# ECO 550 Midterm Exam 12

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**ECO 550 Midterm Exam 12**

1. Which of the following will increase (V0), the shareholder wealth maximization model of the firm: V0·(shares outstanding) = Σ∞t=1 (π t ) / (1+ke)t + Real Option

2. Shirking of one’s duties is often encountered in team production settings because

3. The Saturn Corporation (once a division of GM) was permanently closed in 2009. What went wrong with Saturn?

4. Possible goals of Not-For-Profit (NFP) enterprises include all of the following EXCEPT:

5. Recently, the American Medical Association changed its recommendations on the frequency of pap-smear exams for women. The new frequency recommendation was designed to address the family histories of the patients. The optimal frequency should be where the marginal benefit of an additional pap-test:

7. The level of an economic activity should be increased to the point where the ____ is zero.

8. The primary difference(s) between the standard deviation and the coefficient of variation as measures of risk are: 9. The ____ is the ratio of ____ to the ____.

10. The approximate probability of a value occurring that is greater than one standard deviation from the mean is approximately (assuming a normal distribution)

11. Generally, investors expect that projects with high expected net present values also will be projects with

12. The standard deviation is appropriate to compare the risk between two investments only if

13. Marginal revenue (MR) is ____ when total revenue is maximized.

14. If demand were inelastic, then we should immediately: 15. Iron ore is an example of a:

16. A price elasticity (ED) of −1.50 indicates that for a ____ increase in price, quantity demanded will ____ by ____.

17. When demand is ____ a percentage change in ____ is exactly offset by the same percentage change in ____ demanded, the net result being a constant total consumer expenditure.

18. When demand elasticity is ____ in absolute value (or ____), an increase in price will result in a(n) ____ in total revenues.

19. Suppose we estimate that the demand elasticity for fine leather jackets is .7 at their current prices. Then we know that:

20. In regression analysis, the existence of a high degree of intercorrelation among some or all of the explanatory variables in the regression equation constitutes:

21. Even though insignificant explanatory variables can raise the adjusted R2 of a demand function, one should not interpret their effects on the regression when

22. The standard deviation of the error terms in an estimated regression equation is known as:23. The constant or intercept term in a statistical demand study represents the quantity demanded when all independent variables are equal to:Answer

24. One commonly used test in checking for the presence of autocorrelation when working with time series data is the ____.

25. All of the following are reasons why an association relationship may not imply a causal relationship except:

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