Managerial Economics & Business Strategy 10th Edition by Michael Baye Test bank
the firm
is maximizing profits.
should increase the quantity produced to increase profits.
should decrease the quantity produced to increase profits.
should retire.
References
Multiple Choice Difficulty: 01 Easy Learning Objective: 01-06 Apply marginal analysis
to determine the optimal level of a managerial
control variable.
If the interest rate is 5 percent and cash flows are $3,000 at the end of year one and $5,000 at the end of year two,
then the present value of these cash flows is
$7,392.29.
$8,400.34.
$4,222.50.
$400.74.
References
Multiple Choice Difficulty: 02 Medium Learning Objective: 01-05 Apply present value
analysis to make decisions and value assets.
83.
Award: 1.00 point
84.
Award: 1.00 point
New firms have incentive to enter an industry when there is(are)
new production technologies.
positive economic profits.
an abundance of labor.
high capital costs.
References
Multiple Choice Difficulty: 01 Easy Learning Objective: 01-04 Apply the five forces
framework to analyze the sustainability of an
industry's profits.
If the interest rate is 12.5 percent, what is the present value of $200 received in one year?
$25
$177.78
$197
$225
References
Multiple Choice Difficulty: 02 Medium Learning Objective: 01-05 Apply present value
analysis to make decisions and value assets.
85.
Award: 1.00 point
86.
Award: 1.00 point
If you put $700 in a savings account at an interest rate of 3 percent, how much money will you have in one year?
$370
$679.61
$703.00
$721
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 3 percent, the present value of $900 received at the end of four years is
$792.00.
$799.64.
$873.79.
$927.40.
References
Multiple Choice Difficulty: 02 Medium Learning Objective: 01-05 Apply present value
analysis to make decisions and value assets.
87.
Award: 1.00 point
88.
Award: 1.00 point
Maximizing the lifetime value of the firm is equivalent to maximizing the firm's current profits if the
interest rate is larger than the growth rate in profits and both are constant.
growth rate in profits is constant and is larger than the interest rate.
interest rate is smaller than the growth rate of profits.
growth rate of profits and the interest rate are equal.
References
Multiple Choice Difficulty: 03 Hard Learning Objective: 01-07 Identify and apply six
principles of effective managerial decision
making.
Given the benefit function B(Y) = 200Y − 3Y 2 , the marginal benefit is
600Y.
200 − 3Y.
200 − 6Y 2 .
200 − 6Y.
References
Multiple Choice Difficulty: 02 Medium Learning Objective: 01-06 Apply marginal analysis
to determine the optimal level of a managerial
control variable.
89.
Award: 1.00 point
90.
Award: 1.00 point
Negotiation between the buyer and seller of a new ski boat is an example of
consumer–producer rivalry.
consumer–consumer rivalry.
producer–producer rivalry.
supplier–producer rivalry.
References
Multiple Choice Difficulty: 01 Easy Learning Objective: 01-01 Summarize how goals,
constraints, incentives, and market rivalry affect
economic decisions
If the annual interest rate is 0 percent, the present value of receiving $210 in the next year is
$221.
$200.
$201.
$210.
References
Multiple Choice Difficulty: 01 Easy Learning Objective: 01-05 Apply present value
analysis to make decisions and value assets.
91.
Award: 1.00 point
92.
Award: 1.00 point
If the interest rate is 7 percent, $500 received at the end of nine years is worth how much today?
500/(0.07) 9
500/(1 + .07) 9
500/(1 + 7) 9
500
References
Multiple Choice Difficulty: 01 Easy Learning Objective: 01-05 Apply present value
analysis to make decisions and value assets.
Suppose the growth rate of the firm's profit is 7 percent, the interest rate is 10 percent, and the current profits of the
firm are $120 million. What is the value of the firm?
$44 million