# ECO 550 Midterm Exam

Pages: 3 (505 words) Published: September 21, 2014
ECO 550 Midterm Exam
1. 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 2. Shirking of one’s duties is often encountered in team production settings because 3. The Saturn Corporation (once a division of GM) was permanently closed in 2009. What went wrong with Saturn? 4. Possible goals of Not-For-Profit (NFP) enterprises include all of the following EXCEPT: 5. 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: 7. The level of an economic activity should be increased to the point where the ____ is zero. 8. The primary difference(s) between the standard deviation and the coefficient of variation as measures of risk are: 9. The ____ is the ratio of ____ to the ____.

10. The approximate probability of a value occurring that is greater than one standard deviation from the mean is approximately (assuming a normal distribution) 11. Generally, investors expect that projects with high expected net present values also will be projects with 12. The standard deviation is appropriate to compare the risk between two investments only if 13. Marginal revenue (MR) is ____ when total revenue is maximized. 14. If demand were inelastic, then we should immediately:

15. Iron ore is an example of a:
16. A price elasticity (ED) of −1.50 indicates that for a ____ increase in price, quantity demanded will ____ by ____. 17. When demand is ____ a percentage change in ____ is exactly offset by the same percentage change in ____ demanded, the net result being a constant total consumer expenditure. 18. When demand elasticity is ____ in absolute value (or ____), an increase in price will result in a(n) ____ in...