Strayer eco550 midterm exam (both parts taken on febuary 09, 2014)

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Strayer eco550 midterm exam (both parts taken on febuary 09, 2014)

Question # 00008171 Posted By: neil2103 Updated on: 02/09/2014 04:11 PM Due on: 02/28/2014

Subject Economics Topic General Economics Tutorials:

Question

eco 550 mid term exam..................................

Take Test: Midterm Exam Part 1

Question 1

Income tax payments are an example of ____.

Answer

		implicit costs
		explicit costs
		normal return on investment
		shareholder wealth

Question 2

The primary objective of a for-profit firm is to ___________.

Answer

		maximize agency costs
		minimize average cost
		maximize total revenue
		set output where total revenue equals total cost
		maximize shareholder value

Question 3

To reduce Agency Problems, executive compensation should be designed to:

Answer

		create incentives so that managers act like owners of the firm.
		avoid making the executives own shares in the company.
		be an increasing function of the firm's expenses.
		be an increasing function of the sales revenue received by the firm.

Question 4

Possible goals of Not-For-Profit (NFP) enterprises include all of the following EXCEPT:

Answer

		maximize total costs
		maximize output, subject to a breakeven constraint
		maximize the happiness of the administrators of the NFP enterprise
		maximize the utility of the contributors

Question 5

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

Answer

		explicit cost
		total economic cost
		implicit cost
		shareholder wealth

Question 6

The moral hazard in team production arises from

Answer

		poorly designed team membership
		lack of proper assignment of individual tasks
		disorganization in groups
		a conflict between tactically best interest and one’s duty
		insufficient experience

Question 7

The primary difference(s) between the standard deviation and the coefficient of variation as measures of risk are:

Answer

		the coefficient of variation is easier to compute
		the standard deviation is a measure of relative risk whereas the coefficient of variation is a measure of absolute risk
		the coefficient of variation is a measure of relative risk whereas the standard deviation is a measure of absolute risk
		the standard deviation is rarely used in practice whereas the coefficient of variation is widely used

Question 8

The approximate probability of a value occurring that is greater than one standard deviation from the mean is approximately (assuming a normal distribution)

Answer

		68.26%
		2.28%
		34%
		15.87%

Question 9

The ____ is the ratio of ____ to the ____.

Answer

		standard deviation; covariance; expected value
		coefficient of variation; expected value; standard deviation
		correlation coefficient; standard deviation; expected value
		coefficient of variation; standard deviation; expected value

Question 10

A change in the level of an economic activity is desirable and should be undertaken as long as the marginal benefits exceed the ____.

Answer

		marginal returns
		total costs
		marginal costs
		average costs
		average benefits

Question 11

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?

Answer

		U.S. Government bonds
		municipal bonds
		common stock
		commercial paper

Question 12

An closest example of a risk-free security is

Answer

		General Motors bonds
		AT&T commercial paper
		U.S. Government Treasury bills
		San Francisco municipal bonds
		an I.O.U. that your cousin promises to pay you $100 in 3 months

Question 13

Marginal revenue (MR) is ____ when total revenue is maximized.

Answer

		greater than one
		equal to one
		less than zero
		equal to zero
		equal to minus one

Question 14

A price elasticity (E_D) of ?1.50 indicates that for a ____ increase in price, quantity demanded will ____ by ____.

Answer

		one percent; increase; 1.50 units
		one unit; increase; 1.50 units
		one percent; decrease; 1.50 percent
		one unit; decrease; 1.50 percent
		ten percent; increase; fifteen percent

Question 15

If demand were inelastic, then we should immediately:

Answer

		cut the price.
		keep the price where it is.
		go to the Nobel Prize Committee to show we were the first to find an upward sloping demand curve.
		stop selling it since it is inelastic.
		raise the price.

Question 16

Those goods having a calculated income elasticity that is negative are called:

Answer

		producers' goods
		durable goods
		inferior goods
		nondurable goods

Question 17

An income elasticity (Ey) of 2.0 indicates that for a ____ increase in income, ____ will increase by ____.

Answer

		one percent; quantity supplied; two units
		one unit; quantity supplied; two units
		one percent; quantity demanded; two percent
		one unit; quantity demanded; two units
		ten percent; quantity supplied; two percent

Question 18

The factor(s) which cause(s) a movement along the demand curve include(s):

Answer

		increase in level of advertising
		decrease in price of complementary goods
		increase in consumer disposable income
		decrease in price of the good demanded

uestion 19

Which of the following would tend to make demand INELASTIC?

