1. please take your time to answer the questions below as this is a final and the goal is to score 100%

2. please number the answers correctly as these are certain questions on the exam

1. Suppose the interest rate is 5 percent, the expected growth rate of the firm is 2 percent, and the firm is expected to continue forever. If current profits are $1,000, what is the value of the firm?

A. $35,000

B. $26,500

C. $30,000

D. $31,000

2. The higher the interest rate, the greater the:

A. Neither present value nor net present value is correct.

B. Both present value and net present value are correct.

C. net present value.

D. present value.

3. The opportunity cost of an action is the:

A. cost of all alternative actions that could have been taken.

B. monetary payment the action required.

C. value of the most highly valued alternative action given up.

D. None of the statements associated with this question are correct.

5. In a competitive market, the market demand is Q^d= 70 - 3P and the market supply is Q^s= 6P. A price ceiling of $4 will result in a

A, surplus of 34 units.

B. shortage of 34 units.

C. surplus of 58 units.

D. shortage of 24 units.

6. The own price elasticity of demand for apples is 1.5. If the price of apples falls by 6 percent, what will happen to the quantity of apples demanded?

A. It will increase 4 percent.

B. It will fall 4 percent.

C. It will increase 9 percent.

D. It will fall 6 percent.

8. A firm derives revenue from two sources: goods X and Y. Annual revenues from good X and Y are $10,000 and $20,000, respectively. If the price elasticity of demand for good X is 2.0 and the cross-price elasticity of demand between Y and X is 1.5, then a 4 percent increase in the price of X will:

A. decrease total revenues from X and Y by $400.

B. increase total revenues from X and Y by $800.

C. increase total revenues from X and Y by $8,000.

D. increase total revenues from X and Y by $400.

9. If the slope of the indifference curve is steeper than the slope of the budget line, and X is on the horizontal axis:

A. MRS < P_X/P_Y.

B. the consumer is willing to give up more of good Y to get an additional unit of good X than is necessary under the current market prices.

C. MRS < P_X/P_Y.

D. the consumer is willing to give up more of good X to get an additional unit of good Y than is necessary under the current market prices.

12. What is the maximum amount of good Y that can be purchased if X and Y are the only two goods available for purchase and P_x= $10, P_y= $20, X = 20, and M = 400?

A. 10

B. 0

C. 5

D. 20

13. Suppose the cost function is C(Q) = 50 + Q 10Q²+ 2Q³. At 10 units of output, the average cost curve is:

A. in the declining stage.

B. at the minimum level.

C. at the maximum level.

D. in the increasing stage

14. A price elasticity of zero corresponds to a demand curve that is:

A. vertical.

B. either vertical or horizontal

C. downward sloping with a slope always equal to 1.

D. horizontal.

17. Suppose the demand for good x is ln Q_x^d= 21 0.8 ln P_x 1.6 ln P_y+ 6.2 ln M + 0.4 ln A_x. Then we know good x is:

A. an elastic good.

B. a normal good.

C. an inferior good.

D. a Giffen good.

19. When there are economies of scope between products, selling off an unprofitable subsidiary could lead to:

A. only a minor reduction in costs.

B. a major reduction in costs.

C. only a minor reduction in sales.

D. a major reduction in sales.