Q&A Hero

Q: In the context of advertising, a marketer's self-reference criterion (SRC) may affect the ultimate success of the communication.

Q: A curve that shows a set of consumption alternatives that give the same level of satisfaction isA) a substitution curve. B) a budget line.C) an indifference curve. D) an income curve.

Q: A proper feedback system allows a company to correct errors before substantial damage occurs.

Q: If marginal utility is zero, total utility isA) falling. B) increasing.C) at its maximum. D) negative.

Q: For an addictive drug such as heroin, if the price of heroin increases, thenA) the quantity demanded never changes.B) the quantity demanded will decrease by a relatively large amount. C) the quantity demanded will actually increase.D) the quantity demanded will decrease by a relatively small amount.

Q: Feedback channels must be carefully selected if a decoded message is to reach the consumer.

Q: The marginal benefit of pollution abatement is represented byA) an upward sloping curve. B) a downward sloping curve. C) a horizontal curve. D) a vertical curve.

Q: Other sales personnel are a source of noise in the international communications process.

Q: If the expected rate of return on a stock exceeds the required rate, a. The stock is experiencing supernormal growth. b. The stock should be sold. c. The company is probably not trying to maximize price per share. d. The stock is a good buy. e. Dividends are not being declared.

Q: The feedback step of the international communications process is unrelated to the effectiveness of the other steps.

Q: If we include cash benefits and in -kind benefits available to low-income people, the share of the U.S. population in povertyA) drops dramatically. B) increases somewhat.C) increases dramatically. D) does not change.

Q: An increase in a firm's expected growth rate would normally cause the firm's required rate of return to a. Increase. b. Decrease. c. Fluctuate. d. Remain constant. e. Possibly increase, possibly decrease, or possibly remain unchanged.

Q: Errors at the receiver end of the international communications process can be avoided if the message is encoded properly.

Q: The main difference between a monopsonist and a competitive buyer of labor is thatA) the monopsonist can hire as many workers as it wants at the going wage while the competitive firm must raise wages to hire additional workers.B) the competitive firm can hire as many workers as it wants at the going wage while the monopsonist can hire more workers at lower wages.C) the competitor can hire as many workers as it wants at the going wage while the monopsonist must raise wages to hire additional workers.D) the monopsonist can force wages down and still hire as many workers as it wants while the competitive firm must increase the wage rate to hire additional workers.

Q: Assuming g will remain constant, the dividend yield is a good measure of the required return on a common stock under which of the following circumstances? a. g = 0. b. g > 0. c. g < 0. d. Under no circumstances. e. Answers a and b are both correct.

Q: Problems of literacy, media availability, and types of media create problems in the international communications process at the encoding step.

Q: Which of the following is the largest union in the United States?A) International Brotherhood of TeamstersB) International Brotherhood of Electrical WorkersC) National Education AssociationD) American Federation of State, County, and Municipal Employees

Q: When a marketing executive advertises his product in a newspaper, the newspaper acts as a feedback channel.

Q: A project with a 3-year life has the following probability distributions for possible end of year cash flows in each of the next three years:

Q: The firmʹs demand for labor curve is itsA) average product of labor curve.B) marginal product of labor curve.C) marginal revenue product of labor curve.D) average revenue product of labor curve.

Q: Uncontrollable and unpredictable influences such as competitive activities and confusion that detract from the process of communication are called feedback.

Q: Assume that, to help build your nest-egg, you made two deposits of $100, one on January 1, 2014, and one on July 1, 2014, in a savings account that paid 10 percent compounded semiannually. On January 1, 2015, the bank increased the interest rate paid on savings accounts to 12 percent, annual compounding. Then you made a third $100 deposit on April 1, 2015. How much should there be in your account on January 1, 2016? a. $353.08 b. $349.95 c. $355.27 d. $362.10 e. $338.43

Q: Under the U.S. system of regulation, most regulars are selected fromA) politicians and their friends.B) the industry that is to be regulated. C) consumer advocacy groups.D) university professors who understand the nature of the industry and who understand the true interests of consumers.

Q: You will receive a $100 annual perpetuity starting at Year 0, a $300 annual perpetuity with the first payment at the end of Year 5, and a $200 semiannual perpetuity (i.e., 2 payments per year) with the first payment in the middle of Year 10. If you require an effective annual interest rate of 14.49 percent, what is the future value of all three perpetuities together? (Hint: The effective semiannual interest rate is equal to (1.1449)1/2− 1.0 = 7%.) a. $2,091.86 b. $2,785.14 c. $4,213.51 d. Infinite; the future value of any perpetuity is infinite. e. Cannot determine the value since some payments are received annually and some semiannually.

Q: When a message from a source is converted into effective symbolism for transmission to a receiver, the message is said to have been decoded.

Q: Stephanie listens to punk rock because her friends do. This isA) a positive sum game. B) collusion.C) positive market feedback. D) negative market feedback.

Q: A reason for the failure of marketing communications is that the message received by the intended audience is not understood because of different cultural interpretations.

Q: An investor is considering the purchase of 20 acres of land. An analysis indicates that if the land is used for cattle grazing, it will produce a cash flow of $1,000 per year indefinitely. If the investor requires a return of 10 percent on investments of this type, what is the most he or she should be willing to pay for the land? a. $1,000 b. $10,000 c. $100,000 d. $150,000 e. $1,000,000

Q: For a firm that sells an information product, the long -run equilibrium exists at a point at which economic profits areA) negative. B) zero.C) positive. D) dependent upon the particular product.

Q: You have the opportunity to buy a perpetuity which pays $1,000 annually. Your required rate of return on this investment is 15 percent. You should be essentially indifferent to buying or not buying the investment if it were offered at a price of a. $5,000.00 b. $6,000.00 c. $6,666.67 d. $7,500.00 e. $8,728.50

Q: Different cultures usually seek different values or benefits from the primary function of a product.

Q: An implication of the downward slope of the demand curve for a monopolistic competitive firm is thatA) its marginal revenue curve slopes upward.B) its marginal revenue curve and its demand curve are identical (same) line.C) its marginal revenue curve slopes downward but lies above the demand curve. D) its marginal revenue curve slopes downward but lies below the demand curve.

Q: What are the six issues that must be taken into consideration by an e-vendor?

Q: Which of the following statements is most correct? a. The first payment under a 3-year, annual payment, amortized loan for $1,000 will include a smaller percentage (or fraction) of interest if the interest rate is 5 percent than if it is 10 percent. b. If you are lending money, then, based on effective interest rates, you should prefer to lend at a 10 percent simple, or quoted, rate but with semiannual payments, rather than at a 10.1 percent simple rate with annual payments. However, as a borrower you should prefer the annual payment loan. c. The value of a perpetuity (say for $100 per year) will approach infinity as the interest rate used to evaluate the perpetuity approaches zero. d. Statements a, b, and c are all true. e. Only statements b and c are true.

Q: Suppose a monopolistʹs costs and revenues are as follows: ATC = $50.00; MC = $35.00; MR = $45.00; P = $55.00. The firm shouldA) increase output and decrease price. B) decrease output and increase price.C) not change output or price. D) shut down.

Q: Company B found out that the middleman it was using was skimming money from its profits, so it decided it had to terminate the relationship. What does Company B need to know before terminating a middleman in a foreign country?

Q: Which of the following statements is correct? a. Simple rates can't be used in present value or future value calculations because they fail to account for compounding effects. b. The periodic interest rate can be used directly in calculations as long as the number of payments per year is greater than or equal to the number of compounding periods per year. c. In all cases where interest is added or payments are made more frequently than annually, the periodic rate is less than the annual rate. d. Generally, the APR is greater than the EAR as a result of compounding effects. e. If the compounding period is semiannual then the periodic rate will equal the effective annual rate divided by two.

Q: A true signal mustA) convey information only.B) convey information and direct the resource owners to act appropriately.C) convey information about the long-run future. D) explain in detail why something should be done.

Q: What is secondary wholesaling and when might it be used?

Q: A $10,000 loan is to be amortized over 5 years, with annual end-of-year payments. Given the following facts, which of these statements is correct? a. The annual payments would be larger if the interest rate were lower. b. If the loan were amortized over 10 years rather than 5 years, and if the interest rate were the same in either case, the first payment would include more dollars of interest under the 5-year amortization plan. c. The last payment would have a higher proportion of interest than the first payment. d. The proportion of interest versus principal repayment would be the same for each of the 5 payments. e. The proportion of each payment that represents interest as opposed to repayment of principal would be higher if the interest rate were higher.

Q: TotalOutputTotalCostsTotalOutputTotalCosts100$500106$528101501107540102503108555103506109580104510110615105518111660Refer to the above table. This firm operates in a perfectly competitive market in which the market price is $5/unit. What is true when the firm produces 110 units?A) Total revenue equals $3,075.B) Total costs exceed total revenue by $65.C) Marginal revenue is more than marginal cost. D) Its total profit is $65.

Q: What are the various techniques that can be used to motivate middlemen?

