Demand for a company product

Demand for a company product

1. Demand for a company product is,Q=400 – 0.5P and TC =2-,000 +50Q + 3Q^2Total profit is maximized at output of; (Points : 1)a) 750b) 625c) 850d) 75E) none of the aboveQuestion 2. 2. What is the profit maximizing price? (Points : 1)a) 810b) 750c) 650d) 600e) none of the aboveQuestion 3. 3. What will profits be at the profit max output and price; (Points : 1)a) 8000b) 8100c) 9050d) 8125e) none of the aboveQuestion 4. 4. A company sells a product to retail and commercial customers. The inverse demand functions for these markets are;Retail: P1 = 180 – 8Q1 P2 = 100 – 4Q2Total cost for the company is: TC=5- + 20 (q1 + Q2)Assuming the company can charge different prices in each market, the company`s total profit will be; (Points : 1)a) 11,500b) 5,600c) 1,225d) 1,150e) none of the aboveQuestion 5. 5. A company is considering the purchase of a new machine which will cost $100,000. Net cash flow before depreciation and taxes are $25,000 per year for five years. The machine would be depreciated (straight-line method) over five years with no salvage value.What is the annual net cash flow after depreciation and taxes? (Points : 1)a) 25,000b) 21,000c) 28,000d) 23,000e) none of the aboveQuestion 6. 6. What is the internal rate of return (Points : 1)a) 8. 25%b) 4. 85%c) 3. 80%d) 6. 20%e) none of the aboveQuestion 7. 7. In the short-run for a purely competitive market, a manufacturer will stop producing when: (Points : 1)a) the total revenue is less than total costb) the contribution to fixed cost is zero or lessc) the price is greater than AVCd) operating at a losse) a and bQuestion 8. 8. If a price ceiling is set below the market clearing price, (Points : 1)a) supply will exceed demandb) rationing is likelyc) consumers will face a situation of surplusesd) supply will exactly equal demand at that priceQuestion 9. 9. Under asymmetric information, (Points : 1)a) you never get what you paid forb) you sometimes get cheatedc) you never get cheatedd) at best you get what you pay fore) sellers make profits in excess of competitive returnsQuestion 10. 10. All of the following are mechanisms which reduce the adverse selection problem except_________________ (Points : 1)a) warranties from established enterprises with non-redeploy able assetsb) high interest ratec) large collateral requirementsd) brand names and products-specific promotions and retail displayse) higher prices in repeat customers transactionsQuestion 11. 11. In the case of pure monopoly: (Points : 1)a) one firm is the sole producer of a good or service which has no close substitutesb) the firm `s profit is maximized at the price and output combination where marginal cost equals marginal revenuec) the demand curve is always elasticd) a and b onlye) a, b, and cQuestion 12. 12. A monopoly will always produce less than a purely competitive industry, ceteris paribus. (Points : 1)TrueFalseQuestion 13. 13. The practice by telephone companies of charging lower long -distance rates at night than during the day is an example of: (Points : 1)a) inverted block pricingb) second-degree pricing discriminationc) peak-load pricingd) first-degree price discriminatione) none of the aboveQuestion 14. 14. An oligopoly is characterized by: (Points : 1)a) a relative small number of firmsb) either differentiated or undifferentiated productsc) actions of any individual firm will affect sales of other firms in the industryd) a and be) a, b, and cQuestion 15. 15. Advertising intensity will be larger for_______________. (Points : 1)a) Perfectly Competative COS.b) COS. with large gross marginsc) Advertising elasticity is larged) Oligopoliese) b and cQuestion 16. 16. Transfer pricing: (Points : 1)a) is typical of a centralized firmb) assumes no external sources availablec) should maximize a division`s profits, rather than the firm`sd) can exist with or without an external competitive markete) none of the aboveQuestion 17. 17. Which of the statements about price discrimination is (are) false? (Points : 1)a) It must be possible to segment the marketb) It must be difficult to transfer the seller`s product from one market segment to anotherc) public utilities practice first-degree price discriminationd) there must be differences in the elasticity of demand from one segment to anothere) c and dQuestion 18. 18. Joint product are: (Points : 1)a) products which are technically independent in the production processb) exemplified by beef and hide from cattlec) products whose production process are interdependentd) a and be) b and cQuestion 19. 19. _________________ is a new product pricing strategy which results in a high initial product price. This is reduced over time as demand at the higher price is satisfied. (Points : 1)a) Prestige pricingb) Price liningc) Skimmingd) Incremental pricinge) none of the aboveQuestion 20. 20. 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. (Points : 1)TrueFalseQuestion 21. 21. In pure competition: (Points : 1)a) The optimal price-output solution occurs at the point where marginal revenue is equal to priceb) a firm`s demand curve is represented by a horizontal linec) a firm is a price-taker since the products of every producer are perfect substitutes for the products of every other producerd) a and b onlye) a, b, and cQuestion 22. 22. Experience goods are products or services (Points : 1)a) that the customer already knowsb) whose performance is highly unusualc) whose quality is undetectable when purchasedd) not likely to cause repeat purchasese) all of the aboveQuestion 23. 23. The market for “lemons” is one in which (Points : 1)a) the rational buyer discountsb) the seller`s products claim are unverifiable at the point of purchasec) “the bad apples drive out the good”d) the problem of adverse selection is rampante) all of the aboveQuestion 24. 24. One justification for allowing regulated firms to engage in price discrimination is that costs for most users are lower than they would be in the absence of price discrimination. (Points : 1)TrueFalseQuestion 25. 25. The kinked demand curve was developed to explain: (Points : 1)a) fluctuations of prices in pure competitionb) rigidities observed in prices in oligopolistic industriesc) fluctuations observed in prices in oligopolistic industriesd) all of the abovee) none of the aboveQuestion 26. 26. 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. (Points : 1)a) average total costb) average profitc) marginal profitd) marginal coste) marginal revenueQuestion 27. 27. Effective collusion generally is more difficult as the number of oligopolistic firms involved increases (Points : 1)TrueFalseQuestion 28. 28. Given TC = 10 + 5QED = -3 the optimal price is :(Points : 1)a) 2 MCb) $ 10c) 50 centsd) a and be) none of the aboveQuestion 29. 29. The Domino principle (Points : 1)a) is a smoothing techniqueb) is an econometric techniquec) refers to cross-sectional datad) is a barometric technique (lagging indicator)e) none of the aboveQuestion 30. 30. Retailers (Points : 1)a) do not need forecastsb) could get their forecast from industrial forecastsc) any forecasting technique would applyd) none of the aboveQuestion 31. 31. A forecast can be reliable but not valid (Points : 1)TrueFalseQuestion 32. 32. Accuracy of forecasts (Points : 1)a) cannot be determinedb) is inversely related to average error or root mean square errorc) depends on seasonalityd) none of the aboveQuestion 33. 33. Econometric techniques of forecasting (Points : 1)a) use time as the predictor variableb) are inferior to time series techniquesc) do not allow you to add predictor variable once you create the modeld) are limited to using a system of equationse) none of the aboveQuestion 34. 34. In time series models (Points : 1)a) you must be careful in choosing predictor variablesb) data must be randomc) in a good model autocorrelations will be large and positived) there is no way to determine if the data is randome) none of the aboveQuestion 35. 35. If variability of data in a time series increases overtime (Points : 1)a) you should use an additive modelb) you should use a multiplicative modelc) you cannot use the datad) none of the aboveQuestion 36. 36. The CAPM is used to: (Points : 1)a) Determine the Cost of bondsb) Determine the IRRc) Price of Common Stockd) Compare risk and returne) c and d

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