Bmm7203

Multiple Choice Questions 1. The key element that protects an auditor against common law liability is: A. Adherence to generally accepted accounting principles (GAAP) B. Adherence to generally accepted auditing standards (GAAS) ETHICAL OBLIGATIONS AND DECISION MAKING IN ACCOUNTING TEXT AND CASES 4TH EDITION BY STEVE M MINTZ CHAIR TEST BANK C. Compliance with threats and safeguards approach D. Maintain confidentiality of client information 2. Which of the following is NOT one of the fo...

MULTIPLE CHOICE 1. A football team has the chance of scoring the game-winning touchdown on the last play of the game. It can either run or pass. The defense can play for the run or play for the pass. The following normal form lists the payoffs from the game made up by this last play. The payoffs are probabilities of winning the game. Offense Defense Defend Pass Defend Run Pass 0, 1 1, 0 Run 1, 0 0, 1 What is the defense’s dominant strategy? a. Defend the run. b. Defend the pass....

MULTIPLE CHOICE 1. The principal is distinct from the agent in the principal-agent model because a. the principal offers the contract to the agent. b. the principal is fully informed. c. both a and b. d. neither a nor b. ANS: a 2. Which of the following is an application of the adverse selection problem? a. a customer driving more recklessly after buying car insurance. b. a teenager “hanging out” with friends his or her parents do not approve of. c. shareholders offering a high-pow...

MULTIPLE CHOICE 1. In general, microeconomic theory assumes that firms attempt to maximize the difference between a. total revenue and accounting costs. b. price and marginal cost. c. total revenues and economic costs. d. economic costs and average cost. ANS: c 2. A firm’s total revenue is equal to a. total quantity produced times marginal cost. b. total quantity produced times market price. c. marginal revenue times total quantity produced. d. market price divided by total quantit...

MULTIPLE CHOICE 1. Which of the following functional forms for utility suggests the greatest substitution effect when starting at the point where PX = PY a. U = min (X, Y) b. U = X + Y c. U = X1/2Y 1/2 d. U = X1/4Y 3/4 ANS: b 2. With only two goods, if the income effect is in the same direction as the substitution effect then the good is a. normal b. inferior but not Giffen c. Giffen d. There is not enough information to answer. ANS: a 3. With only two goods, if the income effec...

MULTIPLE CHOICE 1. Suppose the market for oranges is perfectly competitive and unregulated. Suppose also that the chemicals used to keep the oranges insect-free damage the environment by an estimated $1 per bushel of oranges. Suppose QD = 1000 - 100P and QS = -100 + 100P. The market equilibrium quantity is a. 400 b. 450 c. 500 d. 550 ANS: b 2. Suppose the market for oranges is perfectly competitive and unregulated. Suppose also that the chemicals used to keep the oranges insect-free d...

MULTIPLE CHOICE 1. Probability is sometimes defined as a. the expected profit of a fair bet. b. the most likely outcome of a given experiment. c. the outcome that will occur on average for a given experiment. d. the relative frequency with which an event will occur. ANS: d 2. Expected value is defined as a. the profit on a fair bet. b. the most likely outcome of a given experiment. c. the outcome that will occur on average for a given experiment. d. the relative frequency with which a...

MULTIPLE CHOICE 1. A firm’s demand for labor is known as a “derived demand” because a. the firm gains utility from hiring more labor. b. the amount of labor hired depends upon how much output the firm can sell. c. the wage rate paid to workers is derived from the market for labor. d. it is derived from the demand for capital. ANS: b 2. If the price of an input falls, a firm would increase the use of that input for two reasons: a. The input is now more productive, and the firm can s...

MULTIPLE CHOICE 1. Consider a two-good production economy in which both goods are produced with fixed proportions production functions. Then, some efficient allocations will exhibit unemployment of some factor providing a. the firms use the inputs in different proportions. b. the firms exhibit diminishing returns to scale. c. the firms exhibit increasing returns to scale. d. production can never be efficient if there are unemployed inputs. ANS: a 2. Suppose two goods (X and Y ) are bein...

MULTIPLE CHOICE 1. In the very short run a. new firms may enter the industry. b. existing firms may change the quantity they are supplying. c. price and quantity supplied is absolutely fixed. d. quantity supplied is absolutely fixed. ANS: d 2. In the short run a. new firms may enter an industry. b. existing firms may change the quantity they are supplying. c. price and quantity supplied are absolutely fixed. d. quantity supplied is absolutely fixed. ANS: b 3. The short-run market su...