Managerial Economics (Froeb, McCann, Shor, Ward) Chapter 2 - Custom Scholars
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Managerial Economics (Froeb, McCann, Shor, Ward) Chapter 2

question
How is wealth created by voluntary transactions?
answer
By moving assets from lower- to higher-valued uses.
question
What destroys wealth?
answer
Anything that impedes the movement of assets to higher-valued uses, such as:
1. taxes
2. subsidies
3. price controls
question
A company can be thought of as a series of______________?
answer
transactions.
question
What does a well-designed organization reward employees for?
answer
Identifying and consummating profitable transactions and/or stopping unprofitable transactions.
question
An individual's value for a good or service is:
answer
The amount of money he or she is willing to pay for it.
question
True or False: The biggest advantage of capitalism is that it creates wealth by letting a person follow his or her own self-interest.
answer
True
question
True or False: Wealth-creating transactions are more likely to occur with private property rights, with strong contract enforcement and black markets.
answer
True
question
True or False: Government regulation is the best way to eliminate poverty.
answer
True
question
Which of the following are examples of a price floor?
A. Minimum wages
B. Rent controls in New York
C. Both A and B
D. None of the above
answer
A. Minimum wages
question
What is a price ceiling?
answer
A government-set maximum price.
question
Taxes
A. Impede the movement of assets to higher-valued uses
B. Reduce incentives to work
C. Decrease the number of wealth creating transactions
D. All of the above
answer
D. All of the above
question
A consumer values a car at $30,000 and it costs a producer $20,000 to make the same car. If the transaction is completed at $24,000 what are the buyer and seller surpluses?
answer
Seller surplus: $4,000
Buyer surplus: $6000
question
A consumer values a car at $525,000 and a producer values the same car at $485,000. If sales tax is 8% and is levied on the seller, then the seller's bottom-line price is _____ . (Round to nearest thousand)
answer
$524,000
question
Efficiency implies opportunity
A. Always
B. Never
C. Only if accompanied by secure property rights
D. None of the above
answer
B. Never
question
Buyer surplus
answer
The difference between the buyer's value (what he is willing to pay) and the price (what he has to pay
question
When is an economy considered efficient?
answer
When all assets are employed in their highest valued uses.
question
The buyer values the house at $130,000- This is the buyers top dollar
answer
Willingness to pay
question
The seller values the house at $120,000. This is the seller's bottom line.
answer
Won't accept less
question
True or False?
answer
The overbidding from the oil company="subsidy"
1 of 19
question
How is wealth created by voluntary transactions?
answer
By moving assets from lower- to higher-valued uses.
question
What destroys wealth?
answer
Anything that impedes the movement of assets to higher-valued uses, such as:
1. taxes
2. subsidies
3. price controls
question
A company can be thought of as a series of______________?
answer
transactions.
question
What does a well-designed organization reward employees for?
answer
Identifying and consummating profitable transactions and/or stopping unprofitable transactions.
question
An individual's value for a good or service is:
answer
The amount of money he or she is willing to pay for it.
question
True or False: The biggest advantage of capitalism is that it creates wealth by letting a person follow his or her own self-interest.
answer
True
question
True or False: Wealth-creating transactions are more likely to occur with private property rights, with strong contract enforcement and black markets.
answer
True
question
True or False: Government regulation is the best way to eliminate poverty.
answer
True
question
Which of the following are examples of a price floor?
A. Minimum wages
B. Rent controls in New York
C. Both A and B
D. None of the above
answer
A. Minimum wages
question
What is a price ceiling?
answer
A government-set maximum price.
question
Taxes
A. Impede the movement of assets to higher-valued uses
B. Reduce incentives to work
C. Decrease the number of wealth creating transactions
D. All of the above
answer
D. All of the above
question
A consumer values a car at $30,000 and it costs a producer $20,000 to make the same car. If the transaction is completed at $24,000 what are the buyer and seller surpluses?
answer
Seller surplus: $4,000
Buyer surplus: $6000
question
A consumer values a car at $525,000 and a producer values the same car at $485,000. If sales tax is 8% and is levied on the seller, then the seller's bottom-line price is _____ . (Round to nearest thousand)
answer
$524,000
question
Efficiency implies opportunity
A. Always
B. Never
C. Only if accompanied by secure property rights
D. None of the above
answer
B. Never
question
Buyer surplus
answer
The difference between the buyer's value (what he is willing to pay) and the price (what he has to pay
question
When is an economy considered efficient?
answer
When all assets are employed in their highest valued uses.
question
The buyer values the house at $130,000- This is the buyers top dollar
answer
Willingness to pay
question
The seller values the house at $120,000. This is the seller's bottom line.
answer
Won't accept less
question
True or False?
answer
The overbidding from the oil company="subsidy"

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