ECON201 Week 3 Quiz SCORE 100 PERCENT

Quiz
Question 1 (10 points)
 
Demand is price inelastic if:
Question 1 options:

the price of the good responds slightly to a quantity change.

the demand curve shifts very little when a demand shifter changes.

the percentage change in quantity demanded is relatively small in response to a relatively large percentage change in price.

all of the above are true.
Question 2 (10 points)
 
If the absolute value of price elasticity is greater than 1, this means the demand curve in that region is:
Question 2 options:

price elastic.

price inelastic.

unit price elastic.

upward sloping.
Question 3 (10 points)
 
Which of the following will lead to a decrease in total revenue?
Question 3 options:

price goes up and demand is perfectly inelastic

price goes up and demand is price inelastic

price declines and demand is price elastic

price increases and demand is price elastic
Question 4 (10 points)
 
If total revenue goes up when price falls, the price elasticity of demand is said to be:
Question 4 options:

price inelastic.

unit price elastic.

price elastic.

positive.
Question 5 (10 points)
 
Price elasticity of demand measures the responsiveness of the change in:
Question 5 options:

quantity demanded to a change in price.

price to a change in quantity demanded.

slope of the demand curve to a change in price.

slope of the demand curve to a change in quantity demanded.
Question 6 (10 points)
 
The price elasticity of demand is:
Question 6 options:

always positive.

always greater than 1.

usually equal to 1.

always negative.
Question 7 (10 points)
 
A men's tie store sold an average of 30 ties per day when the price was $5 per tie but sold 50 of the same ties per day when the price was $3 per tie. Hence, the absolute value of the price elasticity of demand is:
Question 7 options:

greater than zero but less than 1.

equal to 1.

greater than 1 but less than 3.

greater than 3.
Question 8 (10 points)
 
If the total revenue received by a firm does not change when it raises its price, this indicates that the demand for the firm's product is:
Question 8 options:

unstable.

price inelastic.

price elastic.

unit price elastic.
Question 9 (10 points)
 
The ratio of the percentage change in a dependent variable to the percentage change in an independent variable, all other things unchanged, is:
Question 9 options:

total revenue.

production possibilities.

elasticity.

slope.
Question 10 (10 points)
 
The price elasticity of a good will tend to be greater:
Question 10 options:

the longer the relevant time period.

the fewer number of substitute goods available.

if it is a staple or necessity with few substitutes.

All of the above are true.
Supply and Demand in Agriculture
 
Question 11 (10 points)
 
(Exhibit: Supply and Demand in Agriculture) To help farmers:
Question 11 options:

a price floor would be set at P4, causing a surplus of Q3 - Q0.

a price floor would be set at P2, causing a surplus of Q2 - Q0.

a price ceiling would be set at P4, causing a surplus of Q2 - Q1.

a price floor would be set at P1, causing a shortage of Q3 - Q0.
Question 12 (10 points)
 
(Exhibit: Supply and Demand in Agriculture) If a price floor at P4 is set to help farmers in terms of income and government wants to assure farmers that their output will be purchased, the government would have to purchase an amount of output equal to:
Question 12 options:

Q3 - Q0.

Q3 - Q1.

Q2 - Q1.

none of the above are correct.
Question 13 (10 points)
 
(Exhibit: Supply and Demand in Agriculture) If the government set an effective price floor at one of the prices shown on the vertical axis:
Question 13 options:

with this much wheat on the market, the price would fall to P1.

Q3 bushels of wheat would be supplied.

the resulting shortage would be made up by the government out of its accumulated stocks.

all of the above would be true.
Demand and Price Elasticity 1
 
Question 14 (10 points)
 
(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $2.50 and $2.25?
Question 14 options:

-9

-19

indeterminate

none of the above
Question 15 (10 points)
 
(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $2.25 and $2.00?
Question 15 options:

-5.67

-4.00

-9.00

-17.6
Question 16 (10 points)
 
(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $1.75 and $1.50?
Question 16 options:

-0.42

-1.5

-1.86

none of the above

ECON201 Week 3 Discussion Price Discrimination

Movie theaters, airlines, and many other businesses like to charge customers different prices based on time of the day, age, and purchase dates. Why?

Provide an example of a price discrimination for a good or service that you thought it to unfair. Do you still believe that the discrimination is unjustifiable?

 

 

ECON201 Midterm Exam SCORE 100 PERCENT

Quiz
Question 1 (5 points)
 
Economics is the study of:
Question 1 options:

increasing the level of productive resources so there is maximum output in society.

increasing the level of productive resources so there is a minimum level of income.

how people, institutions, and society make choices under conditions of scarcity.

the efficient use of scarce resources paid for at the minimum level of cost to consumers and businesses.
Question 2 (5 points)
 
Which of the following is not a central focus of the "economic perspective"?
Question 2 options:

Scarcity and choice.

The scientific method.

Purposeful behavior.

