Eco 550 Midterm Part 1 Latest May 2015 And Other 3 Version Answers
ECO 550 MIDTERM PART 1. LATEST MAY 2015 AND OTHER 3 VERSION ANSWERS POSTED AS A BONUS
Recently, the American Medical Association changed its recommendations on the frequency of pap-smear exams for women. The new frequency recommendation was designed to address the family histories of the patients. The optimal frequency should be where the marginal benefit of an additional pap-test:
is greater than the marginal cost of the test
is lower than the marginal cost of an additional test
equals the marginal cost of the test
The Saturn Corporation (once a division of GM) was permanently closed in 2009. What went wrong with Saturn?
Saturns cars sold at prices higher than rivals Honda or Toyota, so they could not sell many cars.
Saturn sold cars below the prices of Honda or Toyota, earning a low 3% rate of return.
Saturn found that young buyers of Saturn automobiles were very loyal to Saturn and GM.
Saturn implemented a change management view that helped make first time Saturn purchasers trade up to Buick or Cadillac.
Economic profit is defined as the difference between revenue and ____.
total economic cost
A Real Option Value is:
An option that been deflated by the cost of living index makes it a real option.
An opportunity cost of capital.
An opportunity to implement cost savings or revenue expansion in a flexible business plan.
An objective function and a decision rule that comes from it.
The moral hazard in team production arises from
poorly designed team membership
lack of proper assignment of individual tasks
disorganization in groups
a conflict between tactically best interest and ones duty
In the shareholder wealth maximization model, the value of a firm’s stock is equal to the present value of all expected future ____ discounted at the stockholders’ required rate of return.
profits (cash flows)
The primary difference(s) between the standard deviation and the coefficient of variation as measures of risk are:
the coefficient of variation is easier to compute
the standard deviation is a measure of relative risk whereas the coefficient of variation is a measure of absolute risk
the coefficient of variation is a measure of relative risk whereas the standard deviation is a measure of absolute risk
the standard deviation is rarely used in practice whereas the coefficient of variation is widely used
The ____ is the ratio of ____ to the ____.
standard deviation; covariance; expected value
coefficient of variation; expected value; standard deviation
correlation coefficient; standard deviation; expected value
coefficient of variation; standard deviation; expected value
The standard deviation is appropriate to compare the risk between two investments only if
the expected returns from the investments are approximately equal
the investments have similar life spans
objective estimates of each possible outcome is available
the coefficient of variation is equal to 1.0
The level of an economic activity should be increased to the point where the ____ is zero.
net marginal cost
net marginal benefit
The approximate probability of a value occurring that is greater than one standard deviation from the mean is approximately (assuming a normal distribution)
An closest example of a risk-free security is
General Motors bonds
AT&T commercial paper
U.S. Government Treasury bills
San Francisco municipal bonds
an I.O.U. that your cousin promises to pay you $100 in 3 months
When demand is ____ a percentage change in ____ is exactly offset by the same percentage change in ____ demanded, the net result being a constant total consumer expenditure.
elastic; price; quantity
unit elastic; price; quantity
inelastic; quantity; price
inelastic; price; quantity
Auto dealers slash prices at the end of the model year in response to deficient demand/excess inventory but restaurants facing the same problem slash production because
auto customers are less price sensitive than restaurant customers
price elasticity of demand (in absolute values) is higher for auto than restaurant customers
price elasticity of supply is lower in auto than in restaurants
restaurant food spoils quickly and is much more perishable
price elasticity of supply in autos is smaller than the absolute value of price elasticity of demand but the reverse is true for restaurants
Those goods having a calculated income elasticity that is negative are called:
Iron ore is an example of a:
An income elasticity (Ey) of 2.0 indicates that for a ____ increase in income, ____ will increase by ____.
one percent; quantity supplied; two units
one unit; quantity supplied; two units
one percent; quantity demanded; two percent
one unit; quantity demanded; two units
ten percent; quantity supplied; two percent
The factor(s) which cause(s) a movement along the demand curve include(s):
increase in level of advertising
decrease in price of complementary goods
increase in consumer disposable income
decrease in price of the good demanded
Which of the following would tend to make demand INELASTIC?
the amount of time analyzed is quite long
there are lots of substitutes available
the product is highly durable
the proportion of the budget spent on the item is very small
no one really wants the product at all
In which of the following econometric problems do we find Durbin-Watson statistic being far away from 2.0?
the identification problem
All of the following are reasons why an association relationship may not imply a causal relationship except:
the association may be due to pure chance
the association may be the result of the influence of a third common factor
both variables may be the cause and the effect at the same time
the association may be hypothetical
The method which can give some information in estimating demand of a product that hasnt yet come to market is:
the consumer survey
a statistical demand analysis
plotting the data
the barometric method
Demand functions in the multiplicative form are most common for all of the following reasons except:
elasticities are constant over a range of data
ease of estimation of elasticities
exponents of parameters are the elasticities of those variables
marginal impact of a unit change in an individual variable is constant
In regression analysis, the existence of a high degree of intercorrelation among some or all of the explanatory variables in the regression equation constitutes:
a simultaneous equation relationship
The constant or intercept term in a statistical demand study represents the quantity demanded when all independent variables are equal to:
their minimum values
their average values
LINK TO PART 2
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