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Question Question 1 The economic concept of "opportunity cost" is most closely associated with which of the following management considerations? market structure resource scarcity product demand technology 2 points Save Answer Question 2 Scarcity is a condition that exists when there is a fixed supply of resources relative to the demand for the product. there is a large demand for a product. resources are not able to meet the entire demand for a product. All of these 2 points Save Answer Question 3 A critical element of entrepreneurship (as opposed to managerial skills) is leadership skills. risk taking. technology. political skills. 2 points Save Answer Question 4 A large corporation's profit objective may not be profit or wealth maximization, because stockholders have little power in corporate decision making. management is more interested in maximizing its own income. managers are overly concerned with their own survival and may not take all prudent risks. All of these 2 points Save Answer Question 5 Unlike an accountant, an economist measures costs on a(n) ________ basis. explicit replacement historical conservative 2 points Save Answer Question 6 A firm's "normal profit" is best characterized by the average of a firm's profits over the past five years. amount of profit necessary to keep the price of a firm's stock from changing. amount of profit a firm could earn in its next best alternative activity. the average amount of profit earned in the firm's industry. 2 points Save Answer Question 7 If the price of a substitute increases, which of the following is most likely to happen in the market for the product under consideration in the short run? Supply will increase. Firms will leave the market. Firms will devote more variable inputs in the production of this good. Firms will devote less variable inputs in the production of this good. 2 points Save Answer Question 8 Which of the following best applies to the distinction between the "long run" and the "short run"? The short run is a period of approximately 1-6 months while the long run is any time frame which is longer. In the short run, only new firms may enter, while in the long-run firms may either enter or exit the market. The rationing function of price is a short-run phenomenon whereas the guiding function is a long-run phenomenon. All of these statements are correct. 2 points Save Answer Question 9 A market is in equilibrium when supply is equal to demand. the price is adjusting upward. the quantity supplied is equal to the quantity demanded. tastes and preference remain constant. 2 points Save Answer Question 10 If government imposes a price ceiling on a good that is below the market equilibrium price a surplus will develop. a shortage will develop. producers will reduce their sales price. consumers will reduce their demand for the good. 2 points Save Answer Question 11 If an item has several good substitutes, the demand curve for that item is likely to be relatively inelastic. relatively elastic. perfectly inelastic. unit elastic. 2 points Save Answer Question 12 If a firm decreases the price of a good and total revenue decreases, then the demand for this good is price elastic. the demand for this good is price inelastic. the cross elasticity is negative. the income elasticity is less than 1. 2 points Save Answer Question 13 When a regression coefficient is significant at the .05 level, it means that there is only a five percent chance that there will be an error in a forecast. there is 95 percent chance that the regression coefficient is the true population coefficient. there is a five percent chance or less that the estimated coefficient is zero. there is a five percent chance or less that the regression coefficient is not the true population coefficient. 2 points Save Answer Question 14 A major problem in projecting with a trend line is that only straight-line projections can be accommodated. it is valid only if the trend is upward. it will not forecast turning points in activity. it is a very complex method of forecasting. 2 points Save Answer Question 15 When the R2 of a regression equation is very high, it indicates that all the coefficients are statistically significant. the intercept term has no economic meaning. a high proportion of the variation in the dependent variable can be accounted for by the variation in the independent variables. there is a good chance of serial correlation and so the equation must be discarded. 2 points Save Answer Question 16 When is it not in the best interest of a company to hire additional workers in the short run? when the average product of labor is decreasing when the firm is in Stage II of the production process when the marginal revenue product equals zero when the wage rate is equal to or greater than labor's marginal revenue product 2 points Save Answer Question 17 The production period in which at least one input is fixed in quantity is the production run. long run. short run. planning horizon. 2 points Save Answer Question 18 Answer the questions based on the following information.The marginal product of the fourth worker is 150 units of output. 24 units of output. negative. 36 units of output. 2 points Save Answer Question 19 Which of the following statements best represents a difference between short-run and long-run cost? Less than one year is considered the short run; more than one year the long run. There are no fixed costs in the long run. In the short-run labor must always be considered the variable input and capital the fixed input. All of these are true. 2 points Save Answer Question 20 Which level indicates the point of maximum economic efficiency? lowest point on AC curve lowest point on AVC curve lowest point on MC curve None of these 2 points Save Answer Question 21 When a firm increased its output by one unit, its AFC decreased. This is an indication that the law of diminishing returns has taken effect. MC < AFC. AVC < AFC. the firm is spreading out its total fixed cost. 2 points Save Answer Question 22 If an industry could be organized either perfectly competitively or as monopoly, a monopoly would produce less output. produce where P > MC. charge higher prices. All of these 2 points Save Answer Question 23 If a perfectly competitive firm incurs an economic loss, it should shut down immediately. try to raise its price. shut down in the long run. shut down if this loss exceeds fixed cost. 2 points Save Answer Question 24 Monopoly is characterized by unique products. market entry and exit are difficult or impossible. non-price competition not necessary. All of these 2 points Save Answer Question 25 In perfect competition, if firms enter the market in the long run total supply will increase causing market price to increase. total supply will decrease causing market price to decrease. total supply will decrease causing market price to increase. total supply will increase causing market price to decrease.