Marginal analysis.
Question 3 (5 points)
 
The satisfaction or pleasure one gets from consuming a good or service is:
Question 3 options:

price.

utility.

consumption.

preferences.
Question 4 (5 points)
 
The private ownership of property resources and use of prices to direct and coordinate economic activity is characteristic of:
Question 4 options:

a command system.

a market system.

communism.

socialism.
Question 5 (5 points)
 
Which statement best describes a capitalist economy?
Question 5 options:

The production of goods and services is determined primarily by markets, but the allocation of goods and services is determined primarily by government.

The production of goods and services is determined primarily by government, but the allocation of goods and services is determined primarily by markets.

The production and allocation of goods and services is determined primarily through markets.

The production and allocation of goods and services is determined primarily through government.
Question 6 (5 points)
 
Capitalism is an economic system that:
Question 6 options:

produces more capital goods than consumer goods.

produces more consumer goods than capital goods.

gives the government the right to tax individuals and corporations.

private individuals and corporations the right to own productive resources.
Question 7 (5 points)
 
In a market system, well-defined property rights are important because they:
Question 7 options:

reduce unnecessary investment.

limit destructive economic growth.

create economic problems.

encourage economic activity.
Question 8 (5 points)
 
If two goods are complements:
Question 8 options:

they are consumed independently.

an increase in the price of one will increase the demand for the other.

a decrease in the price of one will increase the demand for the other.

they are necessarily inferior goods.
Question 9 (5 points)
 
When the price of a product is increased 10 percent, the quantity demanded decreases 15 percent. In this range of prices, demand for this product is:
Question 9 options:

elastic.

inelastic.

cross-elastic.

unitary elastic.
Question 10 (5 points)
 
Demand can be said to be inelastic when:
Question 10 options:

an increase in price results in a reduction in total revenue.

a reduction in price results in an increase in total revenue.

a reduction in price results in a decrease in total revenue.

the elasticity coefficient exceeds one.
Question 11 (5 points)
 
Economic growth is shown by a shift of the production possibilities curve outward and to the right.
Question 11 options:

True

False
Question 12 (5 points)
 
The four factors of production are land, labor, capital, and government services.
Question 12 options:

True

False
Question 13 (5 points)
 
If demand increases and supply simultaneously decreases, equilibrium price will rise.
Question 13 options:

True

False
Question 14 (5 points)
 
Property rights have a positive effect in a market economy because they encourage owners to maintain their property.
Question 14 options:

True

False
Question 15 (5 points)
 
In the price range where demand is inelastic, a decrease in price will result in a decrease in total revenue.
Question 15 options:

True

False
Question 16 (5 points)
 
Price elasticity of supply decreases the longer the time period.
Question 16 options:

True

False
Question 17 (5 points)
 
Toothpaste and toothbrushes are substitute goods.
Question 17 options:

True

False
Question 18 (5 points)
 
A government-set price ceiling will lower equilibrium price and quantity in a market.
Question 18 options:

True

False
Demand for Shirts
 
Question 19 (5 points)
 
(Exhibit: Demand for Shirts) The price elasticity of demand for the segment AB is:
Question 19 options:

-13

-11

-0.91

-0.1
Question 20 (5 points)
 
(Exhibit: Demand for Shirts) The price elasticity of demand for the segment BC is:
Question 20 options:

greater than 3.33 (absolute value).

-3.33.

-3.

-0.33.
Question 21 (5 points)
 
(Exhibit: Demand for Shirts) The price elasticity of demand for the segment CD is:
Question 21 options:

greater than 1 (absolute value).

-1.

-0.71.

-0.29.
Markets and Efficiency
 
Question 22 (5 points)
 
(Exhibit: Markets and Efficiency) In panel (a):
Question 22 options:

the price of apples is $0.80 and the quantity demanded is Q1.

the equilibrium price ensures that quantity demanded will match quantity supplied.

the equilibrium price ensures that there will be neither surpluses nor shortages.

all of the above are true.
Question 23 (5 points)
 
(Exhibit: Markets and Efficiency) The equilibrium price in Panel (a) tells us that the marginal cost of a pound of apples is:
Question 23 options:

less than $0.80.

equal to $0.80.

greater than $0.80.

equal to the average cost of producing apples.
Question 24 (5 points)
 
(Exhibit: Markets and Efficiency) The price and marginal cost in Panel(a) are equal because of:
Question 24 options:

the marginal decision rule.

the law of demand.

the law of supply.

the law of increasing cost.
Question 25 (5 points)
 
(Exhibit: Markets and Efficiency) What is the marginal benefit to a producer of an extra pound of apples in Panel (a)?
Question 25 options:

It is the price the producer receives.

It is the price the consumer receives.

It is the price the producer pays.

It is all of the above.
Question 26 (5 points)
 
(Exhibit: Markets and Efficiency) What is the marginal cost of an extra pound of apples to a producer in Panel(a)?
Question 26 options:

It is greater than the price.

It is the value that must be given up to produce an extra pound of apples.

It must be less than the price.

It is the cost of the least satisfactory apples.
Question 27 (5 points)
 
(Exhibit: Markets and Efficiency) In Panel (b) demand shifted from D1 to D2, reflecting a change in consumer preferences. The price of apples will change to the new equilibrium price:
Question 27 options:

where the marginal benefit of apples is again equal to the marginal cost.

of $0.70.

where an efficient solution is again achieved.

that is described by all of the above.
Question 28 (20 points)
 
What effect on the price elasticity of demand for commuter rail is there likely to be from a decrease in the price of gasoline? Explain your answer.

BUSI570 ADE Week 4 Firm Financial Analysis Project Parts I-III Lowe's Company

Company:Lowe's Companies, Inc.

Develop an overview/history of the firm that you have chosen, as well as conduct an end-point financial analysis and working capital analysis.

Part I: Firm History and Overview (due Week 4)

Develop an overview/history of the firm that you have chosen, as well as the industry your firm operates in. You should include information that describes the market structure and competition in the industry, along with the position of your firm within this industry – i.e., is the firm one of the leaders or is it a niche player? Is the firm one of the medium-size firms in the industry? Part I will be worth 30 points.

Part II: End-Point Financial Analysis (due Week 4)

Using historical financial statements (income statements and balance sheets) for the firm, analyze the financial performance and changes to the firm over a ten-year time period using an end-point analysis framework similar to that used in the analysis of Coca-Cola (Week 1 dropbox assignment). You should calculate the same ratios and financial measures as were provided for the Coca-Cola case.

Next, you will identify the major changes in the firm's financial performance over this time period. Include an analysis of: 1) overall changes/growth in the firm's revenues, assets, and liabilities; 2) common-size statements; 3) ratio analysis; and 4) analysis using the DuPont model.

You will be required to provide the conclusions regarding which way the major ratio categories are trending. An acceptable conclusion might be, for example: "profitability has increased over the last five years as evidenced by increasing net margin and gross margin ratios. This is the result of a decrease in cost of goods sold, higher margins because of increased market share, etc." You should also research the notes to your company's 10K to determine the probable causes of these changes ("Leverage increased because the company issued $50M in bonds to pay for a plant expansion."). Part II will be worth 70 points.

Part III: Working Capital Analysis (due Week 4)

Using the same financial statements from your Financial Analysis (Part II), provide an analysis of the firm's working capital policy and changes to this policy over a ten-year period. Your working capital analysis should include the following: 1) overall level and change in WC over the time period and the factors that caused these changes; 2) calculation of the Cash Conversion Cycle for the beginning and ending period and a discussion of causal factors and implication of these changes; 3) overall assessment of the firm's working capital policy (i.e., is it conservative, moderate, or aggressive?). Compare your results to the firm's industry averages. Part III will be worth 40 points.

BUSI570 ADE Week 4 Discussion

This week's material covers two very important securities in finance--bonds and stocks. Our task will be to try to determine what is happening currently in bond and stock markets. You will have two tasks:

1. Find an article in a recent newspaper or business publication (within the last month) that discusses something concerning the bond market. This can be information on current bond values, current interest rates and Fed monetary policy, the global debt situation, the U.S. budget situation and its basis in debt funding, etc.. You should use nationally recognized sources for this article, such as The Wall Street Journal, The Financial Times, Business Week, etc. Identify the source of your information and provide a link. Describe and discuss the main points of this article and how this information could be useful to a financial manager.
2. Do the same for stocks--i.e., find an article about what is happening in the stock market. Again, identify your source and provide a link; describe and discuss the main points of this article; relate this information to the course.

Initial post due Friday by 11:59 pm CT. Two responses due Sunday by 11:59 pm CT.

 

BUSI570 ADE Week 3 Discussion 3

Our discussion this week will provide an opportunity for us to 'think and dream big' in a capital budgeting sense. Your task will be as follows:

1. Go to either of the following websites: www.ted.com or fora.tv. Both of these sites provide video presentations on a variety of topics, some of which deal with new innovations and ideas. Watch some of the videos that deal with new ideas/innovations and choose one that resonates with you.
2. Describe the idea for your classmates and provice a link to it. Try to capture the idea presented in the video in a capital budgeting framework. Try to identify the various costs of a project, the cash flows associated with it, etc. That is, if you were to translate the idea into a capital budgeting framework, how would you do it? What factors would you need to consider in your analysis? These will be very general in nature--not specific dollar amounts.
3. Describe any positive or negative externalities that might result from the project. (NOTE: externalities are benefits/costs outside of the original transaction--e.g., pollution control results in better health outcomes).

BUSI570 ADE Week 1 Discussion 1

We are all aware of the financial crisis that engulfed the economy during 2008.  Michael Lewis is the author of several books including Liar's Poker, Moneyball, The Big Short, and Boomerang.  He has written two very insightful articles detailing the reasons for the crisis and the ways to repair the system. 

Please read "The End of the Financial World as We Know It" and "How to Repair a Broken Financial World."   These articles were written in January of 2009. Discuss three (3) things you learned from the articles and share them with your classmates. 

In addition to reading the two Lewis articles linked above, please find one other article/video/ etc. on the financial crisis and summarize it for the class.  This information can come from articles (use reputable sources--NYT, WSJ, Financial Times, etc.), from videos, news programs, etc.  Several sources can be found in the Instructional Materials for Week One.