Answer

		the amount of time analyzed is quite long
		there are lots of substitutes available
		the product is highly durable
		the proportion of the budget spent on the item is very small
		no one really wants the product at all

Question 20

The standard deviation of the error terms in an estimated regression equation is known as:

Answer

		coefficient of determination
		correlation coefficient
		Durbin-Watson statistic
		standard error of the estimate

uestion 21

In which of the following econometric problems do we find Durbin-Watson statistic being far away from 2.0?

Answer

		the identification problem
		autocorrelation
		multicollinearity
		heteroscedasticity
		agency problems

Question 22

When using a multiplicative power function (Y = a X1b1 X2b2 X3b3) to represent an economic relationship, estimates of the parameters (a, and the b's) using linear regression analysis can be obtained by first applying a ____ transformation to convert the function to a linear relationship.

Answer

		semilogarithmic
		double-logarithmic
		reciprocal
		polynomial
		cubic

Question 23

The method which can give some information in estimating demand of a product that hasn’t yet come to market is:

Answer

		the consumer survey
		market experimentation
		a statistical demand analysis
		plotting the data
		the barometric method

Question 24

Demand functions in the multiplicative form are most common for all of the following reasons except:

Answer

		elasticities are constant over a range of data
		ease of estimation of elasticities
		exponents of parameters are the elasticities of those variables
		marginal impact of a unit change in an individual variable is constant

Question 25

The Identification Problem in the development of a demand function is a result of:

Answer

		the variance of the demand elasticity
		the consistency of quantity demanded at any given point
		the negative slope of the demand function
		the simultaneous relationship between the demand and supply functions

Take Test: Midterm Exam Part 2

Question 1

The use of quarterly data to develop the forecasting model Y_t= a +bY_t?1 is an example of which forecasting technique?

Answer

		Barometric forecasting
		Time-series forecasting
		Survey and opinion
		Econometric methods based on an understanding of the underlying economic variables involved
		Input-output analysis

Question 2

Time-series forecasting models:

Answer

		are useful whenever changes occur rapidly and wildly
		are more effective in making long-run forecasts than short-run forecasts
		are based solely on historical observations of the values of the variable being forecasted
		attempt to explain the underlying causal relationships which produce the observed outcome

Question 3

Consumer expenditure plans is an example of a forecasting method. Which of the general categories best described this example?

Answer

		time-series forecasting techniques
		barometric techniques
		survey techniques and opinion polling
		econometric techniques
		input-output analysis

Question 4

Which of the following barometric indicators would be the most helpful for forecasting future sales for an industry?

Answer

		lagging economic indicators.
		leading economic indicators.
		coincident economic indicators.
		wishful thinking

Question 5

Smoothing techniques are a form of ____ techniques which assume that there is an underlying pattern to be found in the historical values of a variable that is being forecast.

Answer

		opinion polling
		barometric forecasting
		econometric forecasting
		time-series forecasting

Question 6

The variation in an economic time-series which is caused by major expansions or contractions usually of greater than a year in duration is known as:

Answer

		secular trend
		cyclical variation
		seasonal effect
		unpredictable random factor

Question 7

In an open economy with few capital restrictions and substantial import-export trade, a rise in interest rates and a decline in the producer price index of inflation will

Answer

		raise the value of the currency
		lower the nominal interest rate
		increase the volume of trading in the foreign exchange market
		lower the trade-weighted exchange rate
		increase consumer inflation.

Question 8

In a recession, the trade balance often improves because

Answer

		service exports exceed manufactured good exports
		banks sell depressed assets
		fewer households can afford luxury imports
		direct investment abroad declines
		the capital account exceeds the current account

Question 9

An appreciation of the U.S. dollar has what impact on Harley-Davidson (HD), a U.S. manufacturer of motorcycles?

