Answers to Week you MC Problems

Chapter 1: Managers, Revenue, and Markets

Chapter several: Marginal research for Optimal Decisions

the right answers are noticeable red.

1В Economic theory is known as a valuable tool for business making decisions because it В

a. В identifies for managers the essential info for making a decision. b. В assumes away the condition.

c. В creates a realistic, sophisticated model of the business firm. g. В provides an easy solution to complex business complications. В В

2В Economic income is

a. the difference between total revenue as well as the opportunity cost of all of the resources used in production. b. the difference between total revenue and the implicit costs of applying owner-supplied assets. c. the difference between accounting profit plus the opportunity cost of the market-supplied resources used by the organization. d. the difference between accounting profit and explicit costs. В

3В Consider a firm that employs a lot of resources which have been owned by the firm. В When accounting profit is zero, economic income В

a. must also the same zero.

b. is sure to be positive.

c. should be negative and shareholder prosperity is decreased.

d. may not be computed accurately, but the firm is disregarding even nonetheless. В

4В Suppose Marv, the owner-manager of Marv's Warm Dogs, gained $72, 1000 in revenue last year. В Marv's explicit costs of procedure totaled $36, 000. В Marv has a Bachelor of Science degree in mechanical anatomist and could always be earning $30, 000 every year as mechanised engineer. В

a. В Marv's implicit cost of using owner-supplied resources can be $36, 1000. b. В Marv's economic earnings is $36, 000.

c. В Marv'" t implicit expense of using owner-supplied resources is usually $30, 500. d. В Marv's economic revenue is $6, 000.

electronic. В both c and d.

5В Owners of the firm wish the managers to make organization decisions that will В

a. В maximize the importance of the organization.

b. В В maximize expected profit in each amount of operation. c. В maximize the industry share of the firm.

g. В both a and b are appropriate when revenue and cost conditions in one time period are independent of revenues and costs in future time periods. elizabeth. В choices a and w are generally not equivalent, so managers must always keep pace with maximize business.

6В When a firm is a price-taking firm,

a. В the cost of the item it sells is determined by the intersection with the market require and supply figure for the product. b. В raising the price of the merchandise above the market-determined price will cause sales to fall practically to actually zero. c. В many other companies produce a merchandise that is similar to the end result produced by all of those other firms in the industry. d. В all of the previously mentioned

7В Economic income is the best way of measuring a business performance mainly because В

a. В normal earnings is generally also difficult to evaluate.

b. В economic profit completely accounts for most sources of income. c. В only explicit costs influence managerial decisions as, in general, only explicit costs can be deducted from earnings for the purposes of computing taxable profit. m. В the opportunity cost of applying ALL solutions is subtracted from total revenue. В

8В Which with the following is definitely an example of an implicit expense for a company? В

a. В the worth of time proved helpful by the owner.

b. В any wages and salaries paid out to used.

c. В forgone rent on property held by company.

d. В both a and c

electronic. В all in the above

9В St. Charles Clinic, located in an upper-income community of a large metropolis, recently received a refurbished mansion being a gift coming from an grateful patient. В The board of directors decided to remodel the mansion and use it as recuperative quarters for patients offering a premium pertaining to luxurious places to stay. В The expense to the clinic of making use of the mansion contains В

a. В nothing as it was a present.

b. В how much the hospital pays for upkeep--taxes, insurance, ammenities, maintenance, etc . c. В how much a healthcare facility would receive if it rented or marketed the estate. d. В both b and c

10В Until...