In the short run, finding the optimal amount of variable input involves which relationship? A) MP = MC B) AP = MP C) MP = 0 D) MRP = MFC ANSWER D
Date: September 9th, 2020
The internal rate of return equals the cost of capital when A) NPV = 0. B) NPV > 0. C) NPV < 0. D) None of the above ANSWER A
Date: September 9th, 2020
The above figure shows the cost curves for a competitive firm. If the profit-maximizing level of output is 40, price is equal to A) $0. B) $15. C) $10. D) $11. ANSWER B
Date: September 9th, 2020
The perfect substitution of two inputs implies that A) two inputs can be substituted at a ratio of 1 to 1. B) one input can be substituted for another up to some point. C) two inputs can be substituted at some constant ratio. D) one input can be substituted for another. ANSWER C
Date: September 9th, 2020
When two mutually exclusive projects are considered, the NPV calculations and the IRR calculations may, under certain circumstances, give conflicting recommendations as to which project to accept. The reason for this result is that in the NPV calculation, cash inflows are assumed to be reinvested at the cost of capital, while in the IRR solution, […]
Date: September 9th, 2020
If MRP > MLC, it means that a firm should A) use less labor. B) use more labor. C) increase its fixed capacity. D) decrease its fixed capacity. ANSWER B
Date: September 9th, 2020
When analyzing a capital budgeting project, the analyst must include in his calculation all of the following except A) all revenues and costs in terms of cash flows. B) only those cash flows that will change if the proposal is accepted (i.e., incremental cash flows). C) interest payments on debt financing connected with the project. […]
Date: September 9th, 2020
International price discrimination for a good is possible if A) goods are sold through the gray market. B) the price difference between two countries is greater than the transaction costs in arbitrage. C) the price difference between two countries is less than the transaction costs in arbitrage. D) None of the above. ANSWER C […]
Date: September 9th, 2020
In economic theory, if an additional worker adds less to the total output than previous workers hired, it is because A) there may be less that this person can do, given the fixed capacity of the firm. B) he/she is less skilled than the previously hired workers. C) everyone is getting in each other’s way. […]
Date: September 9th, 2020
The market for used cars is shown in the above figure. Neither buyers nor sellers can tell whether any given car is a lemon. Forty percent (40%) of all cars are lemons. Which of the following statements is TRUE? A) All of the cars will be sold at $1,600. B) No cars will be sold. […]
Date: September 9th, 2020
