Q&A Hero

Q: Social Security is a pure transfer program becauseA) it transfers funds from current workers to the poor.B) the government transfers funds from middle -income workers to welfare recipients. C) current payroll taxes are used to pay the eligible retirees.D) the government subsidizes the medical bill of the poor.

Q: The projected balance sheet forecasting method produces accurate results unless which of the following condition(s) is (are) present? a. Fixed assets are "lumpy." b. Strong economies of scale are present. c. Excess capacity exists because of a temporary recession. d. Answers a, b, and c all make the projected balance sheet method inaccurate. e. Answers a and c make the projected balance sheet method inaccurate, but, as the text explains, the assumption of increasing economies of scale is built into the projected balance sheet method.

Q: While countries have standards for products produced within its borders, there are no such standards that are applicable to imported goods.

Q: When there is only one buyer in the market, A) a closed shop exists.B) a monopsony exists.C) then the market will be perfectly competitive.D) the supply curve for the good will be perfectly elastic.

Q: The projected balance sheet method of forecasting is based on which of the following assumptions? a. All balance sheet accounts are tied directly to sales. b. Most balance sheet accounts are tied directly to sales. c. The current level of total assets is optimal for the current sales level. d. Answers a and c above. e. Answers b and c above.

Q: The adoption of universal quality standards would mean that the perceptions of industrial product quality would also be standardized.

Q: When a firm has maximized profits, A) it has also minimized total costs.B) the marginal product of each input is also maximized.C) the marginal physical product is greater than the input price for all inputs. D) its marginal cost is zero.

Q: Determine the increase or decrease in cash for Rinky Supply Company for last year, given the following information. (Assume no other changes occurred during the past year.) Decrease in marketable securities = $25 Increase in accounts receivables = $50 Increase in notes payable = $30 Decrease in accounts payable = $20 Increase in accrued wages and taxes = $15 Increase in inventories = $35 Retained earnings = $ 5 a. −$50 b. +$40 c. −$30 d. +$20 e. −$10

Q: The change in output resulting from the addition of one more worker isA) marginal physical product. B) marginal revenue product.C) average physical product. D) average revenue product.

Q: The lack of common standards for manufacturing highly specialized equipment is a problem in international sales of industrial products.

Q: Alumbat Corporation has $800,000 of debt outstanding, and it pays an interest rate of 10 percent annually on its bank loan. Alumbat's annual sales are $3,200,000; its average tax rate is 40 percent; and its net profit margin on sales is 6 percent. If the company does not maintain a TIE ratio of at least 4 times, its bank will refuse to renew its loan, and bankruptcy will result. What is Alumbat's current TIE ratio? a. 2.4 b. 3.4 c. 3.6 d. 4.0 e. 5.0

Q: According to the capture hypothesis, it appears that regulators eventually end upA) adopting policies that benefit the firms being regulated.B) adopting policies that benefit consumers at the expense of the regulated firms. C) adopting policies that benefit no one.D) satisfying neither producers nor consumers, but striving to control as much as possible.

Q: A product whose design reflects the needs and expectations of the buyerno more, no lessis a quality product.

Q: 5 = (CA − $100,000)/(CA/3.0).

Q: A product that exceeds performance expectations can also be considered to be of poor quality.

Q: When there is a tendency for a particular product to fall out favor with additional consumers because other consumers have chosen not to purchase the product,A) negative market feedback occurs. B) positive market feedback occurs. C) the tit-for-tat strategy will begin. D) the network effect will increase.

Q: 5 = (CA − $100,000)/CL

Q: Average fixed cost for an information product wouldA) first decrease and then increase as quantity increases.B) increase constantly as quantity increases. C) decrease constantly as quantity increases. D) remain constant as quantity increases.

Q: Good quality as interpreted by a highly industrialized market is the same as that interpreted by standards of a less industrialized nation.

