If your income goes up by 2 and, in response, the quantity demanded of good x falls by 3, the good x can be considered
a. An inferior good
b. A normal good
c. A public good
d. A private good
QUESTION 2According to the profit-maximization goal, the firm should attempt to maximize short-run profits since there is too much uncertainty associated with long-run profits.
a. true
b. false
QUESTION 3A payday loan company has decided to open several new locations in the city. To decide where to open these locations it hires consultants and must decide how to pay them. To align incentives, it should to pay the consultants
a. Per store opened
b. A percentage of the profit earned per new store
c. A fixed contract amount
d. All of the above
QUESTION 4If your income goes up by 2 and, in response, the quantity demanded of good x rises by 3, good x can be considered
a. An inferior good
b. A normal good
c. A public good
d. A private good
QUESTION 5Which of the following statements concerning the shareholder wealth maximization model is (are) true?
a. The timing of future profits is explicitly considered.
b. The model provides a conceptual basis for evaluating differential levels of risk.
c. The model is only valid for dividend-paying firms.
d. a and b
e. a, b, and c
QUESTION 6A payday loan company has decided to open several new locations in the city. To decide where to open these locations it hires consultants and decides to pay them per location opened. The company should expect to see
a. A large number of badly selected stores
b. A large number of well selected stores
c. A small number of well selected stores
d. A small number of badly selected stores
QUESTION 7If your income goes up by 2 and, in response, the quantity demanded of good x rises by 3, the income elasticity of demand would be:
a. 1.5
b. 6
c. 3
d. .20
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