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Q:
Net fixed assets reflect the historical costs for property, plant, and equipment less accumulated depreciation.
a. True
b. False
Q:
The government imposes a tax on an industry that produces goods creating a negative externality. Yet the industry produces more than the optimum quantity of output. This meansA) the tax is more than the external cost associated with the product. B) the tax is less than the external cost associated with the product. C) the company should advertise the product more.D) the company should increase the production of the product.
Q:
Most annual reports include detailed financial data for the two most recent years, along with historical summaries of key accounting statistic for the past five or ten years.
a. True
b. False
Q:
One of the core components in the Product Component Model is the product platform.
Q:
The government finances Social Security throughA) excise taxes. B) payroll taxes.C) the sale of goods and services. D) state taxes.
Q:
The packaging component of the Product Component Model consists of the physical productthe platform that contains the essential technologyand all its design and functional features.
Q:
Selling new stock is an equity transaction; it does not affect any asset or liability account and, therefore, does not appear on the statement of cash flows.
a. True
b. False
Q:
A firm that is a monopolist in the output market and a monopsonist in the input marketA) will hire the same amount of labor as if perfect competition prevailed in both markets, but pay a lower wage.B) will restrict the level of output but not that of employment compared to the perfectly competitive case.C) will hire less labor but pay the same wage compared to the perfectly competitive case.D) will hire less labor and pay a lower wage compared to the perfectly competitive case.
Q:
Product diffusion or acceptance is more rapid when product perceptions are similar to current cultural values.
Q:
If a positive change in gross fixed assets is greater than the change in accumulated depreciation for a particular year, net fixed assets increase and this constitutes a source of funds.
a. True
b. False
Q:
The profit-maximizing combination of resources in a perfectly competitive situation occurs at the point at whichA) MRP of labor = price of labor (wage rate).B) MRP of land = price of land (rental rate per unit).C) MRP of capital = price of capital (cost per unit of service). D) All of the above are correct.
Q:
In general, the rate of diffusion of a product is negatively related to its relative advantage.
Q:
If sales decrease and financial leverage increases, we can say with certainty that the profit margin on sales will decrease.
a. True
b. False
Q:
Refer to the above figure. The firm is operating using MRP0. An increase in productivity has occurred. The relevant curve for the firm after the increase in productivityA) is MRP0.B) is MRP1.C) is MRP2.D) could be MRP1 or MRP2 depending upon whether the firm was earning a positive profit.
Q:
One variable that affects the rate of diffusion of a product is the actual attributes of the innovation.
Q:
The fixed charge coverage ratio recognizes that firms often lease equipment under contract and thus, some firms must meet more than just their scheduled interest payments out of earnings. Therefore, the fixed charge coverage is more inclusive than the TIE ratio.
a. True
b. False
Q:
The capture hypothesis suggests thatA) marginal cost regulation is superior to average cost regulation.B) the well-focused interests of consumers will lead to the over-regulation of most industries.C) the firms being regulated will unduly influence the regulators.D) regulation will lead to over -entry and eventual losses for firms in the industry.
Q:
One of the three variables that affect the rate of diffusion of a product is the perceived attributes of product innovation.
Q:
Suppose a firm wants to maintain a specific TIE ratio. If the firm knows the level of its debt, the interest rate it will pay on that debt and the applicable tax rate, the firm can then calculate the earnings level required to maintain its target TIE ratio.
a. True
b. False
Q:
For years, your parents claimed they had no desire to join a social web site. Recently, however, they joined one and said they did so because all their relatives have joined the same site with them. Your parentsʹ behavior is an example ofA) a switching cost. B) a network effect.C) the impact of positive market feedback. D) the impact of negative market feedback.
Q:
According to Everett Rogers, the element of time differentiates elements in the diffusion of new ideas from other types of communication research.
Q:
Suppose two firms with the same amount of assets pay the same interest rate on their debt and earn the same rate of return on their assets, and that ROA is positive. However, one firm has a higher debt ratio. Under these conditions, the firm with the higher debt ratio will also have a higher rate of return on common equity.
a. True
b. False
Q:
Marginal 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:
From a sociological point of view, any idea perceived as new by a group of people is an innovation.
Q:
We can use the fixed asset turnover ratio to legitimately compare firms in different industries as long as all the firms being compared are using the same proportion of fixed assets to total assets.
a. True
b. False
Q:
The number of firms in a monopolistically competitive market means thatA) all firms will have substantial monopoly power since there are so few firms in the industry.B) each firm has a relatively small share of the total market since there are many firms in the industry.C) the firms will be likely to collude since there are only a few firms in the industry.D) firms will have a hard time earning non-negative profits since there are many firms in the industry.
