Question

10.Present value is

A.

the inverse of the interest rate.

B.

the nominal value instead of the real value of something.

C.

the value of a dollar received a year from​ now, expressed in terms of its future value.

D.

the value of a future amount expressed in​ today's dollars.

11,Suppose that you borrow​ $100,000 from the bank to purchase some land and you agree to pay 2 percent interest on the loan. If the loan must be repaid in 12 months and the inflation rate is 3 percent during the​ year, then

A.

you will repay the bank with fewer dollars than the bank initially loaned you.

B.

you will repay the bank with dollars with less purchasing power than it initially loaned you.

C.

the bank will receive fewer​ dollars, because of​ inflation, than it had initially expected to receive.

D.

you will repay the bank with dollars with more purchasing power than you initially borrowed.

12.The part of corporate profits that is paid to the shareholders of a corporation is

A.

business revenue.

B.

shareholders.

C.

retained earnings.

D.

dividends.

13,The PE ratio for a stock is

A.

the predicted earnings per share of the stock divided by its current yield.

B.

the predicted volatility of the stock.

C.

the current yield of the stock.

D.

the price of the stock divided by its earnings per share.

14.If a farmer buys​ one-hundred more acres for her flower​ farm, she is making a

A.

​variable-input decision.

B.

​short-run decision.

C.

​long-run decision.

D.

​immediate-run decision.

15.If in the short run total product is decreasing as more workers are​ hired, then the marginal physical product is

A.

positive.

B.

negative.

C.

increasing.

D.

zero.

16.The observation that after some​ point, successive equal size increases in a variable factor of​ production, such as​ labor, added to fixed factors of​ production, will result in smaller increases in output is the

A.

law of diminishing marginal product.

B.

consumer equilibrium.

C.

streamlining production function.

D.

theory of increasing marginal utility.

17.The change in total variable cost which accompanies one extra unit of output is

A.

the average total cost.

B.

marginal cost.

C.

the average variable cost.

D.

the average fixed cost.

18.Which of the following would NOT be considered a fixed cost of​ production?

A.

Wages paid to labor

B.

Insurance payments on plant and equipment

C.

The opportunity cost of capital

D.

Interest payments on a loan

19.The long run is defined as a time period during which full adjustment can be made to any change in the economic environment. Thus in the long​ run, all factors of production are variable.​ Long-run curves are sometimes called planning​ curves, and the long run is sometimes called the

A.

minimum efficient time period.

B.

planning horizon.

C.

​non-adjustment period.

D.

foreseeable future.

20.Economies of scale exist where the​ long-run average cost curve is

A.

tangent to the marginal cost curve.

B.

​upward-sloping.

C.

horizontal.

D.

​downward-sloping.

21.Minimum efficient scale

A.

is the point at which diseconomies of scale begin for a particular firm.

B.

is the point at which economies of scale begin for a particular firm.

C.

is the lowest rate of output per unit of time at which​ long-run average costs reach a minimum for a particular firm.

D.

applies only to firms with​ U-shaped long-run average cost curves.

Answer 1

Question 10

Present value refers to the value of an amount that has to be received in future time period in constant dollar terms.

In other words, when value of a future amount is expressed in terms of today's dollars then such value is referred to as present value.

Hence, the correct answer is the option (D).

Question 11

In the given case, nominal interest rate is 2 percent and inflation rate is 3 percent.

Since, inflation rate is greater than the nominal interest rate, real interest rate would be negative.

Real interest rate indicate purchasing power.

So,

It can be stated that the amount of loan repaid would have less purchasing power than the amount loaned.

Hence, the correct answer is the option (B).

Question 12

Corporate profits are utilized in three manner -

1. Some part of them are used to pay corporate taxes.

2. Some part of them is retained.

3. Some part of them is paid to the shareholders.

Amount that is paid to the shareholders is termed as dividend.

Hence, the correct answer is the option (D).