ECO 550 Effective Communication - tutorialrank.com

1. ECO 550 Final Guide (All Possible Questions) For more course tutorials visit www.tutorialrank.com Chapter 9—Applications of Cost Theory MULTIPLE CHOICE 1. Evidence from empirical studies of short-run cost-output relationships lends support to the: 2. The short-run cost function is: 3. Theoretically, in a long-run cost function: 4. Break-even analysis usually assumes all of the following except: 5. What is another term meaning the degree of operating leverage? 6. In a study of banking by asset size over time, we can find which asset sizes are tending to become more prominent. The size that is becoming more predominant is presumed to be least cost. This is called: 7. George Webb Restaurant collects on the average $5 per customer at its breakfast & lunch diner. Its variable cost per customer averages $3, and its annual fixed cost is $40,000. If George Webb wants to make a profit of $20,000 per year at the diner, it will have to serve__________ customers per year. 8. In determining the shape of the cost-output relationship only ____ depreciation is relevant.

2. 9. Which of the following is not a limitation of the survivor technique for measuring the optimum size of firms within an industry? 10. The primary disadvantage of engineering methods for measuring cost functions is that they deal with the managerial and entrepreneurial aspects of the production process or plant. 11. A linear total cost function implies that: 12. A ____ total cost function implies that marginal costs ____ as output is increased. 13. A ____ total cost function implies that marginal costs ____ as output is increased. 14. A ____ total cost function yields a U-shaped average total cost function. 15. In the linear breakeven model, the difference between selling price per unit and variable cost per unit is referred to as: 16. Which of the following is not an assumption of the linear breakeven model: 17. In the linear breakeven model, the breakeven sales volume (in dollars) is equal to fixed costs divided by: 18. The degree of operating leverage is equal to the ____ change in ____ divided by the ____ change in ____. 19. The linear breakeven model excludes ____ from the analysis. 20. In the linear breakeven model, the relevant range of output is that range where the linearity assumptions of the model are assumed to hold. 21. In the linear breakeven model, the breakeven sales volume (in dollars) can be found by multiplying the breakeven sales volume (in units) by:

3. 22. In the linear breakeven model, a firm incurs operating losses whenever output is less than the breakeven level. PROBLEMS 1. For each of the following cost-output relationships, describe the shape (U-shape, decreasing, increasing, constant) of the average total cost and marginal cost functions (C = total cost, Q = output): 2. Offshore Petroleum's fixed costs are $2,500,000 and its debt repayment requirements are $1,000,000. Selling price per barrel of oil is $18 and variable costs per barrel are $10. Chapter 10—Prices, Output, and Strategy: Pure and Monopolistic Competition MULTIPLE CHOICE 1. The main difference between perfect competition and monopolistic competition is: 2. Long distance telephone service has become a competitive market. The average cost per call is $0.05 a minute, and it’s declining. The likely reason for the declining price for long distance service is: 3. What is the profit maximization point for a firm in a purely competitive environment? 4. All of the following are true for both competition and monopolistic competition in the long run, except one of them. Which is it? 5. Which of the following statements is (are) true concerning a pure competition situation? 6. In pure competition: 7. In the short-run for a purely competitive market, a manufacturer will stop production when:

4. 8. In the purely competitive case, marginal revenue (MR) is equal to: 9. In long-run equilibrium, all firms in a pure competition market situation operating under a condition of certainty will have identical costs even though they may use different production and operation techniques. 10. If price exceeds average costs under pure competition, ____ firms will enter the industry, supply will ____, and price will be driven ____. 11. A firm in pure competition would shut down when: 12. In the long-run, firms in a monopolistically competitive industry will 13. Uncertainty includes all of the following except ____. 14. Experience goods are products or services 15. Buyers anticipate that the temporary warehouse seller of unbranded computer equipment will 16. All of the following are mechanisms which reduce the adverse selection problem except ____. 17. Asset specificity is largest when 18. Under asymmetric information, 19. To escape adverse selection and elicit high quality experience goods buyers can 20. The problems of asymmetric information exchange arise ultimately because 21. The market for "lemons" is one in which 22. The fraudulent delivery of low quality experience goods at high prices is more likely if

5. 23. An "experience good" is one that: 24. A "search good" is: 25. The price for used cars is well below the price of new cars of the same general quality. This is an example of: PROBLEMS 1. Sunrise Juice Company sells its output in a perfectly competitive market. The firm's total cost function is given in the following schedule: 2. Superior Metals Company has seen its sales volume decline over the last few years as the result of rising foreign imports. In order to increase sales (and hopefully, profits), the firm is considering a price reduction on luranium--a metal that it produces and sells. The firm currently sells 60,000 pounds of luranium a year at an average price of $10 per pound. Fixed costs of producing luranium are $250,000. Current variable costs per pound are $5. The firm has determined that the variable cost per pound could be reduced by $.50 if production volume could be increased by 10 percent (fixed costs would remain constant). The firm's marketing department has estimated the arc elasticity of demand for luranium to be −1.5. Chapter 11—Price and Output Determination: Monopoly and Dominant Firms MULTIPLE CHOICE 1. Unique Creations has a monopoly position in magnometers. If the marginal cost for a magnometer is $50 and the price elasticity for magnometers is -4, what is the optimal monopoly price? 2. Land’s End estimates a demand curve for turtleneck sweaters to be: 3. Declining cost industries

