Question: If a firm successfully adopts a product

> A retailer has to pay $9 per hour to hire 13 workers. If the retailer only needs to hire twelve workers, a wage rate of $7 per hour is sufficient. What is the MC of the 13th worker? a. $117. b. $9. c. $33. d. $84.

> A firm is thinking of hiring an additional worker to their organization who can increase total productivity by 100 units a week. The cost of hiring him is $1,500 per week. If the price of each unit is $12, a. the MR of hiring the worker is $1,500 b. The

> Suppose your firm adopts a technology that allows you to increase your output by 15%. If the elasticity of demand is -3, how should you adjust price if you want to sell all of your output? a. 5% lower. b. 0.5% lower. c. 15% higher. d. 15% lower.

> A bakery currently sells chocolate chip cookies at a price of $16/dozen. The MC is $8/dozen. The cookies are becoming more popular with customers and so the bakery owner is considering raising the price to $20/dozen. What percentage of customers must b

> Which of the following is the reason for the existence of consumer surplus? a. Consumers can purchase goods that they “want” in addition to what they “need.” b. Consumers can occasionally purchase products for less than their production cost. c. Some

> Buyers consider Marlboro cigarettes and Budweiser beer to be complements. If Marlboro just increased its prices, what would you expect to occur in the Budweiser market? a. Demand would rise, and Budweiser would reduce price. b. Demand would fall, and B

> Christine has purchased five bananas and is considering the purchase of a sixth. It is likely she will purchase the sixth banana if a. the marginal value she gets from the sixth banana is lower than its price. b. the marginal benefit of the sixth ban

> An economist estimated the cross-price elasticity for peanut butter and jelly to be 1.5. Based on this information, we know the goods are a. inferior goods. b. complements. c. inelastic. d. substitutes.

> Which of the following goods has a negative income elasticity of demand? a. Cars b. Items from Dollar stores c. Shoes d. Bread

> Jim recently graduated from college. His income increased tremendously from $5,000 a year to $60,000 a year. Jim decided that instead of renting he will buy a house. This implies that a. houses are normal goods for Jim b. houses are inferior goods for Ji

> Transfer prices should be set at a. marginal cost of the selling division plus a reasonable profit amount. b. marginal cost of the selling division unless it is evaluated as a profit center. c. the opportunity cost of the asset being transferred. d. at

> It’s lunch time, you are hungry and you would like to have some pizza. By the law of diminishing marginal value, a. You would pay more for your first slice of pizza than your second. b. You would pay more for your second slice of pizza than your first

> Jim has estimated elasticity of demand for gasoline to be -0.7 in the short-run and -1.8 in the long run. A decrease in taxes on gasoline would: a. lower revenue in both the short and long run. b. raise revenue in both the short and long run. c. raise r

> Once marginal cost rises above average cost, a. Average costs will increase b. Average costs are unaffected c. Average costs will decrease d. None of the above

> A company faces the following costs at the respective production level in addition to its fixed costs of $50,000: Quantity Marginal Cost Sale Price Marginal Return  1 $10,000 $20,000 $10,000  2 $11,000 $20,000 $9,000  3 $12,000 $20,000

> It costs a firm $90 per unit to produce product A and $70 per unit to produce product B individually. If the firm can produce both products together at $175 per unit of product A and B, this exhibits signs of a. economies of scale b. economies of scope

> According to the law of diminishing marginal returns, marginal returns: a. diminish always prior to increasing. b. diminish constantly. c. diminish never.

> Following are the costs to produce Product A, Product B, and Products A and B together. Which of the following exhibits economies of scope? a. 100, 150, 240 b. 100, 150, 250 c. 100, 150, 260 d. All of the above

> 5. A security system company’s total production costs depend on the number of systems produced according to the following equation: Total Costs = $20,000,000 + $4000*quantity produced. Given these data, which of the following is a false statement? a.

