Question 1
Sizzling Foods, Inc ‘s partial income statement from is shown below:
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2011
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Revenues
Revenue from sales of meals.............
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. Their economic cost is:
Question 2
1) $17,000,000
2) $38,200,000
3) $41,000,000
4) $42,300,000
Question 3
Togo Clinic uses doctors and nurses optimally and is servicing the maximum number of patients given a limited annual payroll. The last doctor hired treated 1,600 extra patients in a year, while the last nurse hired treated 1,000 extra patients in a year. If doctors make $40,000 a year, what do nurses make?
1) $25,000 a year
2) $20,000 a year
3) $15,000 a year
4) $10,000 a year
Question 4
With a given supply curve, a decrease in demand leads to
1) a decrease in equilibrium price and an increase in equilibrium quantity.
2) an increase in equilibrium price and a decrease in equilibrium quantity.
3) a decrease in equilibrium price and a decrease in equilibrium quantity
4) no change in price and a decrease in equilibrium quantity.
5) none of the above
Question 5
Derrick owns and operates a bakery. Every Saturday he bakes a batch of fresh kolaches, and every Saturday he sells all the kolaches and has to turn some customers away. Which of the following statements is correct?
1) At the current price, quantity demanded exceeds quantity supplied.
2) The current price is higher than the equilibrium price.
3) If Derrick lowered the price of kolaches, the shortage would increase.
4) both a and c
5) all of the above
Question 6
If price falls from $200 to $150, and the quantity demanded rises from 1000 to 1500 units, what is the elasticity of demand over this range?
1) -0.625
2) -1.0
3) -1.17
4) -2.5
5) -3.0
Question 7
If the price elasticity of DVD recorders is -0.3 and price increases 20%, what happens to the quantity of DVD recorders demanded?
1) quantity decreases by 26%
2) quantity decreases by 6%
3) quantity increases by 15%
4) quantity increases by 21%
Question 8
If M = $15,000 and = $20 and the supply function is , equilibrium price and quantity are, respectively,
1) P = $55 and Q = 195.
2) P = $6 and Q = 38.
3) P = $12 and Q = 200.
4) P = $50 and Q = 170.
5) P = $40 and Q = 250.
Question 9
Suppose the marginal benefit and marginal cost functions for activity A is:
MB = 100 - 5A
MC = 20 + 3A
The fifth unit of activity A will
1) increase net benefits by 75.
2) reduce net benefits by 35.
3) increase net benefits by 40.
4) decrease net benefits by 40.
5) reduce net benefits by 75.