6. 4. A monopolist seller of Irish ceramics faces the following demand function for its product: P = 62 - 3Q. The fixed cost is $10 and the variable cost per unit is $2. What is the maximizing QUANTITY for this monopoly 5. Globo Public Supply has $1,000,000 in assets. Its demand curve is: P = 206 - .20•Q and its total cost function is: TC = 20,000 + 6•Q where TC excludes the cost of capital. If Globo Public Supply is UNREGULATED, find Globo's optimal price. 6.A monopolist faces the following demand curve: P = 12 - .3Q with marginal costs of $3. What is the monopolistic PRICE? 7. In natural monopoly, AC continuously declines due to economies in distribution or in production, which tends to found in industries which face increasing returns to scale. If price were set equal to marginal cost, then: 8.The profit-maximizing monopolist, faced with a negative-sloping demand curve, will always produce: 9. In the case of pure monopoly: 10. A monopoly will always produce less than a purely competitive industry, ceteris paribus. 11. The demand curve facing the firm in ____ is the same as the industry demand curve. 12. When the cross elasticity of demand between one product and all other products is low, one is generally referring to a(n) ____ situation. 14. Of the following, which is not an economic rationale for public utility regulation? 15. The practice by telephone companies of charging lower long- distance rates at night than during the day is an example of:

7. 16. In the electric power industry, residential customers have relatively ____ demand for electricity compared with large industrial users. But contrary to price discrimination, large industrial users generally are charged ____ rates. 17. ____ as practiced by public utilities is designed to encourage greater usage and therefore spread the fixed costs of the utility's plant over a larger number of units of output. 18. Regulatory agencies engage in all of the following activities except _______. PROBLEMS 1. The Zinger Company manufactures and sells a line of sewing machines. Demand per period (Q) for a particular model is given by the following relationship: 2. Zar Island Gas Company is the sole producer of natural gas in the remote island country of Zar. The company's operations are regulated by the State Energy Commission. The demand function for gas in Zar has been estimated as: MULTIPLE CHOICE 1. "Conscious parallelism of action" among oligopolistic firms is an example of ____. 2. The kinked demand curve model was developed to help explain: 3. An oligopoly is characterized by: 4. Which of the following is an example of an oligopolistic market structure?

8. 5. In the Cournot duopoly model, each of the two firms, in determining its profit-maximizing price-output level, assumes that the other firm's ____ will not change. 6. If a cartel seeks to maximize profits, the market share (or quota) for each firm should be set at a level such that the ____ of all firms is identical. 7. In the absence of any legally binding enforcement mechanism, individual cartel producers may find it advantageous to cheat on the agreements and engage in secret price concessions. 8. A(n) ____ is characterized by a relatively small number of firms producing a product. 9. The distinctive characteristic of an oligopolistic market structure is that there are recognizable interdependencies among the decisions of the firms. 10. Factors that affect the ability of oligopolistic firms to successfully engage in cooperation include ____. 11. Effective oligopolistic collusion is more likely to occur when customer orders are small, frequent, and received on a regular basis as compared with large orders that are received infrequently at irregular intervals. 12. Effective collusion generally is more difficult as the number of oligopolistic firms involved increases. 13. The largest problem faced in cartel pricing agreements such as OPEC is: 14. Some market conditions make cartels MORE likely to succeed in collusion. Which of the following will make collusion more successful? 15. Even ideal cartels tend to be unstable because

9. 16. Suppose that in a perfectly competitive industry the equilibrium industry quantity is 10,000 units. Suppose that the monopoly output is 5,000. For a2-firm Cournot Oligopoly (N =2) known as a duopoly, what is a likely Cournot QUANTITY for the industry? 17. A cartel is a situation where firms in the industry 18. In a kinked demand market, whenever one firm decides to lower its price, 20. Barometric price leadership exists when 21. Some industries that have rigid prices. In those industries, we tend to PROBLEMS 1. Two companies (A and B) are duopolists that produce identical products. Demand for the products is given by the following demand function: 2. Two companies (A and B) are duopolists that produce identical products. Demand for the products is given by the following demand function: 3. The Winston Tobacco Company feels that it is faced with the following segmented demand function for its cigarettes: MULTIPLE CHOICE 1. In ____ 2-person, nonzero-sum games there is no communication between the participants and no way to enforce agreements. 2. A strategy game is 3. Essential components of a game include all of the following except:

10. 4. In a zero-sum game 5. When airlines post prices on an electronic bulletin board at 8:00 a.m. each morning, the decision-makers are engaged in 6. The starting point of many methods for predicting equilibrium strategy in sequential games is 7. Consider the game known as the Prisoner's Dilemma. What's the dilemma? 8. When there is an Equilibrium (or a Nash Equilibrium), we expect that: 9. The Prisoner’s Dilemma involves two spies who are held in separate soundproof rooms. But even if the two spies could communicate, what makes it difficult for them to achieve the cooperative solution (both not confessing)? 10. When there is no Equilibrium (or no Nash Equilibrium), we expect that: 11. In a game, a dominated strategy is one where: 12. If two firms operate in a market that is characterized as being a Prisoner’s Dilemma, and the two strategies given them are to restrict output or expand output, which of the following strategy pairs would represent the cooperative solution in a duopoly for firm 1 and firm 2, and firm 1 given first in each pair? 13. A key to analyzing subgame perfect equilibrium strategy in sequential games is 14. Credibility in threats and commitments in sequential games is based on

11. 15. In making promises that are not guaranteed by third parties and in imposing penalties that are not enforced by third parties, all of the following are credibility-enhancing mechanisms except 16. The difference between cooperative and non-cooperative games is 17. An illustration of a non-credible commitment is the promise 18. A dominant strategy differs from a Nash equilibrium strategy in that 19. In adopting mixed Nash equilibrium strategy, a player is attempting to 20. To trust a potential cooperator until the first defection and then never cooperate thereafter is 21. Non-cooperative sequential games can incorporate all the following features except 22. If one-time gains from defection are always less than the discounted present value of an infinite time stream of cooperative payoffs at some given discount rate, the decision-makers have escaped 23. The chain store paradox of an incumbent who accommodates a finite stream of potential entrants threatening to enter sequentially numerous markets illustrates 24. Cooperation in repeated prisoner's dilemma situations seems to be enhanced by all of the following except 25. Credible promises and hostage mechanisms can support a continuous stream of cooperative exchanges except when PROBLEMS Exhibit 13-1

12. Consider the information below when answering the following question(s): 1. In choosing whether to deliver to six or seven neighborhoods, Pizza Spinners has to take into account not only its own costs, but also the delivery area response of its competitor Harry's Pizzeria. If the payoffs per week from delivering in six and seven neighborhoods are as displayed in the exhibit above, what will Pizza Spinner's choose and why? 2. In choosing whether to deliver to six or seven neighborhoods, Harry's Pizzeria has to take into account not only its own costs but the delivery area response of its competitor Pizza Spinners. If the payoffs per week from delivering in six and seven neighborhoods are as displayed in Exhibit 13-1, what will Harry's Pizzeria choose and why? 3. If the city-pair route from Orlando to New Orleans is served by only two air carriers, Northwest and Delta, and if the payoffs from discounting or maintaining high prices are as below, what behavior would you predict for Delta in a one-play game and why? 4. Retailers A and B anticipate many repetitions of the following pricing game in which they must choose between discounting or maintaining higher prices. Under what circumstances will store A resist discounting and choose MAINTAIN? 5. Suppose a new low cost discount firm must decide in advance between introducing LARGE or SMALL capacity in a licensed cable TV market where the incumbent then will decide on a HIGH or MATCHING pricing response. If the following table describes the payoffs from various combinations of these strategies, what capacity will the new entrant choose and why? Appendix 13A—Entry Deterrence and Accommodation Games MULTIPLE CHOICE

13. 1. In deciding whether to invest in excess capacity in order to deter entry, incumbents should consider all of the following except 2. An inverse intensity customer sorting rule is one in which 3. An efficient customer sorting rule is one in which 4. All of the following are sunk cost investments that precommit an incumbent to aggressively defend market share and the cash flow prior to threatened entry except Chapter 14—Pricing Techniques and Analysis MULTIPLE CHOICE 1. The segmenting of customers into several small groups such as household, institutional, commercial, and industrial users, and establishing a different rate schedule for each group is known as: 2. Which of the statements about price discrimination is (are) false? 3. Which of the following pricing policies best identifies when a product should be expanded, maintained, or discontinued? 4. Second-degree price discrimination:

14. 5. In ____ price discrimination, the entire consumer surplus is captured by the producer. 6. In ____ price discrimination, the monopolist charges each consumer the highest price that purchaser is willing to pay for each unit purchased (provided that this price exceeds the marginal cost of production). 7. ____ is a new product pricing strategy which results in a high initial product price. This price is reduced over time as demand at the higher price is satisfied. 8. ____ is the price at which an intermediate good or service is transferred from the selling to the buying division within the same firm. 9. For a monopolist that engages in price discrimination, when the price elasticity in market 1 is less (in absolute value) than in market 2, the optimal price in market 1 will exceed the optimal price in market 2. 10. To maximize profits, a monopolist that engages in price discrimination must allocate output in such a way as to make identical the ____ in all markets.

