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The Fundamentals of Managerial Economics

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Chapter 01
The Fundamentals of Managerial Economics

Multiple Choice Questions 1. | The higher the interest rate: A. | the greater the present value of a future amount. | B. | the smaller the present value of a future amount. | C. | the greater the level of inflation. | D. | None of the statements associated with this question are correct. | | 2. | If the interest rate is 10 percent and cash flows are $1,000 at the end of year one and $2,000 at the end of year two, then the present value of these cash flows is: A. | $2,562. | B. | $3,200. | C. | $439. | D. | $3,000. | | 3. | Accounting profits are: A. | total revenue minus total cost. | B. | total cost minus total revenue. | C. | marginal revenue minus total cost. | D. | total revenue minus marginal cost. | | 4. | Economic profits are: A. | total revenue minus total cost. | B. | marginal revenue minus marginal cost. | C. | total revenue minus total opportunity cost. | D. | total profits of the economy as a whole. | | 5. | Which of the following is an implicit cost to a firm that produces a good or service? A. | Labor costs | B. | Costs of operating production machinery | C. | Foregone profits of producing a different good or service | D. | Costs of renting or buying land for a production site | | 6. | Which of the following is an implicit cost of going to college? A. | Tuition | B. | Cost of books and supplies | C. | Room and board | D. | Foregone wages | | 7. | Which of the following are signals to the owners of scarce resources about the best uses of those resources? A. | Profits of businesses | B. | Government regulations | C. | Economic indicators | D. | The accounting cost of those resources | | 8. | The primary inducement for new firms to…...

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