Managerial Economics & Business Strategy 10th Edition by Michael Baye Test bank
profits in a market economy.
53.
Award: 1.00 point
54.
Award: 1.00 point
If the annual interest rate is 0 percent, the present value of receiving $1.10 in the next year is
$1.00.
$1.01.
$1.11.
$1.10.
References
Multiple Choice Difficulty: 02 Medium Learning Objective: 01-05 Apply present value
analysis to make decisions and value assets.
If the interest rate is 5 percent, $100 received at the end of seven years is worth how much today?
100/(0.05) 7
100/(1 + 0.05) 7
100/(1 + 5) 7
100
References
Multiple Choice Difficulty: 02 Medium Learning Objective: 01-05 Apply present value
analysis to make decisions and value assets.
55.
Award: 1.00 point
56.
Award: 1.00 point
As the interest rate increases, the opportunity cost of waiting to receive a future amount
increases.
decreases.
may rise or fall.
remains the same.
References
Multiple Choice Difficulty: 01 Easy Learning Objective: 01-05 Apply present value
analysis to make decisions and value assets.
The higher the interest rate,
the greater the present value.
the greater the net present value.
both the present value and net present value are greater.
neither the present value nor the net present value is greater.
References
Multiple Choice Difficulty: 01 Easy Learning Objective: 01-05 Apply present value
analysis to make decisions and value assets.
57.
Award: 1.00 point
58.
Award: 1.00 point
To an economist, maximizing profit is
maximizing the value of the firm.
maximizing the current year's profits.
minimizing the permanent total costs.
minimizing the future risks.
References
Multiple Choice Difficulty: 02 Medium Learning Objective: 01-07 Identify and apply six
principles of effective managerial decision
making.
The value of the firm is the
current value of profits.
present discounted value of all future profits.
average value of all future profits.
total value of all future profits.
References
Multiple Choice Difficulty: 02 Medium Learning Objective: 01-07 Identify and apply six
principles of effective managerial decision
making.
59.
Award: 1.00 point
60.
Award: 1.00 point
Marginal benefits are the
incremental benefits of a decision.
average benefits of a decision.
total benefits of a decision.
present discounted benefit of a decision.
References
Multiple Choice Difficulty: 01 Easy Learning Objective: 01-06 Apply marginal analysis
to determine the optimal level of a managerial
control variable.
The optimal amount of studying is determined by comparing
marginal benefit and the total cost of studying.
marginal benefit and the total benefit of studying.
marginal benefit and the marginal cost of studying.
total benefit and the total cost of studying.
References
Multiple Choice Difficulty: 01 Easy Learning Objective: 01-06 Apply marginal analysis
to determine the optimal level of a managerial
control variable.
61.
Award: 1.00 point
62.
Award: 1.00 point
If marginal benefits exceed marginal costs, it is profitable to
increase Q (quantity, output produced).
decrease Q (quantity, output produced).
stay at that level of Q (quantity, output produced).
produce zero.
References
Multiple Choice Difficulty: 02 Medium Learning Objective: 01-06 Apply marginal analysis
to determine the optimal level of a managerial
control variable.
If marginal costs exceed marginal benefits, then
the firm ends up with a net loss.
the firm's average costs exceed average benefits.
the firm should decrease its production level.
the firm should not change its production level.
References
Multiple Choice Difficulty: 02 Medium Learning Objective: 01-06 Apply marginal analysis
to determine the optimal level of a managerial
control variable.
63.
Award: 1.00 point
64.
Award: 1.00 point
In order to maximize net benefits, the managerial control variable should be used up to the point where
total costs equal total benefits.
average costs equal marginal benefits.
average benefits equal marginal costs.