15. 11. Barbers give a price discount to kids. According to price discrimination, if barbers use price discrimination, this implies demand for hair cuts by kids is more elastic. 12. Third-degree price discrimination exists whenever: 13. The following are possible examples of price discrimination, EXCEPT: 14. Firms that have a cover charge for their customers and charge for each item they purchase as well are exhibiting 15. A manufacturer produces two types of computer software, Word processing (W) and Spreadsheet (S), which is offered to two different retail outlets (#1 and #2). The following table shows the maximum price each retail outlet is willing to pay for each individual software product. 16. Vacation tours to Europe invariably package visits to disparate regions: cities, mountains, and the seaside. Bundling, a type of second degree price discrimination, is most profitable when: 17. The optimal mark-up is: m = -1/ (E+1). When the mark-up on cookware equals 50%, then demand elasticity (E) for cookware is: 18. [Advanced Material] Cross functional revenue management examines capacity, pricing, and customer account management in order to maximize revenue. Capacity Planning

16. Pricing Customer Account Management If the MegaPlex Movie Theater finds that too often they have to turn customers away from their theaters at peak movie times for blockbusters creating too much slippage, cross functional revenue management suggests: 19. [Advanced Material] Restaurants try to buy just enough fish to match the expected walk-ins and reservations. If they buy a lot more fish, in the language of revenue management: 20. [Advanced Material] If an airline company decides to buy smaller jets with fewer seats, then the problem of: a. 21. [Advanced Material] If airlines found that the number of no-shows starts to increase, then its policy for optimal overbooking would tend to: PROBLEM 1. Consolidated Salt Company sells table salt to both retail grocery chains and commercial users (e.g., bakeries, snack food makers, etc.). The demand function for each of these markets is:

17. MULTIPLE CHOICE 1. Non-redeployable durable assets that are dependent upon unique complementary and perfectly redeployable assets to achieve substantial value-added will typically be organized as 2. Vertical integration may be motivated by all of the following except: 3. Contracts are distinguished from tactical alliances by which of the following characteristics: 4. When manufacturers and distributors establish credible commitments to one another, they often employ 5. Which of the following is not among the functions of contract? 6. Buying electricity off the freewheeling grid at one quarter 'til the hour for delivery on the hour illustrates: 7. When someone contracts to do a task but fails to put full effort into the performance of an agreement, yet the lack of effort is not independently verifiable, this lack of effort constitutes a 8. When retail bicycle dealers advertise and perform warranty repairs but do not deliver the personal selling message that Schwinn has designed as part of the marketing plan but cannot observe at less than prohibitive cost, the manufacturer has encountered a problem of ____. 9. Which of the following are not approaches to resolving the principal- agent problem?

18. 10. To accomplish its purpose a linear profit-sharing contract must 11. Mac trucks and their dealers would likely have an organizational form of 12. Reliant assets are always all of the following except: 13. Governance mechanisms are designed 14. When borrowers who do not intend to repay are able to hide their bad credit histories, a lender's well-intentioned borrowers should 15. Each of the following is an example of moral hazard in which people modify their behavior in an opportunistic way, often frustrating the intent of governmental or management policies. Which is NOT an example of moral hazard? 16. Agency problems appear in many settings within a firm. All of the following are examples, except which is NOT a good example of this problem? PROBLEMS 1. Cooperative agreements between manufacturers and retailers concerning retail promotion and manufacturer advertising are often the key to the success of new products. Analyze the following sequential product promotion game, and then predict 1) whether the product will be updated by the manufacturer (Man), 2) whether the retail distributor (RET) will promote the product, and 3) whether the manufacturer will advertise the product. No explanation necessary.

19. 2. In the following sequential marketing game, is a threat by the manufacturer (Man) not to advertise a newly updated product unless the retailer (RET) promotes it a credible threat? Appendix 15A—Auction Design and Information Economics MULTIPLE CHOICE 1. Common value auctions with open bidding necessarily entail 2. An incentive-compatible mechanism for revealing true willingness to pay in a private value auction is 3. In comparing rules for serving a queue, last-come first-served has all of the following effects except 4. The principal advantage of an open bidding system for allocating telecommunications spectrum licenses was 5. A Dutch auction implies all of the following except 6. Each&nbs ************************************************ ECO 550 Midterm Part 1 and 2 (All Possible Questions) For more course tutorials visit www.tutorialrank.com

20. Chapter 1—Introduction and Goals of the Firm MULTIPLE CHOICE 1. The form of economics most relevant to managerial decision-making within the firm is: 2. If one defines incremental cost as the change in total cost resulting from a decision, and incremental revenue as the change in total revenue resulting from a decision, any business decision is profitable if: 3. 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. 4. Which of the following statements concerning the shareholder wealth maximization model is (are) true? 5. According to the profit-maximization goal, the firm should attempt to maximize short-run profits since there is too much uncertainty associated with long-run profits. 6. According to the innovation theory of profit, above-normal profits are necessary to compensate the owners of the firm for the risk they assume when making their investments. 7. According to the managerial efficiency theory of profit, above-normal profits can arise because of high-quality managerial skills.

21. 8. Which of the following (if any) is not a factor affecting the profit performance of firms: 9. Agency problems and costs are incurred whenever the owners of a firm delegate decision-making authority to management. 10. Economic profit is defined as the difference between revenue and ____. 11. Income tax payments are an example of ____. 12. Various executive compensation plans have been employed to motivate managers to make decisions that maximize shareholder wealth. These include: 13. The common factors that give rise to all principal-agent problems include the 14. The Saturn Corporation (once a division of GM) was permanently closed in 2009. What went wrong with Saturn? 15. A Real Option Value is: 16. Which of the following will increase (V0), the shareholder wealth maximization model of the firm: V0∙(shares outstanding) = S¥t=1(pt ) / (1+ke)t + Real Option Value.