Q: Nolan Inc. has cost of goods sold of $1,000,000 and an inventory turnover of 10.0. The firm's current ratio is 3.0, while its quick ratio is 2.5. What are Nolan's current assets? a. $200,000 b. $300,000 c. $400,000 d. $500,000 e. $600,000

Q: One of the interrelated trends that spurred the demand for technologically advanced products was the disintegration of the Soviet empire.

Q: The meaning of interdependence in a monopolistically competitive market isA) that it is difficult for firms to get together to collude.B) that products produced by firms will be good substitutes.C) that firms will not take into account the reaction of rival firms. D) that price rigging commonly occurs.

Q: A firm has total interest charges of $10,000 per year, sales of $1 million, a tax rate of 40 percent, and a net profit margin of 6 percent. What is the firm's times-interest-earned ratio? a. 16 times b. 10 times c. 7 times d. 11 times e. 20 times

Q: A country can leap several stages of economic development by using technology as economic leverage.

Q: A privately owned monopoly will NEVER produce along a range of output for whichA) the demand curve is elastic.B) the demand curve is inelastic.C) the price elasticity of demand is greater than 1. D) the price elasticity of supply is greater than 1.

Q: In Rostow's five-stage model of economic development, countries in Stage 5 (the age of mass consumption) are mostly service economies.

Q: 27 $2.50 = $18.175 = $18.18 per share.

Q: If an industryʹs long-run per-unit costs decrease as its output increases thenA) the firmʹs long-run economic profits must be less than zero. B) the firm is most likely a decreasing-cost industry.C) the firm is most likely an increasing -cost industry. D) the firm is most likely a constant-cost industry.

Q: In Stage 1 (the traditional society) of Rostow's five-stage model of economic development, the most important industrial demand is labor.

Q: Makeover Inc. believes that at its current stock price of $16.00 the firm is undervalued in the market. Makeover plans to repurchase 2.4 million of its 20 million shares outstanding. The firm's managers expect that they can repurchase the entire 2.4 million shares at the expected equilibrium price after repurchase. The firm's current earnings are $44 million. If management's assumptions hold, what is the expected market price after repurchase? a. $16.00 b. $17.26 c. $18.18 d. $20.00 e. $24.40

Q: In the above figure, at the profit-maximizing rate of production for the perfectly competitive firm total revenue isA) $100. B) $70. C) $30. D) $130.

Q: The degree of economic development of a country can be used as a rough measure of the country's industrial market.

Q: Ducheyne Electric recently declared a 15 percent stock dividend. On the date of the stock dividend Ducheyne had 16 million shares outstanding priced at $46 per share in the market. An accounting entry was required on the balance sheet transferring some retained earnings to the common stock account. If retained earnings were $280 million prior to the transaction, what was the dollar amount of retained earnings after the transfer? a. $280.0 million b. $110.4 million c. $20 million d. $277.6 million e. $169.6 million

Q: Refer to the above table. What are total fixed costs at an output of 3 units?A) $90 B) $120 C) $150 D) $270

Q: The most significant environmental factor affecting the international market for industrial goods and services is the degree of standardization.

Q: Velcraft Company has 20,000,000 shares of common stock authorized, but to date, has only 12,000,000 shares outstanding, each with a $1.00 par value. The company has $24,000,000 in additional paid-in capital and retained earnings are $96,000,000. What is Velcraft's current book value per share? a. $1.00 b. $3.00 c. $11.00 d. $6.60 e. $9.00

Q: A person who is willing to bear more risk will buyA) common stock. B) preferred stock.C) bonds. D) government bonds.

Q: One of the ways that an industrial firm should manage the inherent volatility of the industrial sector is by increasing advertising expenditure during booms.

Q: Culver Inc. has earnings after interest but before taxes of $300. The company's before-tax times-interest-earned ratio is 7.00. Calculate the company's interest charges. a. $42.86 b. $50.00 c. $40.00 d. $60.00 e. $57.93

Q: In comparing accounting profit with economic profit, we generally find thatA) accounting profit is less than economic profit.B) economic profit and accounting profit are the same in the short run. C) accounting profit is greater than or equal to economic profit.D) economic profit exceeds accounting profit by the amount of opportunity costs.

