This is Managerial Economics question? 2. Monitoring is often used by firms in a
ID: 1095470 • Letter: T
Question
This is Managerial Economics question?
2. Monitoring is often used by firms in an attempt to decrease
A. adverse selection.
B. signaling.
C. shirking.
D. piece rates.
3. A ________ is a governance structure where owners are not personally liable.
A. partnership
B. sole proprietorship
C. corporation
D. mixed enterprise
15. Which of the following is an output of production?
A. a haircut
B. a share of Acme Corporation stock
C. a U.S. savings bond
D. None of the above.
18. The short run is
A. usually 3 - 6 months.
B. dependent on the characteristics of the industry.
C. when a firm has to decide whether or not to exit.
D. identical to the long run for most firms.
19. Firms might vertically disintegrate when
A. the industry becomes too large to support itself.
B. it becomes more profitable for a firm to specialize.
C. the IRS cracks down on transfer pricing.
D. the industry shrinks in size.
20. Market structure depends upon
A. the number of firms in the market.
B. the ability of firms to differentiate their goods and services.
C. the ease of entry and exit.
D. All of the above.
22. Which of the following is likely to have the shortest long run?
A. an electric company
B. a nail salon
C. a construction firm
D. a container ship operations company
24. A firm's profit is
A. the difference between revenue and cost.
B. the difference between marginal revenue and marginal cost.
C. usually negative when opportunity costs are included.
D. the opportunity cost of the firm's shareholders.
26. If market price is greater than or equal to the minimum of AVC but below the minimum of AC, then
A. the firm will shut down.
B. profit is positive and so the firm will operate.
C. revenue is lower than variable costs.
D. the firm will operate because its loss is less than if it shut down.
27. Government intervention in a perfectly competitive market
A. guarantees maximized well-being.
B. reduces economic well-being.
C. is an illustration of the "invisible hand theorem."
D. increases economic well-being.
29. The agency problem can be avoided if
A. the manager and owner can manipulate reported profit.
B. the firm has positive profits.
C. the firm is not subject to regulation by a government agency.
D. the goals of the owner and manager are aligned.
31. Which of the following is NOT an explicit cost?
A. $1500 to buy bricks for the driveway of your house
B. The $100 in interest you lost by using your CD funds to pay for new pizza oven
C. $25 for lunch to serve to your workers
D. $200 to hire 2 gardeners for landscaping work
36. You purchase a pizza oven that is expected to last 10 years for $15,000. How do you account for the economic cost of the oven?
A. The cost is the price of the oven minus any revenue made selling pizzas made in the oven.
B. Calculate the value of renting the oven to someone else and use that as your cost.
C. Amortize the cost over the 10 year life of the oven, resulting in a cost of $1,500 per year.
D. Expense the oven, taking a write-off for the entire price in the first year.
44. Which of the following generally does NOT seek to maximize profit?
A. public sector companies
B. state-owned enterprises
C. partnerships
D. sole proprietorships
Explanation / Answer
c
d
b
d
a
c
c
d
a
a
d
b
b
a
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