Economics Midterm Essay Example

Question 1 5 out of 5 points Economic profit is defined as the difference between revenue and ________________. Selected Answer: total economic cost
Correct Answer: total economic cost Question 2 5 out of 5 points 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. Selected Answer: profits
Correct Answer: profits Question 3 0 out of 5 points A typical factor that creates principal-agent problems is Selected Answer: the greater number of agents relative to the number of principals
Correct Answer: unobservability of some manager-agent action Question 4 5 out of 5 points The net present value of an investment represents Selected Answer: the expectedcontribution of that investment to the goal of shareholder wealthmaximization.
Correct Answer: the expectedcontribution of that investment to the goal of shareholder wealthmaximization. Question 5 5 out of 5 points A change in the level of an economic activity is desirable and should be undertaken as long as the marginal benefits exceed the _____________. Selected Answer: marginal costs Correct Answer: marginal costs

Question 6 0 out of 5 points Identify the reasons why the quantity demanded of a product increases as the price of that product decreases. Selected Answer: a and b
Correct Answer: a only Question 7 5 out of 5 points Which one of the following factors causes a movement along the demand curve? Selected Answer: decrease in price of the good demanded
Correct Answer: decrease in price of the good demanded Question 8 5 out of 5 points _____________ have negative calculated income elasticity.