Q: Industrial demand is unaffected by changes in consumer demand.

Q: A firm has a profit margin of 15 percent on sales of $20,000,000. If the firm has debt of $7,500,000, total assets of $22,500,000, and an after-tax interest cost on total debt of 5 percent, what is the firm's ROA? a. 8.4% b. 10.9% c. 12.0% d. 13.3% e. 15.1%

Q: Observations of violations of consumer optimum predicted by consumer choice theory could provide support forI. utility analysisII. bounded rationalityIII. behavioral economicsA) I only. B) III only. C) both I and II. D) both II and III.

Q: Derived demand can be defined as demand that is not dependent on another source.

Q: If Boyd Corporation has sales of $2 million per year (all credit) and days sales outstanding of 35 days, what is its average amount of accounts receivable outstanding (assume a 360 day year)? a. $194,444 b. $57,143 c. $5,556 d. $97,222 e. $285,714

Q: Assuming that the marginal utility of the first four pieces of candy was 30, 28, 24, and 18 respectively, how much total utility was derived from eating the first three pieces of candy?A) 58 B) 82 C) 54D) 100

Q: Managers need to understand the concept of derived demand, particularly when they are selling capital equipment and big-ticket industrial services.

Q: You are given the following information: Stockholders' equity = $1,250; price/earnings ratio = 5; shares outstanding = 25; market/book ratio = 1.5. Calculate the market price of a share of the company's stock. a. $33.33 b. $75.00 c. $10.00 d. $166.67 e. $133.32

Q: Other things being equal, demand is more elastic the A) less expensive the good. B) shorter the time period for adjustment. C) larger the percentage of a total budget that a family spends on the good. D) more unique the good is.

Q: The single most important difference between consumer and industrial marketing is the cyclical swings in demand inherent in the latter.

Q: The Charleston Company is a relatively small, privately owned firm. Last year the company had after-tax income of $15,000, and 10,000 shares were outstanding. The owners were trying to determine the market value for the stock, prior to taking the company public. A similar firm which is publicly traded had a price/earnings ratio of 5.0. Using only the information given, estimate the market value of one share of Charleston's stock. a. $10.00 b. $7.50 c. $5.00 d. $2.50 e. $1.50

Q: All of the following are choices for the polluter when faced with additional costs to abate the externality EXCEPTA) ignore the government regulations. B) install pollution abatement equipment.C) reduce the pollution-causing activity. D) pay the price to pollute.

Q: For firms producing products and services for industrial markets, the chief reason for venturing abroad is the prospect of high profits with no risk.

Q: Pepsi Corporation's current ratio is 0.5, while Coke Company's current ratio is 1.5. Both firms want to "window dress" their coming end-of-year financial statements. As part of their window dressing strategy, each firm will double its current liabilities by adding short-term debt and placing the funds obtained in the cash account. Which of the statements below best describes the actual results of these transactions? a. The transactions will have no effect on the current ratios. b. The current ratios of both firms will be increased. c. The current ratios of both firms will be decreased. d. Only Pepsi Corporation's current ratio will be increased. e. Only Coke Company's current ratio will be increased.

Q: A company focusing its efforts on making its new innovation more user-friendly than before is working on the _______ of the product. A) compatibility B) trialability C) complexity D) discordancy E) observability

Q: The Social Security Fund is designed as A) a pay-as-you-go system. B) an investment portfolio that individual contributors can make periodic payments into. C) an account that allows periodic withdrawals by contributors. D) an individual account with a federal reserve bank.

Q: Which of the following statements is correct? a. If Company A has a higher debt ratio than Company B, then we can be sure that A will have a lower times-interest-earned ratio than B. b. Suppose two companies have identical operations in terms of sales, cost of goods sold, interest rate on debt, and assets. However, Company A uses more debt than Company B; that is, Company A has a higher debt ratio. Under these conditions, we would expect B's profit margin to be higher than A's. c. The ROE of any company which is earning positive profits and which has a positive net worth (or common equity) must exceed the company's ROA. d. Statements a, b, and c are all true. e. Statements a, b, and c are all false.