> What might you reasonably expect of an industry in which firms tend to have economies of scale? a. Exceptional competition among firms b. A large number of firms c. Highly diversified firms d. A small number of firms

> Average costs curves initially fall a. due to declining average fixed costs b. due to rising average fixed costs c. due to declining accounting costs d. due to rising marginal costs

> If you were a manager of a cost center, which of the following areas would be of most interest to you? a. Capturing potential economies of scale. b. Increasing the quality of your product. c. Hiring more marketing staff to figure out how to increase pr

> As a golf club production company produces more clubs, the average total cost of each club produced decreases. This is because: a. total fixed costs are decreasing as more clubs are produced b. average variable cost is decreasing as more clubs are produc

> Microsoft found that instead of producing a DVD player and a gaming system separately, it is cheaper to incorporate DVD playing capabilities in its new version of the gaming system. Microsoft is taking advantage of a. economies of scale b. learning curve

> Holding other factors constant, a decrease in the tax for producing coffee causes a. the supply curve to shift to the left, causing the prices of coffee to rise b. the supply curve to shift to the right, causing the prices of coffee to rise c. the supply

> The price of peanuts increases. At the same time, we see the price of jelly (which is often consumed with peanut butter) rise. How does this affect the market for peanut butter? a. The demand curve will shift to the left; the supply curve will shift to t

> Suppose a new employer is also re-locating to Lampard City and will be attracting many new people who will want to buy new houses. Assume that the change in licensing requirements mentioned above occurs at the same time. What do you think will happen t

> Say the average price of a new home in Lampard City is $160,000. The local government has just passed new licensing requirements for housing contractors. Based on possible shifts in demand or supply and assuming that the licensing changes do not affect

> If the government imposes a price floor at $9 (i.e., price must be $9 or higher) in the above market, how many goods will be traded? a. Five b. Four c. Three d. Two

> Suppose there are nine sellers and nine buyers in a competitive market, each willing to buy or sell one unit of a good, with values {$10, $9, $8, $7, $6, $5, $4, $3, $2}. Assuming there are no transactions costs, what is the equilibrium price in this mar

> Suppose a recent and widely circulated medical article has reported new benefits of cycling for exercise. Simultaneously, the price of the parts needed to make bikes falls. If the change in supply is greater than the change in demand, the price will ___

> When demand for a product falls, which of the following events would you NOT necessarily expect to occur? a. A decrease in the quantity of the product supplied. b. A decrease in its price. c. A decrease in the supply of the product. d. A leftward shift

> Joe runs the Service Division for a car dealership. The overall dealership has profit of $10 million on sales of $100 million and costs of $90 million. Joe’s division contributed $9 million in sales and $7 million in costs. If the Service Division is eva

> If the market for a certain product experiences an increase in supply and a decrease in demand, which of the following results is expected to occur? a. Both the equilibrium price and the equilibrium quantity could rise or fall. b. The equilibrium price w

> Changes in prices of a good causes a. movement along the demand curve b. movement along the supply curve c. no movement along either curve d. Both a and b

> A sudden decrease in the market demand in a competitive industry leads to a. losses in the short-run and average profits in the long-run b. above average profits in the short-run and average profits in the long-run c. new firms being attracted to the in

> If a firm in a perfectly competitive industry is experiencing average revenues greater than average costs, in the long-run a. some firms will leave the industry and price will rise b. some firms will enter the industry and price will rise c. some firms

> What would happen to revenues if a firm in a perfectly competitive industry raised prices? a. They would increase b. They would increase but profit would decrease c. They would increase along with profit d. They would fall to zero

> A competitive firm’s profit maximizing price is $15. At MC=MR, the output is 100 units. At this level of production, average total costs are $12. The firm’s profits are a. $300 in the short run and long run b. $300 in the short-run and zero in the long

> A firm in a perfectly competitive market (a price taker) faces what type of demand curve? a. Unit elastic b. Perfectly inelastic c. Perfectly elastic d. None of the above

> Which of the products below is closest to operating in a perfectly competitive industry? a. Nike shoes b. Cotton c. Perdue Chicken d. Restaurants

> What is the main difference between a competitive firm and a monopoly firm? a. The number of customers served by the firm b. Monopoly firms are more efficient and therefore have lower costs. c. Monopoly firms can generally earn positive profits over a l

> Which of the following types of firms are guaranteed to make positive economic profit? a. Both a perfectly competitive firm and a monopoly b. Neither a perfectly competitive firm nor a monopoly c. A perfectly competitive firm but not a monopoly d. A m

> Which of the following changes might help solve a divisional conflict regarding a decision? a. Change who has authority to make the decision b. Transfer information to the decision makers so they are better informed c. Change the performance evaluation a

> At the individual firm level, which of the following types of firms faces a downward-sloping demand curve? a. Both a perfectly competitive firm and a monopoly firm b. Neither a perfectly competitive firm nor a monopoly firm c. A perfectly competitive fir

> In the long-run, which of the following outcomes is most likely for a firm? a. Zero accounting profits but positive economic profits b. Zero accounting profits c. Positive accounting profits and positive economic profits d. Zero economic profits but

> When a resource or capability is valuable, rare, hard to imitate, and non-substitutable firms may gain a. a temporary competitive advantage. b. a complex competitive advantage. c. competitive parity. d. a sustainable competitive advantage.

