Managerial Economics & Business Strategy 10th Edition by Michael Baye Test bank
108.
Award: 1.00 point
109.
Award: 1.00 point
Find the annual interest rate that would create a perpetual annual cash flow stream of $15,000 when the present value
of the asset is $100,000.
0.15 percent
15 percent
0.1765 percent
17.65 percent
References
Multiple Choice Difficulty: 02 Medium Learning Objective: 01-05 Apply present value
analysis to make decisions and value assets.
Compute the present value of a preferred stock that pays, in perpetuity, an annual cash flow of $200 at an annual
interest rate of 5 percent.
$190.48
$210
$4,000
$4,200
References
Multiple Choice Difficulty: 01 Easy Learning Objective: 01-05 Apply present value
analysis to make decisions and value assets.
110.
Award: 1.00 point
111.
Award: 1.00 point
Suppose B(Q) = 5Q − Q 2 and C(Q) = 1 + Q 2 . Then, net benefits are ______ when Q equals __________ units since the
second-order condition is ______________.
maximized; 5/4; negative
minimized; −1; positive
maximized; 4/5; positive
minimized; 4/5; negative
References
Multiple Choice Difficulty: 01 Easy Learning Objective: 01-06 Apply marginal analysis
to determine the optimal level of a managerial
control variable.
The lower the interest rate,
the greater the present value of a future amount.
the smaller the present value of a future amount.
the greater the level of inflation.
the smaller the level of inflation.
References
Multiple Choice Difficulty: 01 Easy Learning Objective: 01-05 Apply present value
analysis to make decisions and value assets.
112.
Award: 1.00 point
113.
Award: 1.00 point
What is the marginal benefits of producing the fortieth unit?
Number Units Produced Total Benefit Total Costs
0 0 0
10 120 40
20 200 100
30 270 170
40 310 260
50 330 370
4
80
7.75
40
References
Multiple Choice Difficulty: 02 Medium Learning Objective: 01-06 Apply marginal analysis
to determine the optimal level of a managerial
control variable.
What is the marginal cost of producing the tenth unit?
Number Units Produced Total Benefit Total Costs
0 0 0
10 120 40
20 200 100
30 270 170
40 310 260
50 330 370
80
5
40
4
References
Multiple Choice Difficulty: 02 Medium Learning Objective: 01-06 Apply marginal analysis
to determine the optimal level of a managerial
control variable.
114.
Award: 1.00 point
115.
Award: 1.00 point
At what level of output does marginal cost equal marginal benefit?
Number Units Produced Total Benefit Total Costs
0 0 0
10 120 40
20 200 100
30 270 170
40 310 260
50 330 370
10
20
30
40
References
Multiple Choice Difficulty: 02 Medium Learning Objective: 01-06 Apply marginal analysis
to determine the optimal level of a managerial
control variable.
What is the level of net benefits when 20 units are produced?
Number Units Produced Total Benefit Total Costs
0 0 0
10 120 40
20 200 100
30 270 170
40 310 260
50 330 370
−100
80
100
10
References
Multiple Choice Difficulty: 01 Easy Learning Objective: 01-06 Apply marginal analysis
to determine the optimal level of a managerial
control variable.
116.
Award: 1.00 point
117.
Award: 1.00 point
What is the marginal net benefit of producing the twentieth unit?
Number Units Produced Total Benefit Total Costs
0 0 0
10 120 40
20 200 100
30 270 170
40 310 260
50 330 370
2
−5
−2
8
References
Multiple Choice Difficulty: 02 Medium Learning Objective: 01-06 Apply marginal analysis
to determine the optimal level of a managerial
control variable.
[Appendix material: calculus required] Suppose total benefits and total costs are given by B(Y) = 150Y − 10Y 2 . Then
marginal benefits are
150 − 20Y.
150Y − 8Y 2 .
15 − 4Y.
5 − 20Y.
References
Multiple Choice Difficulty: 02 Medium Learning Objective: 01-06 Apply marginal analysis
to determine the optimal level of a managerial
control variable.
118.