Question 1
Income statement for Sizzling Foods, Inc. is shown below:
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2011
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Revenues
Revenue from sales of goods and services.................
Operating costs and expenses:
Cost of products and services sold..........................
Selling expenses...............................................
Administrative expense.......................................
Total operating costs and expenses......................
Income from operations............................................
Interest expense (corporate bonds & loans).....................
Non-recurring expense (Legal expenses/fines in
settling a federal antitrust suit................................
Income taxes.........................................................
Net income............................................................
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$80,000,000
$30,000,000
$3,000,000
$4,000,000
$37,000,000
$43,000,000
$300,000
$200,000
$700,000
$41,800,000
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In 2011, Sizzling Foods owned and occupied an office building in downtown Indianapolis. The building could have been leased to other businesses for $2,000,000 in lease income for 2011. Sizzling food also owned undeveloped land valued at $15,000,000 which is used by employees as a parking lot. Owners of Sizzling Foods can earn a 14% rate of return on that land it they leased it others as a parking lot.
Sizzling's accounting profit is
1) -$4,100,000
2) $9,360,000
3) $38,200,000
4) $42,300,000
5) $41,800,000
Question 2
Answer the questions using the following marginal benefit and marginal cost functions for activity A:
MB = 100 - 5A
MC = 20 + 3A
The optimal level of A is
1) 40
2) 30
3) 20
4) 10
Question 3
If a demand curve goes through the point P = $6 and = 400, then
1) $6 is the highest price consumers will pay for 400 units.
2) $6 is the lowest price consumers can be charged to induce them to buy 400 units.
3) 400 units are the most consumers will buy if price is $6.
4) consumers will buy more than 400 if price is $6.
5) both a and c
Question 4
Which of the following statements is false?
1) Explicit costs of using market-supplied resources entail an opportunity cost equal to the dollar cost of obtaining the resources in the market.
2) When economic profit is zero, the firm's owners could NOT have done better putting their resources in some other industry of comparable risk.
3) If economic profit is positive, accounting profit must also be positive.
4) If economic profit is negative, accounting profit must also be negative.
5) None of the above statements is false.
Question 5
Total revenue increased for a firm operating in the elastic range of its demand curve. Which of the following statements is correct?
1) The firm must have raised price.
2) The firm must have lowered price.
3) Quantity demanded must have increased.
4) both a and c
5) both b and c
Question 6
"When the British government tripled university fees for foreign students in Great Britain, about one-half of them left to study in other countries." The implied price elasticity of demand by foreigners for a British education is (in absolute value)
1) less than 1.
2) equal to 1.
3) between 1.0 and 1.5.
4) greater than 1.5
Question 7
The decision rule for constrained optimization is to select the level for each activity at which
1) marginal benefit equals marginal cost for each activity.
2) total benefit equals total cost for each activity.
3) marginal benefit per dollar of marginal cost is equal across all activities.
4) total benefit per dollar of total cost is equal across all activities.