Which of the following is true of standard economic analysis?
A. It characterizes a firm as a black box that transforms inputs to outputs.
B. It applies basic economic tools to examine the effects of managerial decisions.
C. It focuses on the internal architecture of a firm.
D. It characterizes a firm as an organization that generates economic growth.
Answer: A
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All of the following are roles of a exchange EXCEPT
A) instituting margin requirements on futures contracts. B) marking to market at the end of each day. C) eliminate the need for buyers and sellers of futures contracts to be concerned about the creditworthiness of each other. D) reducing the default risk involving forward contracts.
Mike's income is $600 per month. He spends all of it on books (B) and CDs (C). Books cost $10 and CDs cost $15. His preferences correspond to the utility function U(B,C) = B × C. For that utility function, the marginal benefit of books is C and the marginal benefit of CDs is B. How many books and how many CDs will he purchase in a month?
A. 20 CDs and 30 Books B. 60 CDs and 10 Books C. 15 CDs and 40 Books D. 30 CDs and 15 Books