Week 1 Quiz Eco550

Question 1
3 out of 3 points

Economic profit is defined as the difference between revenue and ____.
Answer

Selected Answer: total economic cost
Correct Answer: total economic cost

Question 2
3 out of 3 points

The flat-screen plasma TVs are selling extremely well. The originators of this technology are earning higher profits. What theory of profit best reflects the performance of the plasma screen makers?
Answer

Selected Answer: innovation theory of profit
Correct Answer: innovation theory of profit

Question 3
3 out of 3 points

Recently, the American Medical Association changed its recommendations on the frequency of pap-smear exams for women. The new frequency recommendation was designed to address the family histories of the patients. The optimal frequency should be where the marginal benefit of an additional pap-test:
Answer

Selected Answer: equals the marginal cost of the test Correct Answer: equals the marginal cost of the test

Question 4
3 out of 3 points

Various executive compensation plans have been employed to motivate managers to make decisions that maximize shareholder wealth. These include:
Answer

Selected Answer: requiring officers to own stock in the company
Correct Answer: requiring officers to own stock in the company

Question 5
3 out of 3 points

In the shareholder wealth maximization model, the value of a firm's stock is equal to the present value of all expected future ____ discounted at the stockholders' required rate of return.
Answer

Selected Answer: profits (cash flows)
Correct Answer: profits (cash flows)

Question 6
3 out of 3 points

Which of the following will increase (V0), the shareholder wealth maximization model of the firm: V0∙(shares outstanding) = Σ∞t=1 (π t ) / (1+ke)t + Real Option Value.
Answer