Q: Which of the following statements is correct? a. Cash flow time lines are helpful graphical displays for situations involving simple annual interest but are not useful when time periods are more frequent than annual. b. The future value of an annuity due is equal to the future value of an otherwise identical regular annuity with interest compounded on each payment for one additional period. c. There is no precise method of calculating either present values or future values when fractional time periods are involved. We must instead use rough approximations. d. The terminal value of a stream of uneven cash flows is found by simply summing up all the cash flows. e. The annual percentage rate (APR) cannot be equivalent to the effective annual rate (EAR).

Q: Refer to the above figure. Average variable costs are represented by curveA) 1. B) 2. C) 3. D) 4.

Q: Discuss the continuity problem associated with a channel of distribution.

Q: Which of the following statements is correct? a. Other things held constant, an increase in the number of discounting periods per year increases the present value of a given annual annuity. b. Other things held constant, an increase in the number of discounting periods per year increases the present value of a lump sum to be received in the future. c. The payment made each period under an amortized loan is constant, and it consists of some interest and some principal. The later we are is the loan's life, the smaller the interest portion of the payment. d. There is an inverse relationship between the present value interest factor of an annuity and the future value interest factor of an annuity, (i.e., one is the reciprocal of the other). e. Each of the above statements is true.

Q: When a corporation uses profits to pay for the purchase of new capital equipment, this is know asA) reinvestment. B) a coupon payment. C) dividend. D) collusion.

Q: What is a foreign sales corporation?

Q: Which of the following statements is correct? a. If a bank uses quarterly compounding for saving accounts, the simple rate will be greater than the effective annual rate. b. The present value of a future sum increases as the simple interest rate increases or the number of discount periods per year decreases. c. The present value of a future sum increases as either the simple interest rate or the number of discount periods per year increases. d. The present value of a future sum decreases as either the simple interest rate or the number of discount periods per year increases. e. All of the above statements are false.

Q: The economyʹs current rate of interest is 10 percent and a firm has $10,000 of owner -invested capital. Its total revenue is $5000 and the firmʹs explicit costs are $3500. From this we know that this firmʹsA) accounting profit is $500. B) economic profit is $1,500.C) accounting profit is $11,500. D) economic profit is $500.

Q: Discuss the Export Trading Company (ETC) Act and its effects on U.S. firms.

Q: Supposed someone offered you the choice of two equally risky annuities, each paying $10,000 per year for five years. One is an ordinary (or deferred) annuity, the other is an annuity due. Which of the following statements is most correct? a. The present value of the ordinary annuity must exceed the present value of the annuity due, but the future value of an ordinary annuity may be less than the future value of the annuity due. b. The present value of the annuity due exceeds the present value of the ordinary annuity, while the future value of the ordinary annuity. c. The present value of the annuity due exceeds the present value of the ordinary annuity, and the future value of the annuity due also exceeds the future value of the ordinary annuity. d. If interest rates increase, the difference between the present value of the ordinary annuity and the present value of the annuity due remains the same. e. Both answers a and d are correct.

Q: Along an indifference curve,A) the marginal utility of all items is equal. B) the total satisfaction is the same.C) the prices of all goods are equal.D) the marginal utility/price ratios of all items are equal.

Q: How does complementary marketing extend a company's distribution? When is a company most likely to use it?

Q: Suppose someone offered you your choice of two equally risky annuities, each paying $5,000 per year for 5 years. One is an annuity due, while the other is a regular (or deferred) annuity. If you are a rational wealth-maximizing investor which annuity would you choose? a. The annuity due. b. The deferred annuity. c. Either one, because as the problem is set up, they have the same present value. d. Without information about the appropriate interest rate, we cannot find the values of the two annuities; hence we cannot tell which is better. e. The annuity due; however, if the payments on both were doubled to $10,000, the deferred annuity would be preferred.

Q: If marginal utility is positive but diminishing, thenA) average utility must be negative.B) marginal utility must be above-average utility. C) total utility must be positive.D) marginal utility must be more than total utility.

Q: What are the main features of export management companies? Describe their advantages and disadvantages.

Q: Which of the following statements is correct? a. The PV of an ordinary annuity will be larger than the PV of an annuity due, other things held constant. b. The effective annual rate will always be greater than the simple rate except in situations where the periodic rate is equal to the simple rate. c. If you were borrowing money from a bank, and the simple interest rate was 10 percent, you would be better off if the bank used daily rather than quarterly compounding. d. If you were borrowing money from a bank, and the simple interest rate was 10 percent, daily compounding, you would be better off if the bank used a 365-day year rather than a 360-day year. e. $100 placed in a bank account which pays 6 percent will double faster if the bank pays interest annually rather than daily.

Q: The longer any price change lasts over time, theA) more difficult it is to alter quantity demanded.B) the more quickly quantity demanded will return to its original level.C) the longer the short-run equilibrium will continue to be the short-run equilibrium. D) more quantity demanded will change.

Q: The Japanese distribution structure has four distinguishing features. Discuss these and explain how they impact Japan's market.

Q: Which of the following statements is false? a. If the discount (or interest) rate is positive, the future value of an expected series of payments will always exceed the present value of the same series. b. To increase present consumption beyond present income normally requires either the payment of interest or else an opportunity cost of interest foregone. c. Disregarding risk, if money has time value, it is impossible for the present value of a given sum to be greater than its future value. d. Disregarding risk, if the present value of a sum is equal to its future value, either r = 0 or t = 0. e. Each of the above statements is true.

Q: The marginal cost of pollution abatement is represented byA) an upward sloping curve. B) a downward sloping curve.C) a horizontal curve. D) a vertical curve.

Q: What happens in an import-oriented distribution structure? How are intermediaries affected?

Q: As the discount rate increases without limit, the present value of the future cash inflows a. Gets larger without limit. b. Stays unchanged. c. Approaches zero. d. Gets smaller without limit, i.e., approaches minus infinity. e. Goes to ern.

Q: One result of the EU's unification is A) the elimination of trade barriers with countries outside the EU. B) the acceptance of universal prices on basic goods. C) the elimination of transportation barriers among member countries. D) an increase in the number of warehouses in member countries. E) elimination of the need for cargo ships for distribution.

Q: Relative poverty refers to A) how a familyʹs income compares to the incomes of those around them. B) poverty levels at a stated income cutoff. C) the number of poor in one state relative to another. D) None of the above.

Q: You have determined the profitability of a planned project by finding the present value of all the cash flows form that project. Which of the following would cause the project to look more appealing in terms of the present value of those cash flows? a. The discount rate decreases. b. The cash flows are extended over a longer period of time, but the total amount of the cash flows remains the same. c. The discount rate increases. d. Answers b and c above. e. Answers a and b above.

Q: For a monopsonist the marginal cost of increasing its workforce will always be greater than the wage rate becauseA) there is not good factor substitution in a monopsony.B) the wage rate offered the newest employee must be paid to all workers.C) the industry will be a closed shop.D) a normal rate of return must be paid to the owner.

Q: Cargo ships are reducing transit time and are larger and thus able to carry more containers. What is a disadvantage of this for U.S. companies' imports? A) They are taking business away from other forms of transit. B) Some ships are too large to fit into U.S. ports. C) The cost is becoming prohibitive. D) Containers cannot be shipped by rail in Europe. E) They have impeded investment in supersonic passenger jets.

Q: Given some amount to be received several years in the future, if the interest rate increases, the present value of the future amount will a. Be higher. b. Be lower. c. Stay the same. d. Cannot tell. e. Be variable.

Q: A website and the product must be culturally neutral, which can be a problem when it comes to color. For instance, the color red is associated with socialism in A) the United States. B) China. C) Brazil. D) Uruguay. E) Spain.

Q: Which of the following correctly describes the trend in U.S. union membership?A) Union membership has been decreasing steadily since the 1930s.B) Union membership decreased from 1930 - 1960, but has been increasing steadily since. C) Union membership peaked in the 1960s and has been decreasing steadily since.D) Union membership declined until the 1980s, but has been increasing steadily since.

Q: The present value of $3,000 to be received in 5 years at a 10% discount rate is $2000. a. True b. False

Q: The additional cost associated with hiring one additional unit of some factor input, such as labor, is referred to asA) marginal physical product of labor. B) marginal revenue cost.C) marginal factor cost. D) marginal revenue product.

Q: E-commerce is a form of ________ selling. A) direct B) parallel C) dual D) indirect E) targeted

Q: A website should be seen as A) a sole means of advertising. B) a vehicle for product delivery. C) a substitute for marketing in more than one language. D) a way to get around differences in cultures. E) a means of promotion and a retail store.

Q: Perpetuities represent a series of even cash flows over a finite period of time. a. True b. False

Q: The hypothesis that regulators eventually adopt policies that benefit the producers in the industry is known as theA) capture hypothesis.B) producersʹ hypothesis.C) share-the-gains, share-the-pains hypothesis. D) itʹs-a-rip-off hypothesis.

Q: The present value of a future cash flow is the amount of money if invested today at particular interest would turn into the future value at maturity. a. True b. False

Q: When developing a website, what is true about the use of language? A) English should be used, as it is the most universal language. B) It is not necessary to use multiple languages because the customer will bridge the language gap. C) Simple translation of web pages is sufficient to reach foreign markets. D) Language and culture do not impact a website's message in any significant way. E) A country-specific (and language-specific) website may make the difference between success and failure.