Q: A monopsonist isA) a firm with monopoly power in the local area. B) a firm that has a unionized labor force.C) a single seller of an input. D) a single buyer of an input.

Q: Karyn, who is interested in marketing her company's diet products in Asia, studies the acceptable behavior, norms, and values in Asian markets as they relate to her product. In other words, Karyn is studying her product's ________ in the Asian markets. A) observability B) compatibility C) dissidence D) trialability E) complexity

Q: Borg Security Systems is considering the sale of 12,000 shares of stock to finance development of a new security product. The firm has 40,000 shares of common stock outstanding, par value of $1.00 per share. The firm has $60,000 in additional paid-in capital and $80,000 in retained earnings. Borg's investment bankers estimate that new shares will bring in $5.15 per share. If Borg goes ahead with the new stock issue, what will be the change in book value per share? a. −$1.00 b. +$0.15 c. +$0.56 d. +$1.00 e. $0

Q: A perfectly competitive firm is hiring variable resources M and N. It will minimize total costsA) MRPm/MFCm = MRPn/MFCn. B) MRPm ∗ MFCm = MRPn ∗ MFCn.C) Pm/MPPm = Pn/MPPn. D) MPPm/Pm = MPPn/Pn.

Q: In terms of innovation characteristics, a product is said to be compatible if A) it provides greater value to the manufacturers than to the consumers. B) the degree of social repercussions associated with it is high. C) its benefits can be communicated easily. D) it has a higher degree of complexity compared with its counterparts'. E) it complies with the accepted behavior, values, and norms of the local market.

Q: Micromain Company has 10,000,000 shares of common stock authorized and 8,000,000 shares outstanding, each with a $1.00 par value. The firm's additional paid-in capital account has a balance of $18,000,000. The previous year's retained earnings account was $124,000,000. In the year just ended, Micromain generated net income of $16,000,000 and the firm has a dividend payout ratio of 40 percent. What will Micromain's book value per share be when based on the final year-end balance sheet? a. $20.75 b. $15.00 c. $15.96 d. $19.95 e. $18.75

Q: Phineas is comparing the innovation characteristics of his company's water filters with those that are already being marketed in the local market. He believes there is lot of potential for his filters as they are functionally more advanced, have a longer life, and can also be marketed at a more competitive price than those of other sellers in the local market. The innovation characteristic of Phineas's product that will help in wide acceptance of his product in the local market is its A) compatibility. B) complexity. C) trialability. D) relative advantage E) observability.

Q: Sam, who owns a carpentry shop, discovered that with 4 laborers he could produce 18 cabinets per day. With 5 laborers he produced 25 cabinets and with 6 laborers he produced 36 cabinets. What was the MPP of the 6th laborer?A) 11 cabinets B) 7 cabinets C) 36 cabinets D) 9 cabinets

Q: Which of the following statements is correct? a. The statement of cash flows should include changes in summary accounts, such as current assets and current liabilities, as well as changes in all individual accounts. b. If a firm sells equity to reduce long-term bonds, this is a capital financing transaction and does not appear on the statement of cash flows. However, if the firm sells equity in order to purchase assets, this transaction would be included in the statement of cash flows. c. Net income is normally the firm's primary operating cash flow, but changes in accounts payable, accounts receivable, inventories and accruals are also classified as operating cash flows. d. Each change on the balance sheet results from one of two types of transactions, either financing activities, such as issuing or retiring new stock or debt, or long-term investment, such as buying and selling assets. e. The change in the firm's liquidity position is measured by how much greater a firm's sources of funds are than its uses of funds.

Q: What is one of the extraneous variables that affects the rate of diffusion of an object? A) the absolute marginal value of the innovation relative to the old B) the actual attributes of the innovation C) the climatic conditions in which the market is located D) the method used to communicate the idea E) the degree of actual novelty of the innovation

Q: According to the capture hypothesis, A) regulators eventually support the views of consumers instead of the firms or the taxpayers, regardless of the reasons why the regulatory agency was established. B) regulators support the view of the regulated firms all along because that is the reason the regulatory agency was established. C) regulators eventually support the views of the regulated firms instead of the consumers or taxpayers, regardless of why the regulatory agency was established. D) regulators eventually support the views of either the firms or the consumers, but at the expense of the taxpayers, regardless of the reasons why the regulatory agency was established.

