1. Managerial economics uses ____________ to help managers solve problems.
a. formal models
b. prescribed behavior
c. quantitative methods
d.
... [Show More] microeconomic theory
e. all of the above
ANS: E PTS: 1
2. Managerial economics draws upon all of the following EXCEPT:
a. finance
b. microeconomics
c. accounting
d. marketing
e. sociology
ANS: E PTS: 1
3. The economic theory of the firm assumes that the primary objective of a firm’s owner or
owners is to:
a. behave in a socially conscientious manner
b. maximize the firm’s profit
c. maximize the firm’s total sales
d. maximize the value of the firm
e. All of these are primary objectives
ANS: D PTS: 1
Chapter 1: Introduction 2
4. If the annual interest rate is i, the present value of $X to be received at the end of each of the
next n years is:
a. $X/i
b. $X/(1 + i)n
c. =
+
n
t
X i t
1
$ 1/(1 )
d. $X[(1 + i)n] / [ i(1 + i)n – 1]
e. $X / [i(1 + i)n – 1]
ANS: C PTS: 1
5. If the annual interest rate is i, the present value of $X to be received at the end of each future
year forever is:
a. $X/(1 + i)
b. $X/i
c. $X/(1 + i)n
d. $X/i n
e. $Xn/i n
ANS: B PTS: 1
6. If the annual interest rate is 25 percent, the present discounted value of $100 to be received in
one year is:
a. $75
b. $80
c. $100
d. $120
e. $125
ANS: B PTS: 1
Chapter 1: Introduction 3
7. You’ve just won the $25 million lottery. You are going to receive a check for $1 million today
and at the end of every year for the next 24 years. If the interest rate is 10 percent, the present
value of your prize is:
a. $8,984,744
b. $9,984,744
c. $12,984,744
d. $20,000,000
e. $25,000,000
ANS: A PTS: 1
8. You borrow money from Fast Eddie’s Fast Cash at 20 percent per year interest and agree to
pay $500 at the end of each of the next four years. You must have borrowed approximately:
a. $2,000
b. $1,595
c. $1,295
d. $1,095
e. $895
ANS: C PTS: 1
9. You buy your child a $100 savings bond that matures in 10 years and pays an annual interest
rate of 10 percent. At maturity the bond will be worth:
a. $228.17
b. $200
c. $259.37
d. $271.17
e. $217.71
ANS: C [Show Less]