ECO 550 Week 5 Midterm Quiz 1, SOLVED

ECO 550 Week 5 Midterm Quiz 1, SOLVED

ECO 550 Week 5 Midterm Quiz 1, SOLVED

This midterm exam consist of 32 multiple choice questions and covers the material in Chapters 1 through 8. There are four questions from each chapter.

1). 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?

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

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

4). Which of the following will increase (V0), the shareholder wealth maximization model of the firm:

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

6). The closest example of a risk-free security is

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). If demand were inelastic, then we should immediately:

10). Producers' goods are:

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

12). Suppose we estimate that the demand elasticity for fine leather jackets is -.7 at their current prices. Then we know that:

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

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

15). All of the following are reasons why an association relationship may not imply a causal relationship except:

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

17). 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:

18). The forecasting technique which attempts to forecast short-run changes and makes use of economic indicators known as leading, coincident or lagging indicators is known as:

19). The type of economic indicator that can best be used for business forecasting is the:

20). An example of a time series data set is one for which the:

21). The optimal currency area involves a trade-off of reducing transaction costs but the inability to use changes in exchange rates to help ailing regions. If the US, Canada, and Mexico had one single currency (the Peso-Dollar) we would tend to see all of the following EXCEPT:

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

23). 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

24). Using demand and supply curves for the Japanese yen based on the $/¥ price for yen, an increase in US INFLATION RATES would

25). The following is a Cobb-Douglas production function: Q = 1.75K0.5·L0.5. What is correct here?

26). Which of the following is never negative?

27). If the marginal product of labor is 100 and the price of labor is 10, while the marginal product of capital is 200 and the price of capital is $30, then what should the firm?

28). In a production process, an excessive amount of the variable input relative to the fixed input is being used to produce the desired output. This statement is true for:

29). What method of inventory valuation should be used for economic decision-making problems?

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

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

32). According to the theory of cost, specialization in the use of variable resources in the short-run results initially in
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