Economics Midterm Essay

1608 Words May 10th, 2011 7 Pages
Question 1 5 out of 5 points Economic profit is defined as the difference between revenue and ________________. Selected Answer: total economic cost
Correct Answer: total economic cost Question 2 5 out of 5 points 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. Selected Answer: profits
Correct Answer: profits Question 3 0 out of 5 points A typical factor that creates principal-agent problems is Selected Answer: the greater number of agents relative to the number of principals
Correct Answer:
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Based on this data, Selected Answer:
a.total revenues would increase because demand is elastic.
Correct Answer:
d.total revenues would increase because demand is inelastic. Question 16 0 out of 5 points 28.Management at the East Alabama Motor Speedway estimates that the "Friday Night Fanatics" would continue to enthusiastically pack the house (every ticket would be sold) even after a 35% increase in the price of admission. Apparently the E.A.M.S is operating in the ______ portion of their ______ curve. Selected Answer:
d.elastic, demand.
Correct Answer:
c.inelastic, demand. Question 17 0 out of 5 points 31.The data below are for a competitive business (price-taker). If the market price is $800 per unit, the company should
31.

Output Average
Fixed Costs Average Variable Costs Average
Total Costs Marginal Cost
0 $3,000
1 $3,000 $900 $3,900 $900
2 $1,500 $800 $2,300 $700
3 $1,000 $700 $1,700 $500
4 $750 $600 $1,350 $300
5 $600 $500 $1,100 $100
6 $500 $550 $1,050 $800
7 $429 $600 $1,029 $900
8 $375 $650 $1,025 $1,000
9 $333 $700 $1,033 $1,100
10 $300 $750 $1,050 $1,200

Selected Answer:
a.shut down (produce nothing).
Correct Answer:
c.produce six units. Question 18 0 out of 5 points 39.If a business can sell 10 units at a price of $30 but has

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