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The additional cost incurred by using an additional unit of the managerial control variable is defined as the:
Correct answer(s):
- Marginal cost
The additional benefits that arise by using an additional unit of the managerial control variable is defined as the:
Correct answer(s):
- Marginal benefit
To maximize profits, a firm should continue to increase production of a good until:
Correct answer(s):
- Marginal revenue equals marginal cost
Suppose the interest rate is five percent, the expected growth rate of the firm is two percent, and the firm is expected to continue forever. If current profits are $1,000, what is the value of the firm?
Correct answer(s):
- $35,000
A firm will have constant profits of $100,000 per year for the next four years and the interest rate is six percent. Assuming these profits are realized at the end of each year, what is the present value these future profits?
Correct answer(s):
- $400,000
A farm must decide whether or not to purchase a new tractor. The tractor will reduce costs by $2,000 in the first year, $2,500 in the second and $3,000 in the third and final year of usefulness. The tractor costs $9,000 today, while the above cost savings will be realized at the end of each year. If the interest rate is seven percent, what is the net present value of purchasing the tractor?
Correct answer(s):
- None of the statements associated with this question are correct
When dealing with present value, a higher interest rate:
Correct answer(s):
- Decreases the present value of a future amount
If the interest rate is five percent, the present value of $200 received at the end of five years is:
Correct answer(s):
- $156.71
If you put $1,000 in a savings account at an interest rate of 10%, how much money will you have in one year?
Correct answer(s):
- $1,100
If the interest rate is 5%, what is the present value of ten dollars received one year from now?
Correct answer(s):
- $9.52
The opportunity cost of receiving ten dollars in the future as opposed to getting that ten dollars today is:
Correct answer(s):
- The foregone interest that could be earned if you had the money today
Scarce resources are ultimately allocated toward the production of goods most wanted by society because:
Correct answer(s):
- Firms attempt to maximize profits
As more firms enter an industry
Correct answer(s):
- Economic profits decrease
The primary inducement for new firms to enter an industry is:
Correct answer(s):
- Presence of economic profits
Which of the following signals to the owners of scarce resources are the best uses of those resources?
Correct answer(s):
- Profits of businesses
Which of the following is an implicit cost of going to college?
Correct answer(s):
- Foregone wages
Which of the following is an implicit cost to a firm that produces a good or service?
Correct answer(s):
- Foregone profits of producing a different good or service
Economic profits are:
Correct answer(s):
- Total revenue minus total opportunity cost
Accounting profits are:
Correct answer(s):
- Total revenue minus total cost
What is the antonym of “Gloomy”
Correct answer(s):
- Bright