22. 17. The primary objective of a for-profit firm is to ___________. 18. Possible goals of Not-For-Profit (NFP) enterprises include all of the following EXCEPT: 19. The flat-screen plasma TVs are selling extremely well. The originators of this technology are earning higher profits. What theory of profit best reflects the performance of the plasma screen makers? 20. To reduce Agency Problems, executive compensation should be designed to: 21. 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: Chapter 2 1. A change in the level of an economic activity is desirable and should be undertaken as long as the marginal benefits exceed the ____. 2. The level of an economic activity should be increased to the point where the ____ is zero. 3. The net present value of an investment represents 4. Generally, investors expect that projects with high expected net present values also will be projects with

23. 5. An closest example of a risk-free security is 6. The standard deviation is appropriate to compare the risk between two investments only if 7. The approximate probability of a value occurring that is greater than one standard deviation from the mean is approximately (assuming a normal distribution) 8. Based on risk-return tradeoffs observable in the financial marketplace, which of the following securities would you expect to offer higher expected returns than corporate bonds? 9. The primary difference(s) between the standard deviation and the coefficient of variation as measures of risk are: 10. The ____ is the ratio of ____ to the ____. 11. Sources of positive net present value projects include 12. Receiving $100 at the end of the next three years is worth more to me than receiving $260 right now, when my required interest rate is 10%. 13. The number of standard deviations z that a particular value of r is from the mean ȓ can be computed as z = (r - ȓ)/ s. Suppose that you work as a commission-only insurance agent earning $1,000 per week on average. Suppose that your standard deviation of weekly earnings is $500. What is the probability that you zero in a week? Use the following brief z-table to help with this problem.

24. T 14. Consider an investment with the following payoffs and probabilities: 15. Consider an investment with the following payoffs and probabilities: 16. An investment advisor plans a portfolio your 85 year old risk-averse grandmother. Her portfolio currently consists of 60% bonds and 40% blue chip stocks. This portfolio is estimated to have an expected return of 6% and with a standard deviation 12%. What is the probability that she makes less than 0% in a year? [A portion of Appendix B1 is given below, where z = (x - m)/s , with m as the mean and s as the standard deviation.] 17. Two investments have the following expected returns (net present values) and standard deviations: PROBLEMS 1. Suppose that the firm's cost function is given in the following schedule (where Q is the level of output): 2. Complete the following table. 3. A firm has decided to invest in a piece of land. Management has estimated that the land can be sold in 5 years for the following possible prices:

25. Chapter 3—Demand Analysis MULTIPLE CHOICE 1. Suppose we estimate that the demand elasticity for fine leather jackets is .7 at their current prices. Then we know that: 2. If demand were inelastic, then we should immediately: 3. In this problem, demonstrate your knowledge of percentage rates of change of an entire demand function (HINT: %DQ = EP•%DP + EY•%DY). You have found that the price elasticity of motor control devices at Allen-Bradley Corporation is -2, and that the income elasticity is a +1.5. You have been asked to predict sales of these devices for one year into the future. Economists from the Conference Board predict that income will be rising 3% over the next year, and AB’s management is planning to raise prices 2%. You expect that the number of AB motor control devices sold in one year will: 4 A linear demand for lake front cabins on a nearby lake is estimated to be: QD = 900,000 - 2P. What is the pointprice elasticity for lake front cabins at a price of P = $300,000? 5. Property taxes are the product of the tax rate (T) and the assessed value (V). The total property tax collected in your city (P) is: P = T•V. If the value of properties rise 4% and if Mayor and City Council reduces the property the tax rate by 2%, what happens to the total amount of property tax collected? [HINT: the percentage rate of change of a product is approximately the sum of the percentage rates of change.} 6. Demand is given by QD = 620 10•P and supply is given by QS = 100 + 3•P. What is the price and quantity when the market is in equilibrium?

26. 7. Which of the following would tend to make demand INELASTIC? 8. Which of the following best represents management's objective(s) in utilizing demand analysis? 9. Identify the reasons why the quantity demanded of a product increases as the price of that product decreases. 10. An increase in the quantity demanded could be caused by: 11. Iron ore is an example of a: 12. If the cross price elasticity measured between items A and B is positive, the two produc ************************************************ ECO 550 Midterm Part 1 For more course tutorials visit www.tutorialrank.com Question 1 Possible goals of Not-For-Profit (NFP) enterprises include all of the following EXCEPT: Question 2

27. 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. Question 3 Various executive compensation plans have been employed to motivate managers to make decisions that maximize shareholder wealth. These include: Question 4 The primary objective of a for-profit firm is to ___________. Question 5 To reduce Agency Problems, executive compensation should be designed to: Question 6 Which of the following will increase (V0), the shareholder wealth maximization model of the firm: V0∙(shares outstanding) = Σ∞t=1 (π t ) / (1+ke)t + Real Option Value. Question 7 A change in the level of an economic activity is desirable and should be undertaken as long as the

