ECO 550 Midterm Exam
1. To reduce Agency Problems, executive compensation should be designed to: 2. Economic profit is defined as the difference between revenue and ____. 3. Possible goals of Not-For-Profit (NFP) enterprises include all of the following EXCEPT: 4. Various executive compensation plans have been employed to motivate managers to make decisions that maximize shareholder wealth. These include: 5. Income tax payments are an example of ____.
6. The moral hazard in team production arises from
7. The primary difference(s) between the standard deviation and the coefficient of variation as measures of risk are: 8. The ____ is the ratio of ____ to the ____.
9. Generally, investors expect that projects with high expected net present values also will be projects with 10. The standard deviation is appropriate to compare the risk between two investments only if 11. The level of an economic activity should be increased to the point where the ____ is zero. 12. Based on risk-return tradeoffs observable in the financial marketplace, which of the following securities would you expect to offer higher expected returns than corporate bonds? 13. An income elasticity (Ey) of 2.0 indicates that for a ____ increase in income, ____ will increase by ____. 14. An increase in each of the following factors would normally provide a subsequent increase in quantity demanded, except: 15. Which of the following would tend to make demand INELASTIC? 16. If demand were inelastic, then we should immediately:
17. Marginal revenue (MR) is ____ when total revenue is maximized. 18. When demand elasticity is ____ in absolute value (or ____), an increase in price will result in a(n) ____ in total revenues. 19. Iron ore is an example of a:
20. The constant or intercept term in a statistical demand study represents the quantity demanded when all independent variables are equal to: 21. When two or more "independent" variables are highly correlated, then we have:
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