> Which of the following is critical for a firm adopting a long-term cost-reduction strategy? a. The firm must also differentiate its product or service. b. The strategy reduces costs by at least 10%. c. The strategy is focused on reducing internal produc

> When a resource or capability is valuable and rare, a firm may gain a a. sustainable competitive advantage. b. competitive parity. c. cost advantage. d. temporary competitive advantage.

> The concept that describes firms possessing different bundles of resources is a. resource heterogeneity b. resource immobility c. barriers to entry d. imitability

> Which of the following is NOT a factor that contributes to higher rivalry in an industry? a. Numerous competitors. b. High fixed costs. c. Fast industry growth. d. Low switching costs for buyers.

> Buyers have higher power when a. their suppliers sell a highly differentiated product. b. they are not a significant purchaser of their supplier's output. c. switching costs are low. d. the buyer industry is highly fragmented (buyers are not concentrat

> Which of the following is NOT an example of an entry barrier? a. Government protection through patents or licensing requirements b. Strong brands c. Low capital requirements for entry d. Lower costs driven by economies of scale

> A computer manufacturer has two divisions: one serving residential customers and one serving business customers. If an incentive conflict arises between the two divisions, how will overall company profits be affected? a. Profits will definitely fall. b.

> Attractive industries have all the following, except a. high supplier power b. low buyer power c. high entry barriers d. low rivalry

> An industry is defined as a. a group of firms producing the exact same products and services. b. firms producing items that sell through the same distribution channels. c. firms that have the same resources and capabilities. d. a group of firms produci

> If buyers expect future price increases, they will ___________ their purchases to avoid it. Similarly, sellers will __________ selling to take advantage of it. a. Accelerate; accelerate b. Accelerate; delay c. Delay; accelerate d. Delay; delay

> If the U.S. economy strengthens, consumer incomes increase, and consumers buy more imported goods and services. How will this affect exchange rates? a. The dollar will appreciate relative to the yuan, and U.S. prices will increase. b. The dollar will a

> In July 2014 the price of a Big Mac was $4.80 in the United States while in China it was only $2.73 at market exchange rates. So the "raw" Big Mac index says that the yuan was under-valued by 43% at that time. How would domestic inflation in China affec

> Following an increase in Mexican interest rates relative to U.S. interest rates, which caused US investors to invest in Mexican Bonds. Which of the following would occur? a. The dollar would appreciate relative to the peso, and Mexican prices would incr

> Following an increase in Mexican interest rates relative to U.S. interest rates, which caused Mexican investors to borrow abroad to invest domestically, which of the following is expected to occur? a. The dollar would appreciate relative to the peso, and

> Following a peso appreciation relative to the dollar, which of the following results is expected to occur? a. U.S. consumers would benefit, and Mexican producers would benefit. b. U.S. consumers would be hurt, and Mexican producers would benefit. c. U.S

> Following a peso appreciation relative to the dollar, which of the following results is expected to occur? a. Prices in the United States would rise, and prices in Mexico would rise. b. Prices in the United States would rise, and prices in Mexico would

> If the Chinese yuan devalues relative to the US dollar, then a. US producers will benefit; Chinese consumers will benefit b. US producers will benefit; Chinese consumers will be hurt c. US producers will be hurt; Chinese consumers will benefit d. US pro

> Local Spanish TV markets cater to individual cities by producing local content. This content can be produced in-house by a network or they can also purchase rights to third-party produced content. Recently, Spanish cities have erected barriers to entry i

> Alpha Industries is considering acquiring Foxtrot Flooring. Foxtrot is worth $20 million to its current owners under its existing operational methods. Because there are some opportunities for synergies between the two companies, Alpha believes that Foxtr

> What are the five filing statuses? Briefly describe how your filing status is determined. What parts of the tax form are affected by your filing status?

> Who typically files Form 1040EZ? Which tax form do most other individual taxpayers file?