28. marginal benefits exceed the ____. Question 8 The standard deviation is appropriate to compare the risk between two investments only if Question 9 Based on risk-return tradeoffs observable in the financial marketplace, which of the following securities would you expect to offer higher expected returns than corporate bonds? Question 10 The ____ is the ratio of ____ to the ____. Question 11 The approximate probability of a value occurring that is greater than one standard deviation from the mean is approximately (assuming a normal distribution) Question 12 The primary difference(s) between the standard deviation and the coefficient of variation as measures of risk are:

29. Question 13 Suppose we estimate that the demand elasticity for fine leather jackets is .7 at their current prices. Then we know that: Question 14 Producers' goods are: Question 15 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. Question 16 Songwriters and composers press music companies to lower the price for music downloads because Question 17 A price elasticity (ED) of −1.50 indicates that for a ____ increase in price, quantity demanded will ____ by ____. Question 18 The factor(s) which cause(s) a movement along the demand curve include(s):

30. Which of the following would tend to make demand INELASTIC? Question 20 Even though insignificant explanatory variables can raise the adjusted R2 of a demand function, one should not interpret their effects on the regression when Question 21 In testing whether each individual independent variables (Xs) in a multiple regression equation is statistically significant in explaining the dependent variable (Y), one uses the: Question 22 The estimated slope coefficient (b) of the regression equation (Ln Y = a + b Ln X) measures the ____ change in Y for a one ____ change in X. Question 23 In which of the following econometric problems do we find Durbin- Watson statistic being far away from 2.0?

31. Question 24 When using a multiplicative power function (Y = a X1b1 X2b2 X3b3) to represent an economic relationship, estimates of the parameters (a, and the b's) using linear regression analysis can be obtained by first applying a ____ transformation to convert the function to a linear relationship. Question 25 One commonly used test in checking for the presence of autocorrelation when working with time series data is the ____. ************************************************ ECO 550 Midterm Part 2 For more course tutorials visit

32. www.tutorialrank.com Question 1 The forecasting technique which attempts to forecast short-run changes and makes use of economic indicators known as leading, coincident or lagging indicators is known as: Question 2 Consumer expenditure plans is an example of a forecasting method. Which of the general categories best described this example? Question 3 Which of the following barometric indicators would be the most helpful for forecasting future sales for an industry? Question 4 The use of quarterly data to develop the forecasting model Yt = a +bYt−1 is an example of which forecasting technique?

33. Question 5 If two alternative economic models are offered, other things equal, we would Question 6 Smoothing techniques are a form of ____ techniques which assume that there is an underlying pattern to be found in the historical values of a variable that is being forecast. Question 7 In Chinese coastal provinces, brick housing for a fast expanding middle class is very comparable in size to housing in the U.S. for a family with median income of $51,000 because Question 8 If Ben Bernanke, Chair of the Federal Reserve Board, begins to tighten monetary policy by raising US interest rates next year, what is the likely impact on the value of the dollar? Question 9 Companies that reduce their margins on export products in the face of appreciation of their home

34. currency may be motivated by a desire to Question 10 Trading partners should specialize in producing goods in accordance with comparative advantage, then trade and diversify in consumption because Question 11 If the British pound (₤) appreciates by 10% against the dollar: Question 12 An appreciation of the U.S. dollar has what impact on Harley-Davidson (HD), a U.S. manufacturer of motorcycles? Question 13 The optimal currency area involves a trade-off of reducing transaction costs but the inability to use changes in exchange rates to help ailing regions. If the US, Canada, and Mexico had one single currency (the Peso-Dollar) we would tend to see all of the following EXCEPT:

35. Question 14 The isoquants for inputs that are perfect substitutes for one another consist of a series of: Question 15 ************************************************ ECO 550 Week 1 DQ 1 Fundamental Economic Concepts For more course tutorials visit www.tutorialrank.com "Fundamental Economic Concepts" Please respond to the following: Answer the following DQs based on the Katrina’s Candies scenario: From the scenario for Katrina’s Candies, examine the key factors affecting the demand for and the supply of a good in general and Katrina’s Candies specifically. Distinguish between a change in demand and a change in the quantity demanded (movement along the demand curve). From the above, indicate the factors that are responsible for a shift in demand; and explain how the change is effected by these factors.