Q: As a short-term creditor concerned with a company's ability to meet its financial obligation to you, which one of the following combinations of ratios would you most likely prefer? Current Debt ratio TIE ratio a. 0.5 0.5 0.33 b. 1.0 1.0 0.50 c. 1.5 1.5 0.50 d. 2.0 1.0 0.67 e. 2.5 0.5 0.71

Q: According to Everett Rogers, the goals of the diffusion researcher and the marketer are to shorten the time lag between A) the dispatch of the product from the company and the time it takes to reach the customer. B) the time that a budget is determined and the time needed for the funds to reach the communication channels. C) initial investment and the profits obtained from those investments. D) introduction of an idea or product and its widespread adoption. E) introduction of an idea or product and when revisions can be made.

Q: When there is a tendency for a particular product to come into favor with additional consumers because other consumers have chosen to purchase the product,A) negative market feedback occurs. B) positive market feedback occurs. C) there is no dominant strategy. D) a price war must result.

Q: Which of the following statements is correct? a. In the text, depreciation is regarded as a use of cash because it reduces fixed assets, which then must be replaced. b. If a company uses some of its cash to pay off short-term debt, then its current ratio will always decline, given the way the ratio is calculated, other things held constant. c. During a recession, it is reasonable to think that most companies' inventory turnover ratios will change while their fixed asset turnover ratios will remain fairly constant. d. During a recession, we can be confident that most companies' DSOs (or ACPs) will decline because their sales will probably decline. e. Each of the above statements is false.

Q: Average total cost for an information product wouldA) first decrease and then increase as quantity increases.B) increase constantly as quantity increases. C) decrease constantly as quantity increases. D) remain constant as quantity increases.

Q: Innovation spreads by the process of A) diffusion. B) filtering. C) dissolution. D) flighting. E) liquidation.

Q: Which of the following actions will cause an increase in the quick ratio in the short run? a. $1,000 worth of inventory is sold, and an account receivable is created. The receivable exceeds the inventory by the amount of profit on the sale, which is added to retained earnings. b. A small subsidiary which was acquired for $100,000 two years ago and which was generating profits at the rate of 10 percent is sold for $100,000 cash. (Average company profits are 15 percent of assets.) c. Marketable securities are sold at cost. d. All of the above. e. Answers a and b above.

Q: From a sociological viewpoint, any idea perceived as new by a group of people is considered as A) a creation B) an adaptation C) a declension D) a tradition E) an innovation

Q: In a monopolistically competitive market, having a large number of firms in the market means thatA) no firm attempts to take into account the reaction of rival firms.B) individual firms will have a large portion of the market giving them monopoly power. C) firms will get together and collude because this will be the only way to earn monopoly profits.D) firms will cooperate with each other to drive competitors out of the market.

Q: Recently the M&M Company has been having problems. As a result, its financial situation has deteriorated. M&M approached the First National Bank for a badly needed loan, but the loan officer insisted that the current ratio (now 0.5) be improved to at least 0.8 before the bank would even consider granting the credit. Which of the following actions would do the most to improve the ratio in the short run? a. Using some cash to pay off some current liabilities. b. Collecting some of the current accounts receivable. c. Paying off some long-term debt. d. Selling some of the existing inventory at cost. e. Purchasing additional inventory on credit (accounts payable).

Q: An important first step in adapting a product to a foreign market is to determine the A) degree of newness of the product as perceived by the intended market. B) personal ethics of individuals in the target market. C) regional political parties present in the domestic market. D) language problem of the intended market. E) product's compliancy to irrational beliefs of its potential foreign consumers.

Q: When the number of substitutes increase, the demand curve for a monopolist willA) not change. B) become more elastic.C) become more inelastic. D) become steeper.