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Masters Degree MBA Quiz on Managerial Economics, created by Clair Hat on 11/03/2016.

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Managerial Economics

Question 1 of 50

1

All economic questions are about:

Select one of the following:

  • how to make money

  • what to produce

  • how to cope with scarcity

  • how to satisfy all our wants

Explanation

Question 2 of 50

1

Macroeconomics deals with:

Select one of the following:

  • the behaviour of firms

  • economic aggregates

  • the activities of individual units

  • the behaviour of the electronics industry

Explanation

Question 3 of 50

1

Microeconomics is not concerned with the behaviour of:

Select one of the following:

  • aggregate demand

  • consumers

  • industries

  • firms

Explanation

Question 4 of 50

1

The study of inflation is part of:

Select one of the following:

  • normative economics

  • macroeconomics

  • microeconomics

  • descriptive economics

Explanation

Question 5 of 50

1

The word that comes from Greek for "one who manages a household" is:

Select one of the following:

  • market

  • consumer

  • producer

  • economy

Explanation

Question 6 of 50

1

What are the two major functions of a managerial economist?

Select one of the following:

  • decision-making and profit management

  • decision-making and capital management

  • decision-making and forward planning

  • pricing decisions and policies & practices

Explanation

Question 7 of 50

1

Which of the following statements about factors of production is false?

Select one of the following:

  • The factor of production termed capital means the money which the owners of the firms need in order to set their firms up.

  • The term "factors of production" is another term for resources

  • The factor of production termed labour means human resources

  • The factor of production termed land means natural resources

Explanation

Question 8 of 50

1

Which of the following statements about the use of resources is not one of the key questions in economics?

Select one of the following:

  • How are resources used?

  • Where are resources used?

  • For what are resources used?

  • For whom are resources used?

Explanation

Question 9 of 50

1

What is meant by intermediate goods and services?

Select one of the following:

  • The same as capital goods, such as plant, buildings, vehicles, and machinery.

  • Products which one firm buys off another and then uses up in its own products

  • All inputs bought by the firms, including labour and raw materials

  • Imports

Explanation

Question 10 of 50

1

What is meant by the term final goods and services?

Select one of the following:

  • The same as the term intermediate goods and services

  • The same as the term consumer goods and services

  • All goods and services except those traded second hand

  • Goods and services which are finished as far as the economy is concerned

Explanation

Question 11 of 50

1

Which of the following statements is true?

Select one of the following:

  • Microeconomics is concerned with the economy as a whole

  • Macroeconomics is concerned with individual markets

  • Governments have no influence over market prices

  • When economists study the price in a market, their chief aims are to understand why the price is what it is and why it might change

Explanation

Question 12 of 50

1

Which of the following types of economy describes the economy of the UK?

Select one of the following:

  • A command economy

  • A market economy

  • A mixed economy

  • A planned economy

Explanation

Question 13 of 50

1

The supply and demand model applies when three of the following four conditions are met. Which condition is not required?

Select one of the following:

  • There must be many buyers

  • There must be many sellers

  • The buyers and sellers must trade an identical item

  • The item traded must be a product

Explanation

Question 14 of 50

1

Suppose a market is in equilibrium, and then the demand increases. Which of the following would be shown on a graph that illustrated the effects?

Select one of the following:

  • An excess demand at the initial equilibrium price.

  • An excess demand at the new equilibrium price.

  • An excess supply at the initial equilibrium price.

  • An excess supply at the new equilibrium price.

Explanation

Question 15 of 50

1

Suppose there is excess supply in a market and the price decreases. Which of the following combinations of events will occur?

Select one of the following:

  • There will be a fall in quantity supplied and a rise in quantity demanded.

  • There will be a fall in quantity supplied and a rise in demand.

  • There will be a fall in supply and a rise in quantity demanded.

  • There will be a fall in supply and a rise in demand.

Explanation

Question 16 of 50

1

Suppose there is a decrease in supply in a market where the supply curve slopes upwards and the demand curve slopes downwards. Which of the following would not occur?

Select one of the following:

  • An excess supply

  • A fall in price

  • A fall in supply

  • A fall in the equilibrium level of expenditure

Explanation

Question 17 of 50

1

Which of the following statements is false?

Select one of the following:

  • Price elasticity of demand is negative for most products

  • Price elasticity of supply is positive for most products

  • Income elasticity of demand is positive for normal goods

  • Cross elasticity of demand is positive between complements

Explanation

Question 18 of 50

1

If the demand curve shifts to the right, then we move up and to the right along our supply curve.

Select one of the following:

  • True
  • False

Explanation

Question 19 of 50

1

According to the Law of Demand, the demand curve for a good will

Select one of the following:

  • shift leftward when the price of a good increases

  • shift rightward when the price of a good increases

  • slope downward

  • slope upward

Explanation

Question 20 of 50

1

If government regulations prohibit the production of a particular good, the demand curve for that good will most likely...

Select one of the following:

  • shift leftward

  • shift rightward

  • remain unchanged

  • disappear

Explanation

Question 21 of 50

1

Suppose there are 100 identical firms in the rag industry, and each firm is willing to supply 10 rags at any price. The market supply curve will be a...

Select one of the following:

  • vertical line where Q = 10

  • vertical line where Q = 100

  • vertical line where Q = 1000

  • horizontal line where Q = 1000

Explanation

Question 22 of 50

1

Equilibrium is defined as a situation in which:

Select one of the following:

  • neither buyers or sellers want to change their behaviour

  • no government regulations exist

  • demand curves are perfectly horizontal

  • suppliers will supply any amount that buyers want to buy

Explanation

Question 23 of 50

1

A competitive equilibrium is described by

Select one of the following:

  • a price only

  • a quantity only

  • the excess supply minus the excess demand

  • a price and a quantity

Explanation

Question 24 of 50

1

When two goods are substitutes, a shock that raises the price of one good causes the price of the other good to...

Select one of the following:

  • remain unchanged

  • decrease

  • increase

  • change in an unpredictable manner

Explanation

Question 25 of 50

1

The percentage change in the quantity demanded in response to a percentage change in the price is known as the:

Select one of the following:

  • slope of the demand curve

  • excess demand

  • price elasticity of demand

  • None of the examples

Explanation

Question 26 of 50

1

If the price elasticity of demand for a good is less than one in absolute terms, we say consumers of this good...

Select one of the following:

  • are not very sensitive to price

  • are not very sensitive to the quantity they demand

  • are very sensitive to price

  • are elastic

Explanation

Question 27 of 50

1

A market is considered imperfectly competitive whenever...

Select one of the following:

  • the government intervenes to set a price floor

  • supply and demand explain how prices are determined

  • a single buyer or seller has the power to affect the price of the product

  • supply and demand fail to establish an equilibrium

Explanation

Question 28 of 50

1

In a market system, prices are determined by:

Select one of the following:

  • Government bureaucrats

  • Supply and demand

  • Total market demand

  • Production costs

Explanation

Question 29 of 50

1

If buyers expect the price of a good to rise in the future, the result is...

Select one of the following:

  • a decrease in supply today

  • an increase in supply today

  • an increase in quantity demanded today

  • an increase in demand today

Explanation

Question 30 of 50

1

If the cross-price elasticity of demand between two goods is negative, then...

Select one of the following:

  • the two goods are complements

  • the two goods are substitutes

  • one of the goods must be inferior

  • the two goods are rarely used together by consumers

Explanation

Question 31 of 50

1

If the price elasticity of demand for a good is 0.75 , the demand for that good can be described as:

Select one of the following:

  • Normal

  • Elastic

  • Inferior

  • Inelastic

Explanation

Question 32 of 50

1

If the income elasticity of demand for a good is negative, then the good is:

Select one of the following:

  • a normal good

  • an inferior good

  • a luxury good

  • a Giffen good

Explanation

Question 33 of 50

1

What kind of relationship exists between the price of a good and demand of its complementary good?

Select one of the following:

  • Direct

  • Inverse

  • No effect

  • Can be direct or inverse

Explanation

Question 34 of 50

1

Law of Demand does not hold in case of:

Select one of the following:

  • Emergency

  • Expectation of price rise

  • Conspicuous goods

  • All of the answers

Explanation

Question 35 of 50

1

If value of Es < 1, it is called:

Select one of the following:

  • Elastic supply

  • Inelastic supply

  • Perfectly elastic supply

  • Perfectly inelastic supply

Explanation

Question 36 of 50

1

In the short-run, which of the following always gets smaller as output increases?

Select one of the following:

  • Average fixed cost

  • Average variable cost

  • Short-run average cost

  • Short-run marginal cost

Explanation

Question 37 of 50

1

Which of the following statements about a profit-maximising firm is false?

Select one of the following:

  • It might set its daily output at a higher level in the short-run than in the long-run.

  • It might set its daily output at a lower level in the short-run than in the long-run.

  • If it had a daily output of zero in the short-run, it would be sure to have a total cost of zero.

  • If it had a daily output of zero in the long-run, it would be sure to have a total cost of zero.

Explanation

Question 38 of 50

1

Implicit costs are:

Select one of the following:

  • equal to total fixed costs

  • comprised entirely of variable costs

  • "payments" for self-employed resource

  • always greater in the short-run than in the long-run

Explanation

Question 39 of 50

1

If a firm's revenues just cover all its opportunity costs, then;

Select one of the following:

  • normal profit is zero

  • economic profit is zero

  • total revenues equal its explicit costs

  • total revenues equal its implicit costs

Explanation

Question 40 of 50

1

The short-run is a time period in which...

Select one of the following:

  • all resources are fixed

  • the level of output is fixed

  • the size of the production plant is variable

  • some resources are fixed and others are variable

Explanation

Question 41 of 50

1

The law of diminishing returns only applies in cases where:

Select one of the following:

  • There is increasing scarcity of factors of production

  • The price of extra units of a factor is increasing

  • There is at least one fixed factor of production

  • Capital is a variable input

Explanation

Question 42 of 50

1

Variable costs are:

Select one of the following:

  • sunk costs

  • multiplied by fixed costs

  • costs that change with the level of production

  • defined as the change in total cost resulting from the production of an additional unit of output

Explanation

Question 43 of 50

1

If the short-run average variable costs of production for a firm are rising, then this indicates that:

Select one of the following:

  • average total costs are at a maximum

  • average fixed costs are constant

  • marginal costs are above average variable costs

  • average variable costs are below average fixed costs

Explanation

Question 44 of 50

1

When a firm doubles its inputs and finds that its output has more than doubled, this is known as:

Select one of the following:

  • economies of scale

  • constant returns to scale

  • diseconomies of scale

  • a violation of the law of diminishing returns

Explanation

Question 45 of 50

1

Economies and diseconomies of scale explain why the:

Select one of the following:

  • short-run average fixed cost curve declines so long as output increases

  • marginal cost curve must intersect the minimum point of the firm's average total cost curve

  • long-run average total cost curve is typically U-shaped

  • short-run average variable cost curve is U-shaped

Explanation

Question 46 of 50

1

The law of diminishing returns states that:

Select one of the following:

  • as a firm uses more of a variable resource, given the quantity of fixed resources, the average product of the firm will increase

  • as a firm uses more of a variable resource, given the quantity of fixed resources, marginal product of the firm will eventually decrease

  • in the short-run, the average total costs of the firm will eventually diminish

  • in the long-run, the average total costs of the firm will eventually diminish

Explanation

Question 47 of 50

1

Opportunity costs arise in production because:

Select one of the following:

  • resources are unlimited

  • resources must be shifted away from producing one good in order to produce another

  • wants are limited in a society

  • monetary costs of inputs usually outweigh non-monetary costs

Explanation

Question 48 of 50

1

Costs which increase with an increase in output are called:

Select one of the following:

  • Fixed costs

  • Changeable costs

  • Variable costs

  • Unchangeable costs

Explanation

Question 49 of 50

1

Costs which do not increase with an increase in output are called:

Select one of the following:

  • Fixed costs

  • Changeable costs

  • Variable costs

  • Unchangeable costs

Explanation

Question 50 of 50

1

Marginal cost is:

Select one of the following:

  • The addition to cost associated with one additional unit of output

  • The per unit cost of production

  • The per unit variable cost of production

  • The per unit fixed cost of production

Explanation

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