Managerial Economics & Business Strategy 10th Edition by Michael Baye Test bank
129.
Award: 1.00 point
[Appendix material: calculus required] Suppose total benefits and total costs are given by B(Y) = 600Y − 12Y 2 and C(Y)
= 20Y 2 . What level of Y will yield the maximum net benefits?
600/64
600/32
300/64
300/8
References
Multiple Choice Difficulty: 03 Hard 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) = 600Y − 12Y 2 and C(Y)
= 20Y 2 . What is the maximum level of net benefits?
2,500.75
2,812.5
1,916.4
7,500
References
Multiple Choice Difficulty: 03 Hard Learning Objective: 01-06 Apply marginal analysis
to determine the optimal level of a managerial
control variable.
130.
Award: 1.00 point
131.
Award: 1.00 point
Suppose the interest rate is 6 percent, the expected growth rate of the firm is 3 percent, and the firm is expected to
continue forever. If current profits are $1,200, what is the value of the firm?
$41,200
$40,000
$36,500
$42,400
References
Multiple Choice Difficulty: 03 Hard Learning Objective: 01-05 Apply present value
analysis to make decisions and value assets.
If the interest rate is 4 percent, the present value of $500 received at the end of four years is
$427.40.
$431.71.
$416.41.
$432.68.
References
Multiple Choice Difficulty: 03 Hard Learning Objective: 01-05 Apply present value
analysis to make decisions and value assets.
132.
Award: 1.00 point
133.
Award: 1.00 point
[Appendix material: calculus required]. Suppose total benefits and total costs are given by B(Y) = 600Y − 12Y 2 and C(Y)
= 20Y 2 . What is the maximum level of total benefits?
2,812.5
7,500
1,600
5,625
References
Multiple Choice Difficulty: 03 Hard Learning Objective: 01-06 Apply marginal analysis
to determine the optimal level of a managerial
control variable.
Find the annual interest rate that would create a perpetual cash flow stream of $20,000 when the present value of the
asset is $250,000.
2.5 percent
8 percent
12.5 percent
25 percent
References
Multiple Choice Difficulty: 02 Medium Learning Objective: 01-05 Apply present value
analysis to make decisions and value assets.
134.
Award: 1.00 point
135.
Award: 1.00 point
You are considering paying $200,000 for an annuity today, and you know you need a yearly cash stream of $10,000
for expenses. What is the minimum annual interest rate (that would create a perpetual cash flow stream) needed for the
annuity?
0.5 percent
5 percent
20 percent
1 percent
References
Multiple Choice Difficulty: 02 Medium Learning Objective: 01-05 Apply present value
analysis to make decisions and value assets.
You are considering paying $250,000 for an annuity today, and you know you need a yearly cash stream of $20,000
for expenses. What is the minimum annual interest rate (that would create a perpetual cash flow stream) needed for the
annuity?
5 percent
8 percent
12.5 percent
25 percent
References
Multiple Choice Difficulty: 02 Medium Learning Objective: 01-05 Apply present value
analysis to make decisions and value assets.
136.
Award: 1.00 point
137.
Award: 1.00 point
What is the marginal benefit of producing the hundredth unit?
Number Units Produced Total Benefit Total Costs
0 0 0
20 120 40
40 200 100
60 270 170
80 310 260
100 330 370
10
1
100
20
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 hundredth unit?
Number Units Produced Total Benefit Total Costs
0 0 0
20 120 40
40 200 100
60 270 170
80 310 260
100 330 370
1.50
5.50
100
110
References
Multiple Choice Difficulty: 02 Medium Learning Objective: 01-06 Apply marginal analysis
to determine the optimal level of a managerial
control variable.
138.
Award: 1.00 point
139.
Award: 1.00 point