Answer

		domestic sales of HD motorcycles increase and foreign sales of HD motorcycles increase
		domestic sales of HD motorcycles decrease and foreign sales of HD motorcycles increase
		domestic sales of HD motorcycles increase and foreign sales of HD motorcycles decrease
		domestic sales of HD motorcycles decrease and foreign sales of HD motorcycles decrease

Question 10

If the British pound (?) appreciates by 10% against the dollar:

Answer

		both the US importers from Britain and US exporters to Britain will be helped by the appreciating pound.
		the US exporters will find it harder to sell to foreign customers in Britain.
		the US importer of British goods will tend to find that their cost of goods rises, hurting its bottom line.
		both US importers of British goods and exporters to Britain will be unaffected by changes in foreign exchange rates.

Question 11

European Union labor costs exceed U.S. and British labor costs primarily because

Answer

		worker productivity is lower in the EU
		union wages are higher in the EU
		layoffs and plant closings are more restrictive in the U.S. and Britain
		the amount of paid time off is higher in the EU
		labor-management relations are better in the EU

Question 12

Purchasing power parity or PPP says the ratios composed of:

Answer

		interest rates explain the direction of exchange rates.
		growth rates explain the direction of exchange rates.
		inflation rates explain the direction of exchange rates.
		services explain the direction exchange rates.
		public opinion polls explain the direction of exchange rates.

Question 13

Trading partners should specialize in producing goods in accordance with comparative advantage, then trade and diversify in consumption because

Answer

		out-of-pocket costs of production decline
		free trade areas protect infant industries
		economies of scale are present
		manufacturers face diminishing returns
		more goods are available for consumption

Question 14

Given a Cobb-Douglas production function estimate of Q = 1.19L^.72K^.18for a given industry, this industry would have:

Answer

		increasing returns to scale
		constant returns to scale
		decreasing returns to scale
		negative returns to scale

Question 15

Marginal factor cost is defined as the amount that an additional unit of the variable input adds to ____.

Answer

		marginal cost
		variable cost
		marginal rate of technical substitution
		total cost

Question 16

The marginal rate of technical substitution may be defined as all of the following except:

Answer

		the rate at which one input may be substituted for another input in the production process, while total output remains constant
		equal to the negative slope of the isoquant at any point on the isoquant
		the rate at which all combinations of inputs have equal total costs
		equal to the ratio of the marginal products of X and Y

Question 17

The primary purpose of the Cobb-Douglas power function is to:

Answer

		allow one to make estimates of cost-output relationships
		allow one to make predictions about a resulting increase in output for a given increase in the inputs
		aid one in gaining accurate empirical values for economic variables
		calculate a short-run linear total cost function

Question 18

The marginal product is defined as:

Answer

		The ratio of total output to the amount of the variable input used in producing the output
		The incremental change in total output that can be produced by the use of one more unit of the variable input in the production process
		The percentage change in output resulting from a given percentage change in the amount
		The amount of fixed cost involved.

4 points

Question 19

Which of the following is never negative?

Answer

		marginal product
		average product
		production elasticity
		marginal rate of technical substitution
		slope of the isocost lines

Question 20

____ are defined as costs which are incurred regardless of the alternative action chosen in a decision-making problem.

Answer

		Opportunity costs
		Marginal costs
		Relevant costs
		Sunk costs

Question 21

:

Answer

		Unaffected when two or more products are produced
		Reduced when two or more products are produced
		Increased when two or more products are produced
		Demonstrating constant returns to scale
		Demonstrating decreasing returns to scale

Question 22

For a short-run cost function which of the following statements is (are) not true?

Answer

		The average fixed cost function is monotonically decreasing.
		The marginal cost function intersects the average fixed cost function where the average variable cost function is a minimum.
		The marginal cost function intersects the average variable cost function where the average variable cost function is a minimum.
		The marginal cost function intersects the average total cost function where the average total cost function is a minimum.

Question 23

If TC = 321 + 55Q - 5Q2, then average total cost at Q = 10 is:

Answer

		10.2
		102
		37.1
		371
		321

Question 24

The existence of diseconomies of scale (size) for the firm is hypothesized to result from:

Answer

		transportation costs
		imperfections in the labor market
		imperfections in the capital markets
		problems of coordination and control encountered by management

Question 25

The cost function is:

Answer

		a means for expressing output as a function of cost
		a schedule or mathematical relationship showing the total cost of producing various quantities of output

		similar to a profit and loss statement
		incapable in being developed from statistical regression analysis

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Solution: eco 550 midterm

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Strayer eco550 midterm exam (both parts taken on febuary 09, 2014)

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