When demand elasticity is ____ in absolute value (or ____), an increase in price will result in a(n) ____ in total revenues.
a. less than 1; elastic; increase
b. more than 1; inelastic; decrease
c. less than 1; elastic; decrease
d. less than 1; inelastic; increase
e. none of the above
QUESTION 2The parent company would want to reward managers based on division revenues because
a. The managers usually have the least information about their divisions
b. It would incentivize the otherwise clueless managers about the daily activities of their divisions
c. The managers usually have the best information about how to run their divisions
d. None of the above
QUESTION 3It costs a firm 80 per unit to produce product A and 50 per unit to produce B individually. If the firm can produce both products together at 140 per unit of product A and B, this exhibits signs of
a. Economies of scale
b. Economies of Scope
c. Diseconomies of Scale
d. Diseconomies of Scope
QUESTION 4An income elasticity (Ey) of 2.0 indicates that for a ____ increase in income, ____ will increase by ____.
a. one percent; quantity supplied; two units
b. one unit; quantity supplied; two units
c. one percent; quantity demanded; two percent
d. one unit; quantity demanded; two units
e. ten percent; quantity supplied; two percent
QUESTION 5Which of the following is a reason there are divisional conflicts over the transfer price?
a. the manager of the upstream division prefers a transfer price that is too high
b. the manager of the downstream division prefers a transfer price that is too low
c. the corporate headquarters does not have enough information to determine the correct transfer price
d. all of the above
QUESTION 6It costs a firm 80 per unit to produce product A and 50 per unit to produce B individually. If the firm can produce both products together at 120 per unit of product A and B, this exhibits signs of
a. Economies of scale
b. Economies of Scope
c. Diseconomies of Scale
d. Diseconomies of Scope
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