100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
Test Bank For Managerial Economics Applications Strategies and Tactics 13th Edition by James R. McGuigan - Test Bank £22.99   Add to cart

Exam (elaborations)

Test Bank For Managerial Economics Applications Strategies and Tactics 13th Edition by James R. McGuigan - Test Bank

 2 views  0 purchase

Test Bank For Managerial Economics Applications Strategies and Tactics 13th Edition by James R. McGuigan Complete Test Bank

Preview 4 out of 134  pages

  • October 7, 2023
  • 134
  • 2023/2024
  • Exam (elaborations)
  • Questions & answers
  • 13th edition
All documents for this subject (1019)
avatar-seller
ExamsExpert
, Test Bank Chapter 1

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:
a. macroeconomics
b. welfare economics
c. free-enterprise economics
d. microeconomics
e. none of the above

ANS: D PTS: 1

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:
a. it increases revenue more than costs or reduces costs more than revenue
b. it decreases some costs more than it increases others (assuming revenues remain constant)
c. it increases some revenues more than it decreases others (assuming costs remain constant)
d. all of the above
e. b and c only

ANS: D PTS: 1

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.
a. profits (cash flows)
b. revenues
c. outlays
d. costs
e. investments

ANS: A PTS: 1

4. Which of the following statements concerning the shareholder wealth maximization model is (are)
true?
a. The timing of future profits is explicitly considered.
b. The model provides a conceptual basis for evaluating differential levels of risk.
c. The model is only valid for dividend-paying firms.
d. a and b
e. a, b, and c

ANS: D PTS: 1

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.
1 © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated,

or posted to a publicly accessible website, in whole or in part.

, Test Bank Chapter 1

a. true
b. false

ANS: B PTS: 1




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.
a. true
b. false

ANS: B PTS: 1

7. According to the managerial efficiency theory of profit, above-normal profits can arise because of
high-quality managerial skills.
a. true
b. false

ANS: A PTS: 1

8. Which of the following (if any) is not a factor affecting the profit performance of firms:
a. differential risk
b. innovation
c. managerial skills
d. existence of monopoly power
e. all of the above are factors

ANS: E PTS: 1

9. Agency problems and costs are incurred whenever the owners of a firm delegate decision-making
authority to management.
a. true
b. false

ANS: A PTS: 1

10. Economic profit is defined as the difference between revenue and ____.
a. explicit cost
b. total economic cost
c. implicit cost
d. shareholder wealth
e. none of the above

ANS: B PTS: 1

11. Income tax payments are an example of ____.
2 © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated,

or posted to a publicly accessible website, in whole or in part.

, Test Bank Chapter 1

a. implicit costs
b. explicit costs
c. normal return on investment
d. shareholder wealth
e. none of the above

ANS: B PTS: 1




12. Various executive compensation plans have been employed to motivate managers to make decisions
that maximize shareholder wealth. These include:
a. cash bonuses based on length of service with the firm
b. bonuses for resisting hostile takeovers
c. requiring officers to own stock in the company
d. large corporate staffs
e. a, b, and c only

ANS: C PTS: 1

13. The common factors that give rise to all principal-agent problems include the
a. unobservability of some manager-agent action
b. presence of random disturbances in team production
c. the greater number of agents relative to the number of principals
d. a and b only
e. none of the above

ANS: D PTS: 1

14. The Saturn Corporation (once a division of GM) was permanently closed in 2009. What went wrong
with Saturn?
a. Saturn’s cars sold at prices higher than rivals Honda or Toyota, so they could not sell many cars.
b. Saturn sold cars below the prices of Honda or Toyota, earning a low 3% rate of return.
c. Saturn found that young buyers of Saturn automobiles were very loyal to Saturn and GM.
d. Saturn implemented a change management view that helped make first time Saturn purchasers
trade up to Buick or Cadillac.
e. all of the above

ANS: B PTS: 1

15. A Real Option Value is:
a. An option that been deflated by the cost of living index makes it a “real” option.
b. An opportunity cost of capital.
3 © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated,

or posted to a publicly accessible website, in whole or in part.

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through credit card for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller ExamsExpert. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for £22.99. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

67474 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy revision notes and other study material for 14 years now

Start selling
£22.99
  • (0)
  Add to cart