Q:
Adaptation of the nonphysical features of a product should be avoided when adapting the product to a new culture.
Q:
The inventory turnover and current ratios are related. The combination of a high current ratio and a low inventory turnover ratio relative to the industry norm might indicate that the firm is maintaining too high an inventory level or that part of the inventory is obsolete or damaged.
a. True
b. False
Q:
The price elasticity of demand for a monopolistA) is infinite since the monopolist is the only firm in the market.B) decreases as more competition occurs in the market. C) increases as similar products enter the market.D) is undefined due to the lack of competition.
Q:
An important first step in adapting a product to a foreign market is to determine the cost-benefit as perceived by the intended market.
Q:
Two firms have the same current ratio, 0.75, and the same amount of sales. However, Firm A has a higher inventory turnover ratio than Firm B. Therefore, we can conclude that the quick ratio of Firm A will be smaller than that of Firm B.
a. True
b. False
Q:
In a decreasing-cost industry, an increase in output will lead toA) an upward shift in the ATC curve. B) an upward shift in the MC curve.C) a reduction in long-run per-unit costs. D) an increase in long-run per-unit costs.
Q:
The European Commission (EC) mandate requires a product to be evaluated on all significant environmental effects throughout its life cycle, from manufacturing to disposal.
Q:
If the current ratio of Firm A is greater than the current ratio of Firm B, we cannot be sure that the quick ratio of Firm A is greater than that of Firm B. However, if the quick ratio of Firm A exceeds that of Firm B, we can be assured that Firm A's current ratio also exceeds B's current ratio.
a. True
b. False
Q:
Green marketing is the term frequently used to identify a marketer's efforts to reduce its dependency on U.S. dollars as the standard for international exchange.
Q:
Economists generally assume that firms attempt to maximizeA) total revenue. B) sales.C) marginal revenue. D) total economic profits.
Q:
Current cash flow from existing assets is highly relevant to the investor. However, the value of the firm depends primarily upon its growth opportunities. As a result, profit projections from those opportunities are the only relevant future flows with which investors are concerned.
a. True
b. False
Q:
The term product homogenization is used to describe the changes mandated by local product and service standards.
Q:
Refer to the above table. What are total fixed costs at an output of 2 units?A) $50 B) $100 C) $150 D) $200
Q:
As long as sales revenues exceed all costs over part of an accounting period, a firm will avoid any cash shortage.
a. True
b. False
Q:
The decision to standardize or adapt a product is less important in delivering quality than price.
Q:
The most important source of financial capital for firms today isA) sale of bonds. B) sale of new issues of stock. C) trade of previously issued stock. D) reinvestment of profits.
Q:
Differences in cash flow cycles and variations in accounting methods among firms can invalidate financial comparisons between firms.
a. True
b. False
Q:
When there are alternative products in a market, all of which meet performance quality standards, the product chosen is the one that meets market-perceived quality attributes.
Q:
Economic profits are equal to
A) total revenues minus total fixed costs.
B) total revenues, after tax, minus cost of goods sold.
C) total revenues minus the implicit and explicit costs of all inputs used.
D) total revenues minus the opportunity cost of labor.
Q:
In accounting, emphasis is placed on determining net income. In finance, the primary emphasis also is on net income because that is what investors use to value the firm. However, a secondary consideration is cash flow because that's what is used to run the business.
a. True
b. False
Q:
Why is water much cheaper than diamonds even though water is essential to human lives while diamonds are not?
Q:
Consumer perceptions of a quality product often have more to do with market-perceived quality than performance quality.
Q:
In order to accurately estimate cash flow from operations, depreciation must be added back to net income. The reason for this is that even though depreciation is deducted from revenue it is really a non-cash charge.
a. True
b. False
Q:
The cost and quality of the product are among the most important criteria by which purchases are made.
Q:
If marginal utility is zero,A) a rational consumer will consume one more unit.B) a rational consumer will consume one less unit next time.C) a rational consumer will not consume additional units beyond this point.D) a rational consumer will consume one more unit if the price is zero.
Q:
The financial position of companies whose business is seasonal can be dramatically different depending upon the time of year chosen to construct financial statements. This time sensitivity is especially true with respect to the firm's balance sheet.
a. True
b. False
Q:
For which of the following would the absolute price elasticity of demand be greatest?A) Salt B) Tickets to the Super BowlC) Pepsi Cola D) Gasoline
Q:
Global competition has put more power in the hands of the seller.
Q:
The time dimension is important in financial statement analysis. While the balance sheet and income statements represent the firm's financial position at a point in time, the statement of cash flows reports changes that were made to the firm's accounts over a period of time.
a. True
b. False
Q:
Output/HourPrivate MCMarginal BenefitExternal Marginal Costs1$10$200.20210.4018.500.40310.90170.70411.5016.501.20512.2014.001.80613.0013.002.80714.4012.004.00Use the information in the above table. The external marginal costs areA) increasing. B) decreasing.C) constant. D) inverse to quantity produced.
Q:
Define country-of-origin effect. How can a company overcome this effect?
Q:
The retained earnings account on the balance sheet does not represent cash and in fact, represents a claim against the existing assets of the firm. This implies that retained earnings are in fact the reinvested earnings of stockholders.
a. True
b. False
Q:
The Social Security system is a(n)A) ad valorem system. B) ability to pay system.C) progressive tax system. D) pay-as-you-go system.
Q:
Define the term global brand. How are global brands important?
Q:
Retained earnings is the cash that has been generated by the firm through its operations which has not been paid out to stockholders as dividends. Retained earnings are kept in cash or near cash accounts and thus, these cash accounts, when added together, will always be equal to the total retained earnings of the firm.
a. True
b. False
Q:
What are the four barriers faced by consumer services marketers when they enter the global market?
Q:
A monopsonist finds its profit maximizing quantity of labor employed at the point at whichA) marginal revenue product is zero.B) marginal revenue product equals marginal factor cost. C) marginal factor cost is zero.D) total cost equals total revenue.
Q:
Funds supplied by common stockholders mainly include capital stock, paid-in capital, and retained earnings, while total equity is comprised of common equity plus preferred stock.
a. True
b. False
Q:
Describe the five characteristics of an innovation that assist in determining the rate of acceptance or resistance of the market to a product.
Q:
In a perfectly competitive situation, the profit -maximizing hiring situation for all inputs being used is whereA) the MRP of each input is equal to the price of each input.B) the MRP of each input is greater than the price of each input.C) the MRP of each input is less than the price of each input.D) There is no relationship between MRP and the prices of the inputs.
Q:
Even if a stock split has no information content, and even if the dividend per share adjusted for the split does not increase, there can still be a real benefit (i.e., a higher value for shareholders) from such a split, but any such benefit is probably small.
a. True
b. False
Q:
Everett Rogers noted that four crucial elements affect the diffusion of new ideas. What are those elements?
Q:
Refer to the above figure. The firm is operating using MRP0. An increase in demand for the product has occurred. The relevant curve for the firm after the increase in priceA) is MRP0.B) is MRP1. C) is MRP2.D) could be MRP1 or MRP2 depending upon whether the firm was earning a positive profit.
Q:
What is green marketing? How does it affect product development?
Q:
A stock dividend and a stock split should, at least conceptually, have the same effect on shareholders' wealth.
a. True
b. False
Q:
The notion that regulated industry members themselves, sooner or later, are able to control regulatory bodies is referred to asA) consumerism.B) cartelization.C) the capture theory. D) the control theory.
Q:
Determining whether a firm's financial position is improving or deteriorating requires analysis of more than one set of financial statements. Trend analysis is one method of measuring a firm's performance over time.
a. True
b. False
Q:
What are the five factors that influence product adaptation in new markets?
Q:
For years, your neighbor insisted she had no desire to own a computer. Recently, however, she purchased one and says she did so because all her relatives have computers and she wants to exchange e-mail with them. Your neighborʹs behavior is an example ofA) a switching cost. B) the impact of negative market feedback.C) limited-pricing behavior. D) a network effect.
Q:
The times-interest-earned ratio is one indication of a firm's ability to meet both long-term and short-term obligations.
a. True
b. False
Q:
In the context of product adaptation, what is product homologation?
Q:
Which of the following statements is generally TRUE about information products?A) High fixed costs and low marginal costs B) High fixed costs and high marginal costs C) Low fixed costs and low marginal costs D) Low fixed costs and high marginal costs
Q:
Market value ratios provide management with a current assessment of how investors in the market view the firm's past performance and future prospects.
a. True
b. False
Q:
Compare and contrast the two ways consumers determine a product's quality.