6 Which one of the following would not shift a country's production possibility frontier outwards (further away from the origin)? A An increase in exports B Technical progress reducing production costs C An increase in the working population D An improvement in the literacy rate
fficient quantities of them for everyone to be able to consume them for nothing.
Consumption of scarce goods is restricted by the fact that consumers have to pay to acquire them. There are lots of things that exist in large quantities, but we still have to pay for them, for example: bread
17 You have the following information on a company $ PBIT 4,000,000 Interest expenses 400,000 Taxes 170,000 Capital expenditure 600,000 Calculate the free cash flow to the firm
16 You have the following information on a company $ PBIT 4,000,000 Interest expenses 400,000 Taxes 170,000 Preferred dividends 500,000 Number of outstanding shares 10,000,000 Calculate the EPS for this company
A $20,000 C $72,000 B $60,000 D $77,000
5 In the production possibility diagram below, what combination of X and Y cannot be produced given current levels of resources?
20 Which one of the following is NOT taken into account by the discount factor applied to future earnings when calculating shareholder value? A The rate of inflation B The amount of earnings that would be lost as taxation C The level of risk attached to future income streams D Shareholders' rate of time preference for money
9 The sector of the economy which consists of manufacturing industries is the : A Primary sector B Secondary sector C Tertiary sector D Quaternary sector
10 There are four main factors of production, each of which has an economic reward. Which one of the following statements about the factors of production is not correct? A Capital is rewarded with interest B Enterprise is rewarded with profit C Labour is rewarded with wages
21 A merger between two firms at different stages in the same production process – for example, between an oil extraction company and an oil shipping company – is an example of: A Horizontal integration B Vertical integration C Conglomerate diversification D Organic growth
18 You have the following information on a company $ PBIT 4,000,000 Interest 500,000 PBT 3,500,000 Tax 1,200,000 Profit for year 2,300,000 Assets 50,000,000 Current liabilities 10,000,000 Calculate the return on capital employed (ROCE).
2 The basic economic problem facing all economies is: A Maximising economic growth B Unemployment C Inflation D Allocating scarce resources
3 Opportunity cost is: A The cost of producing one extra unit of the commodity B The lowest average cost of the commodity C The total cost of the commodity D The loss of the next best alternative
13 Company directors are appointed by: A Auditors B The Board C Senior management D Shareholders
14 In a planned economy, the pattern of production is determined by: A Central allocation B Consumer preference C The price mechanism D The profit motive
Jo bought the warehouse when he started his business, but if he hadn't invested his capital in the business it could now be earning him $5,000 a year in interest. If Jo wasn't working for himself, he could be earning $40,000 working for a large carpentry company in a neighbouring town. Based on the information given, what are the total economic costs of Jo's business, including opportunity costs?
15 Is the sum of the cash flows to the contributors of capital to the firm including shareholders and bondholders the free cashflow to equity or the free cash flow to the firm?
4
Jo is a self-employed carpenter who works in a warehouse that he owns. He buys the wood he needs to use, and last year this cost him $20,000. If Jo didn't work in his warehouse he could earn a rent on it of $12,000 per year.
7 Which of the following would not be regarded by economists as a factor of production? A Labour B Enterprise C Management D Capital
8 Which of the following is likely to shift the production possibility curve (frontier) onwards (away from the origin): A An increase in specialisation B An increase in the labour force C An increase in productivity D All of the above
19 Which sector of the economy contributes most to the gross domestic product (GDP) of developed, capitalist economies? A Industrial B Primary C Government D Service