Managerial Economics Quiz 1

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• Question 1 3 out of 3 points The primary objective of a for-profit firm is to ___________. Answer Selected Answer: maximize shareholder value Correct Answer: maximize shareholder value • Question 2 3 out of 3 points Recently, the American Medical Association changed its recommendations on the frequency of pap-smear exams for women. The new frequency recommendation was designed to address the family histories of the patients. The optimal frequency should be where the marginal benefit of an additional pap-test: Answer Selected Answer: equals the marginal cost of the test Correct Answer: equals the marginal cost of the test • Question 3 3 out of 3 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. Answer Selected Answer: profits (cash flows) Correct Answer: profits (cash flows) • Question 4 3 out of 3 points Income tax payments are an example of ____. Answer Selected Answer: explicit costs Correct Answer: explicit costs • Question 5 3 out of 3 points Economic profit is defined as the difference between revenue and ____. Answer Selected Answer: total economic cost Correct Answer: total economic cost • Question 6 3 out of 3 points Possible goals of Not-For-Profit (NFP) enterprises include all of the following EXCEPT: Answer Selected Answer: maximize total costs Correct Answer: maximize total costs • Question 7 3 out of 3 points The flat-screen plasma TVs are selling extremely well. The originators of this technology are earning higher profits. What theory of profit best reflects the

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