36. Indicate the factors that are responsible for a shift in supply; and explain how the change is affected by these factors. ************************************************ ECO 550 Week 1 DQ 2 Supply and Demand For more course tutorials visit www.tutorialrank.com From the e-Activity, examine the key factors that influence the supply and demand of the selected good in general and Katrina’s Candies specifically. Propose two (2) methods in which organizations that provide the good may utilize this information. Provide a rationale for your response. ************************************************ ECO 550 Week 1-11All DQs For more course tutorials visit

37. www.tutorialrank.com ECO 550 Week 1 DQ 1 Fundamental Economic Concepts ECO 550 Week 1 DQ 2 Supply and Demand ECO 550 Week 2 DQ 1 Estimating Demand ECO 550 Week 2 DQ 2 Estimating Elasticity of Demand ECO 550 Week 3 DQ 1 Managing in the Global Economy ECO 550 Week 3 DQ 2 Outsourcing Offshore ECO 550 Week 4 DQ 1 Production Economics ECO 550 Week 4 DQ 2 Production Decisions ECO 550 Week 5 DQ 1 Applications of Cost Theory ECO 550 Week 5 DQ 2 Cost Management ECO 550 Week 6 DQ 1 Market Structures ECO 550 Week 6 DQ 2 Maximizing Revenue ECO 550 Week 7 DQ 1 Predicting Price-Setting Strategies ECO 550 Week 7 DQ 2 Price-Setting Strategies ECO 550 Week 8 DQ 1 Entering a Merger ECO 550 Week 8 DQ 2 Organizational Form ECO 550 Week 9 DQ 1 Impact of Government Regulation ECO 550 Week 9 DQ 2 Government Regulation

38. ECO 550 Week 10 DQ 1 Long-Term Investment ECO 550 Week 10 DQ 2 Cost-Benefit Analysis ECO 550 Week 11 DQ 1 Transfer It ECO 550 Week 11 DQ 2 Best Practices ************************************************ ECO 550 Week 2 DQ 1 Estimating Demand For more course tutorials visit www.tutorialrank.com Estimating Demand" Please respond to the following: From the scenario for Katrina’s Candies, examine the procedure Herb will use to estimate the demand model developed in the scenario for Week 1. Determine the meaning, relevance, and importance for a manager interpreting the regression results. ************************************************

39. ECO 550 Week 2 DQ 2 Estimating Elasticity of Demand For more course tutorials visit www.tutorialrank.com From the e-Activity, analyze the elasticity of demand for products within the selected industry relevant to Katrina’s Candies. Determine the factors involved in making decisions about pricing these products that you believe to be the most influential. Provide a rationale for your response. ************************************************ ECO 550 Week 3Assignment 1 Demand Estimation (2 Sets) For more course tutorials visit www.tutorialrank.com

40. Option 1: Demand equation: QD = - 5200 - 42P + 20PX + 5.2I + .20A + .25M (2.002) (17.5) (6.2) (2.5) (0.09) (0.21) R2 = 0.55 n = 26 F = 4.88 Independent variables: Q = Quantity demanded of 3-pack units P (in cents) = Price of the product = 500 cents per 3-pack unit PX (in cents) = Price of leading competitor’s product = 600 cents per 3- pack unit I (in dollars) = Per capita income of the standard metropolitan statistical area (SMSA) in which the supermarkets are located = $5,500 A (in dollars) = Monthly advertising expenditures = $10,000 M = Number of microwave ovens sold in the SMSA in which the supermarkets are located = 5,000 1. Compute the elasticities for each independent variable

41. 2. Determine the implications for each of the computed elasticities for the business in terms of short-term and long-term pricing strategies. Provide a rationale in which you cite your results. 3. Recommend whether you believe that this firm should or should not cut its price to increase its market share. Provide support for your recommendation. 4. Assume that all the factors affecting demand in this model remain the same, but that the price has changed. Further assume that the price changes are 100, 200, 300, 400, 500, 600 cents. a. Plot the demand curve for the firm. b. Plot the corresponding supply curve on the same graph using the following MC / supply function Q = -7909.89 + 79.1P with the same prices. c. Determine the equilibrium price and quantity. d. Outline the significant factors that could cause changes in supply and demand for the low-calorie, frozen microwavable food. Determine the primary manner in which both the short-term and the long-term changes in market conditions could impact the demand for, and the supply, of the product.

42. 5. Indicate the crucial factors that could cause rightward shifts and leftward shifts of the demand and supply curves for the low-calorie, frozen microwavable food. Related Products ************************************************ ECO 550 Week 3 DQ 1 Managing in the Global Economy For more course tutorials visit www.tutorialrank.com Managing in the Global Economy" Please respond to the following: · scenario: *Answer the following DQs based on the Katrina’s Candies o From the scenario for Katrina’s Candies, assuming the absence of quantitative data, determine the qualitative forecasting techniques that could be used within this scenario.  Now, assume you have acquired some time series data that would enable you to make short, medium, and long term forecasts. Ascertain the quantitative technique that will provide you with the most accurate forecast. Provide a rationale for your responses

43.  ************************************************  ECO 550 Week 3 DQ 2 Outsourcing Offshore For more course tutorials visit www.tutorialrank.com "Outsourcing Offshore" Please respond to the following: · Answer the following DQs on the decision to outsource offshore: o Aside from maximizing profits, list the key factors that managers should consider when deciding whether or not to outsource offshore. Determine the key factors that you believe to be the most influential. Provide a rationale for your response. o Examine the manner in which the firm’s decision to outsource offshore is impacted by foreign exchange. Determine whether or not it matters where the company outsources offshore. Provide a rationale for your response. ************************************************