> What are FICA taxes? Describe the two portions of FICA and explain what they pay for. Who pays FICA?

> Why is it important to understand the tax consequences of your financial decisions?

> What is an annuity?

> What is a Section 529 College Savings Plan? What are the income limits for parents who desire to take advantage of this plan?

> What is a Coverdell Savings Account? List some expenses that can be paid with Coverdell funds.

> List some of the primary features of the American Taxpayers Relief Act of 2012.

> What is an exemption? How many exemptions may a taxpayer claim?

> What are itemized deductions? How do itemized deductions relate to standard deductions? Provide some examples of itemized deductions.

> Mia has $3,000 in assets, a finance company loan for $500, and an outstanding credit card balance of $135. Mia’s monthly cash inflows are $2,000, and she has monthly expenses of $1,650. What is Mia’s net worth?

> Sandy and Phil have recently married and are both in their early 20s. In establishing their financial goals, they determine that their three long-term goals are to purchase a home, to provide their children with a college education, and to plan for their

> How is adjusted gross income determined?

> Your childhood friend, Brad Brooks, has asked you to help him gain control of his personal finances. Single and 30 years old, Brad is employed as a salesperson for a technology company. His annual salary is $48,000. He claims no exemptions (he enjoys the

> Your childhood friend, Brad Brooks, has asked you to help him gain control of his personal finances. Single and 30 years old, Brad is employed as a salesperson for a technology company. His annual salary is $48,000. He claims no exemptions (he enjoys the

> Your childhood friend, Brad Brooks, has asked you to help him gain control of his personal finances. Single and 30 years old, Brad is employed as a salesperson for a technology company. His annual salary is $48,000. He claims no exemptions (he enjoys th

> To what types of cash flows is the time value of money concept most commonly applied?

> Your childhood friend, Brad Brooks, has asked you to help him gain control of his personal finances. Single and 30 years old, Brad is employed as a salesperson for a technology company. His annual salary is $48,000. He claims no exemptions (he enjoys the

> Recall that Dave and Sharon Sampson established a plan to save $300 per month (or $3,600 per year) for their children’s education. Their oldest child is six years old and will begin college in 12 years. They will invest the $300 in a sa

> Recall that Dave and Sharon Sampson established a plan to save $300 per month (or $3,600 per year) for their children’s education. Their oldest child is six years old and will begin college in 12 years. They will invest the $300 in a sa

> Recall that Dave and Sharon Sampson established a plan to save $300 per month (or $3,600 per year) for their children’s education. Their oldest child is six years old and will begin college in 12 years. They will invest the $300 in a savings account that

> What is the primary objective of investing? What else must be considered? What potential investment vehicles are available?

> Recall that Dave and Sharon Sampson established a plan to save $300 per month (or $3,600 per year) for their children’s education. Their oldest child is six years old and will begin college in 12 years. They will invest the $300 in a savings account that

> DeMarcus wants to retire with $1 million in savings by the time he turns 60. He is currently 18 years old. How much will he need to save each year, assuming he can get a 12% annual return on his investments?

> Emily and Paul are married and filed a joint return for 2015. The standard deduction for their filing status is $12,600. They have the following itemized deductions: Medical bills above the 10% limit……….$400 Mortgage interest…………………………….3,500 State inco

> How much will you have in 36 months if you invest $75 a month at 10% annual interest?

> Luis wants to know how much he will have available to spend on his trip to Belize in three years if he deposits $3,000 today at an annual interest rate of 9%.

> Sandra wants to deposit $100 each year for her son. If she places it in a savings account that pays 5% per year, what amount will be in the account in 20 years?

> What is the time value of money? How is it related to opportunity costs?

> Kyle has $1,000 in cash received for high school graduation gifts from various relatives. He wants to invest it in a certificate of deposit (CD) so that he will have a down payment on a car when he graduates from college in five years. His bank will pay

> Elizabeth borrowed $1,000 from her credit union. She has to make only one payment at the end of the loan. How much will she owe at the end of the year if the credit union charges her 5% interest?

> Jim accepted a $3,000 loan from his Uncle Kurt. Uncle Kurt agreed to defer payments for two years until after Jim graduates from college. How much will Jim owe in two years if his uncle charges him 6% interest compounded annually?

> Why do most people need access to financing at some point in their life?

> Winston will receive $100,000 on his 25th birthday. Which time value of money concept would you use to compute the value of his future inheritance?