Question 1 A principal-agent problems occur when managerial decisions are not co

Question

Question 1

A principal-agent problems occur when managerial decisions are not consistent with the firm's shareholders' interests.

A.) True

B.) False

QUESTION 2

A firm making more than a normal profit may still be experiencing an economic loss.

A.) True

B.) False

QUESTION 3

An inferior good is a good whose demand decreases as its prices decreases.

A.) True

B.) False

QUESTION 4

Assuming that crude oil is an input to automobile tires as well as to gasoline, a reduction in the tariff on imported crude oil would likely result in an increase in the number of tires sold but tire prices may increase or decrease.

A.) True

B.) False

QUESTION 5

Other things remaining unchanged, advertisement would likely make demand for a good more price elastic.

A.) True

B.) False

QUESTION 6

The cross price elasticity demand for a good with respect to the price of a complementary good is negative.

A.) True

B.) False

QUESTION 7

When the marginal product of labor is smaller than its average product, marginal cost will be smaller than average variable cost.

A.) True

B.) False

QUESTION 8

With capital measured along the vertical axis and labor along the horizontal axis the slope of an isoquant is equal to the ratio between the price of capital over the price of labor.

A.) True

B.) False  

QUESTION 9

If the ratio between the price of labor and the price of capital (w/r) is smaller than the ration between the marginal product of labor and the marginal product of capital, the firm should hire more capital.

A.) True

B.) False

QUESTION 10

Normally the ratio between the price of a variable input and the marginal product of that input is equal to marginal cost.

A.) True

B.) False

QUESTION 11

When labor is a variable input the product of wage and marginal product of labor is equal to the profit-maximizing price.

A.) True

B.) False

QUESTION 12

If the price falls below the average total cost the firm may not shut down in the short run.

A.) True

B.) False

QUESTION 13

When a perfectly competitive firm is producing at its profit maximizing level of output, its MR is equal to price and its MC while it may or may not be making an economic profit.

A.) True

B.) False

QUESTION 14

The price a profit maximizing monopoly charges is always greater than its marginal cost as well as it MR while it may not be greater than its ATC.

A.)True

B.) False

QUESTION 15

As new firms enter a monopolistically competitive market, the demand faced by each competing firm becomes more inelastic.

A.) True

B.) False

QUESTION 16

The long-run equilibrium of a monopoly is characterized by its price being equal to its MR but always greater than its ATC.

A.) True

B.) False

QUESTION 17

A monopolistically competitive firm sets its price equal to its MR, while keeping it above MC.

A.) True

B.) False

QUESTION 18

We say that the long-run equilibrium of a monopolistically competitive firm reflects excess capacity because its MC is not equal to its ATC.

A.) True

B.) False

QUESTION 19

In a duopoly with a zero marginal cost, according to the Cournot model, at equilibrium the sum of the two firms' output would be more than 50 percent of the market demand at a zero price.

A.) True

B.) False  

QUESTION 20

In the kinked demand curve model it is assumed that the demand faced by an oligopoly is less elastic when it lowers the price but more elastic when it raises the price.

A.) True

B.) False

QUESTION 21

A distinguishing characteristic of monopolistically competitive market is price discrimination.

A.) True

B.) False

QUESTION 22

The general explanation for the relative price stability in an oligopolistic market is the existence of some degree of decision interdependency among the firms in the market.

A.) True

B.) False

Explanation / Answer

1.

True

because managers focus on their wages and make decision to increase the company size rather than returns for the shareholders

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.