44. ECO 550 Week 4 DQ 1 Production Economics For more course tutorials visit www.tutorialrank.com ECO 550 Week 4 DQ 1 "Production Economics" Please respond to the following: · costs for the expansion decision, and distinguish between the short run and the long run costs. Recommend the key decision-making criteria that Katrina’s Candies should use for expansion decisions in the short run and in the long run. Provide rationale for your response. * From the scenario for Katrina’s Candies, determine the relevant ************************************************ ECO 550 Week 4 DQ 2 Production Decisions For more course tutorials visit www.tutorialrank.com

45. ECO 550 Week 4 DQ 2 "Production Decisions" Please respond to the following: · should or should not continue to produce the good or service. Provide a rationale for your response. From the e-Activity, recommend whether the company in question ************************************************ ECO 550 Week 5 DQ 1 Applications of Cost Theory For more course tutorials visit www.tutorialrank.com ECO 550 Week 5 DQ 1 "Applications of Cost Theory" Please respond to the following: · scenario: * Answer the following DQs based on the Katrina’s Candies o From the scenario for Katrina’s Candies, determine the appropriate type of market structure for the situation in question. Cite at least four (4) defining characteristics that have helped you reach this decision regarding the appropriateness of the chosen structure.

46. o Recommend two (2) kinds of pricing and output strategies that Katrina’s Candies should use to reach the goal of profit maximization. Suggest key modifications that Katrina’s Candies should make in order to maintain a competitive advantage when new entrants enter the market. Provide a rationale for your suggestions. ************************************************ ECO 550 Week 5 DQ 2 Cost Management For more course tutorials visit www.tutorialrank.com ECO 550 Week 5 DQ 2 "Cost Management" Please respond to the following: · accident has occurred in which chemicals leaked into the ground water nearby. Imagine that you are a manager of a chemical company. An The community is unaware of the accident. Compare the primary costs involved in cleaning up the water immediately (and thus confessing) versus

47. hiding your culpability now and possibly paying more in the future. Predict the impact on profitability in both situations. Justify your response. ************************************************ ECO 550 Week 6Assignment 2 Operations Decisions (2 Papers) For more course tutorials visit www.tutorialrank.com Using the regression results and the other computations from Assignment 1, determine the market structure in which the low-calorie food company operates. Use the Internet to research two (2) of the leading competitors in the low-calorie microwavable food industry, and take note of their pricing strategies, profitability, and their relationships within the industry (worldwide). Write a six to eight (6-8) page paper in which you: 1.Outline a plan that will assess the effectiveness of the market structure for the company’s operations. 2.Suppose the business operations have now changed from the market structure specified in the scenario. Determine two (2) likely factors that might have caused the change. Predict the primary manner in which this

48. change would likely impact business operations in the new market environment. 3.Analyze the major short-run and long-run production and cost functions for the low-calorie microwaveable food company. Suggest substantive ways in which the low-calorie food company may use this information in order to make decisions in both the short-run and the long-run. 4.Determine the possible circumstances under which the company should discontinue operations. Suggest key actions that management should take in order to confront these circumstances. Provide a rationale for your response. 5.Suggest one (1) pricing policy that will enable your low-calorie microwavable food company to maximize profits. Provide a rationale for your suggestion. 6.Outline a plan, based on the information provided in the scenario, that the company could use in order to evaluate its financial performance. Consider all the key drivers of performance, such as company profit or loss for both the short term and long term, and the fundamental manner in which each factor influences managerial decisions. 7.Recommend two (2) actions that the company could take in order to improve its profitability and deliver more value to its stakeholders. Outline, in brief, a plan to implement your recommendations. 8.Use at least five (5) quality academic resources in this assignment. Note: Wikipedia does not qualify as an academic resource. Your assignment must follow these formatting requirements: •Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA

49. or school-specific format. Check with your professor for any additional instructions. •Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length. The specific course learning outcomes associated with this assignment are: •Analyze short-run and long-run production and cost functions. •Apply macroeconomic concepts to changes in global and national economies and how they affect economic growth, inflation, interest rates, and wage rates. •Evaluate the profit-maximizing price and output level for given operating costs for monopolies and firms in competitive industries. •Use technology and information resources to research issues in managerial economics and globalization. •Write clearly and concisely about managerial economics and globalization using proper writing mechanics. Click here to view the grading rubric. ************************************************ ECO 550 Week 6 DQ 1 Market Structures

50. For more course tutorials visit www.tutorialrank.com ECO 550 Week 6 Discussion 1 "Market Structures" Please respond to the following: · the monopolistically competitive market structure and faces the following weekly demand and short-run cost functions: * From the scenario, assuming Katrina’s Candies is operating in VC = 20Q+0.006665 Q2 with MC=20 + 0.01333Q and FC = $5,000 P = 50-0.01Q and MR = 50-0.02Q *Where price is in $ and Q is in kilograms. All answers should be rounded to the nearest whole number. ************************************************ ECO 550 Week 6 DQ 2 Maximizing Revenue For more course tutorials visit www.tutorialrank.com