University of Southern California
The primary difference between a periodic and perpetual inventory system is that a periodic system
A. The reported amount of ending inventory is higher under the periodic system.
B. The perpetual system maintains a continual record of inventory transactions, whereas the periodic system records these transactions only at the end of the period.
C. The reported amount of sales revenue is higher under the periodic inventory system.
D. The reported amount of cost of goods sold is higher under the perpetual inventory
A consumer consumes two normal goods, coffee and chocolate. The price of coffee rises. The income effect, by itself, suggests that the consumer will consume
more coffee and more chocolate.
less coffee and more chocolate.
less coffee and less chocolate.
more coffee and less chocolate.
22. The quantity equation of money supply is not true if velocity is not constant.
24. A decrease in which of the following factors (from the perspective of the domestic country) would cause a depreciation of the domestic currency in the short run?
foreign interest rate
relative expected export demand
all of the above
27. According to both Keynes and Friedman, the demand for money decreases with a decrease in
the interest rate.
the return on bonds minus the return on money.
the spread between the interest rates on bonds and money.
28. According to the interest parity condition, the domestic interest rate falls if the _____ rises, ceteris paribus.
foreign interest rate
expected future exchange rate
none of the above
29. A difference between m1 and m2 is that m2 takes ____ into account.
the currency ratio
coins and notes
(Money Creation) Show how each of the following would initially affect a banks assets and liabilities. a. Someone makes a $10,000 deposit into a checking account. b. A bank makes a loan of $1,000 by establishing a checking account for $1,000. c. The loan described in part (b) is spent. d. A bank must write off a loan because the borrower defaults.
Companies may have several reasons for creating joint ventures. Which of the following statements is one reason why firms may decide to form a joint venture?
They may wish t contract manufacture with each other
They will save time to market if they pool their technological know-how
These arrangements are always less risky than strategical alliances
These arrangements avoid the temptation to tap into marketing and management expertise of parent company
When Coca Cola introduced a new, low-calorie version of Coca Cola called C2, despite a major marketing effort, sales of C2 were weak and many doubted that the product would last. Coke's experience with C2 illustrates the economic concept of:
If U.S. workers are paid $16 an hour and Indian workers are paid the equivalent of $4 an hour but U.S. workers can produce four times as many goods as Indian workers in the same amount of time:
Market economies are based upon:
1. Which of the following statements about oligopolies is not correct?
Oligopolistic firms always charge the monopoly price.
Oligopolistic firms are interdependent in a way that firms in perfect competition are not.
An oligopolistic market has only a few sellers.
The actions of any one seller can have a large impact on the profits of all other sellers.
2. Which is true of an oligopoly market that reaches a Nash equilibrium?
The firms will not have behaved as profit maximizers.
A firm will have chosen its best strategy, given the strategies chosen by other firms in the market.
A firm will not take into account the strategies of competing firms.
The market price will be different for each firm.
3. In game theory, what is a dominant strategy?
the best strategy for a player to follow, regardless of the what strategies other players use
a strategy that makes every player better off
a strategy that must appear in every game
the best strategy for a player to follow only if other players are cooperative
4. Which of the following situations produces the largest profits for oligopolists?
The firms reach a Nash equilibrium.
The firms combine to produce the monopoly output level.
The firms set prices equal to marginal cost.
The firms produce a quantity of output that lies between the competitive outcome and the monopoly outcome.
Monopolistically competitive firms
|a.||are guaranteed to earn a short-run economic profit|
|b.||may earn short-run economic profits, although long-run economic profit is typically zero|
|c.||may earn economic profit both in the short run and in the long run|
|d.||earn zero economic profit both in the short run and in the long run|
|e.||can only earn an economic profit in the inelastic portion of their demand curves|
A firm is deciding whether to undertake a proposed investment project. If the present value of the project is positive, based on the firm's opportunity cost of capital, then this indicates (mark all that apply):
A) Investment is profitable
B) Investment is not profitable
C) The project's iternal rate of return exceeds the opportunity cost of capital
D) The project's internal rate of return is less than the opportunity cost of capital
Equipment purchased 2 years ago for $70,000 was expected to have a useful life of 5 years with a $5,000 salvage value. Its performance was less tha expected and it was upgraded for $30,000 one year ago. Increased demand now requires that the equipment be upgraded again for an additional $25,000 or replaced with new equipment that will cost $85,000. If replaced the existing equipment will be sold for $6,000. In conducting a replacement study, the first cost that should be used for the presently owned machine is: