MNGT 611 EXAM 1| VERIFIED SOLUTION

MNGT 611 EXAM 1QUE STION 1 1. In equilibrium, high risk stocks would typically be accompanied by a low returns . b no returns . c high returns . d no sales-no one would buy risky . stocks QUE STION 2 1. While you were an intern you bought 5 packages of hot dogs a month. After acquiring a full-time job with a considerably higher salary, you stopped purchasing hot dogs. For you, hot dogs are a a Inferior good . b Substitute good . c Normal good . d Complementary good . QUE STION 3 1. Use the following setup for questions 44-45 A cloth manufacturing firm is deciding whether or not to invest in new machinery. The machinery costs $45,000 and is expected to increase cash flows in the first year by $25,000 and in the second year by $30,000. The firm’s current fixed costs are $9,000 and current marginal cost are $15. The firm currently charges $18 per unit. What’s the firm’s current contribution margin? a $18 . b $3 . c $15 . d $4 . QUE STION 4 1. If you are willing to purchase a house for $300,000 and you purchase the house for $275,000, this transaction will generate: a $25,000 worth of seller surplus and unknown amount of buyer surplus . b There is no surplus created . c $10,000 worth of buyer surplus and $15,000 of seller surplus . d $25,000 worth of buyer surplus and unknown amount of seller surplus . QUE STION 5 1. With fixed costs of $200, a firm has average total costs of $5 and average variable costs of $3. Its output is: a 66.67 units. . b Need more . information c 40 units. . d 100 units. . QUE STION 6 1. If cars are normal goods, a fall in income will a Increase the demand for cars . b Decrease the demand for cars . c Have no effect on the demand for cars . d None of the above . QUE STION 7 1. Jane makes 1000 items a day. Each day she spends 8 hours producing those items. If hired elsewhere she could have earned $250 an hour. The item sells for $15 each. Production occurs seven days a week. If the explicit costs total $150,000 per month, what is her accounting profit? a $300,000 . b $240,000 . c $60,000 . d $450,000 . QUE STION 8 1. Grooming well for a big date is a a Screening mechanism . b Signaling mechanism . c Way to waste money .