Question

1.Which of the following can be thought of as an adjustment for the risks involved with respect to the cost of a firm acquiring financial capital?

a.Cost of financial capital paid from firm

b.Higher retained earnings from past profits

c.Tax credits for physical capital investments

d.Imposition of hurdle rates of interest

2.If a firm is producing so that the point chosen along the production possibility frontier is socially preferred, then that firm is said to have reached its

a)minimum price efficiency

b)utility-maximizing efficiency

c)allocative efficiency

d)productive efficiency

3.When a firm uses retained profits to invest in more energy efficient equipment, an economist would calculate the _______________ of investing in physical capital.

a.Typical hurdle rate

b.Hurdle rate premium

c.Degree of risk

d.Opportunity cost

4.Deregulation occurs when a government eliminates or scales back rules relating to all but one of the following. Which one is it?

a.Conditions of entry in a certain industry

b.Natural monopoly

c.Prices that can be charged

d.Quantities that can be produced

5.A natural monopoly occurs when the quantity demanded is the minimum quantity it takes to be at the bottom of the long-run average cost curve

a.Greater than

b.Less than

c.Equal to

d. a or c above

6. The demand curve perceived by a perfectly competitive firm

a.Shows that such a firm is a price-maker

b.Shows economies of scale over a large range of output

c.Is horizontal

d. All of the above