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Managerial Economics

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Masters Degree MBA Quiz on Managerial Economics, created by Clair Hat on 11/03/2016.
Clair Hat
Quiz by Clair Hat, updated more than 1 year ago
Clair Hat
Created by Clair Hat over 8 years ago
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Resource summary

Question 1

Question
All economic questions are about:
Answer
  • how to make money
  • what to produce
  • how to cope with scarcity
  • how to satisfy all our wants

Question 2

Question
Macroeconomics deals with:
Answer
  • the behaviour of firms
  • economic aggregates
  • the activities of individual units
  • the behaviour of the electronics industry

Question 3

Question
Microeconomics is not concerned with the behaviour of:
Answer
  • aggregate demand
  • consumers
  • industries
  • firms

Question 4

Question
The study of inflation is part of:
Answer
  • normative economics
  • macroeconomics
  • microeconomics
  • descriptive economics

Question 5

Question
The word that comes from Greek for "one who manages a household" is:
Answer
  • market
  • consumer
  • producer
  • economy

Question 6

Question
What are the two major functions of a managerial economist?
Answer
  • decision-making and profit management
  • decision-making and capital management
  • decision-making and forward planning
  • pricing decisions and policies & practices

Question 7

Question
Which of the following statements about factors of production is false?
Answer
  • 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

Question 8

Question
Which of the following statements about the use of resources is not one of the key questions in economics?
Answer
  • How are resources used?
  • Where are resources used?
  • For what are resources used?
  • For whom are resources used?

Question 9

Question
What is meant by intermediate goods and services?
Answer
  • 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

Question 10

Question
What is meant by the term final goods and services?
Answer
  • 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

Question 11

Question
Which of the following statements is true?
Answer
  • 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

Question 12

Question
Which of the following types of economy describes the economy of the UK?
Answer
  • A command economy
  • A market economy
  • A mixed economy
  • A planned economy

Question 13

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

Question 14

Question
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?
Answer
  • 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.

Question 15

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

Question 16

Question
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?
Answer
  • An excess supply
  • A fall in price
  • A fall in supply
  • A fall in the equilibrium level of expenditure

Question 17

Question
Which of the following statements is false?
Answer
  • 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

Question 18

Question
If the demand curve shifts to the right, then we move up and to the right along our supply curve.
Answer
  • True
  • False

Question 19

Question
According to the Law of Demand, the demand curve for a good will
Answer
  • shift leftward when the price of a good increases
  • shift rightward when the price of a good increases
  • slope downward
  • slope upward

Question 20

Question
If government regulations prohibit the production of a particular good, the demand curve for that good will most likely...
Answer
  • shift leftward
  • shift rightward
  • remain unchanged
  • disappear

Question 21

Question
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...
Answer
  • vertical line where Q = 10
  • vertical line where Q = 100
  • vertical line where Q = 1000
  • horizontal line where Q = 1000

Question 22

Question
Equilibrium is defined as a situation in which:
Answer
  • 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

Question 23

Question
A competitive equilibrium is described by
Answer
  • a price only
  • a quantity only
  • the excess supply minus the excess demand
  • a price and a quantity

Question 24

Question
When two goods are substitutes, a shock that raises the price of one good causes the price of the other good to...
Answer
  • remain unchanged
  • decrease
  • increase
  • change in an unpredictable manner

Question 25

Question
The percentage change in the quantity demanded in response to a percentage change in the price is known as the:
Answer
  • slope of the demand curve
  • excess demand
  • price elasticity of demand
  • None of the examples

Question 26

Question
If the price elasticity of demand for a good is less than one in absolute terms, we say consumers of this good...
Answer
  • are not very sensitive to price
  • are not very sensitive to the quantity they demand
  • are very sensitive to price
  • are elastic

Question 27

Question
A market is considered imperfectly competitive whenever...
Answer
  • 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

Question 28

Question
In a market system, prices are determined by:
Answer
  • Government bureaucrats
  • Supply and demand
  • Total market demand
  • Production costs

Question 29

Question
If buyers expect the price of a good to rise in the future, the result is...
Answer
  • a decrease in supply today
  • an increase in supply today
  • an increase in quantity demanded today
  • an increase in demand today

Question 30

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

Question 31

Question
If the price elasticity of demand for a good is 0.75 , the demand for that good can be described as:
Answer
  • Normal
  • Elastic
  • Inferior
  • Inelastic

Question 32

Question
If the income elasticity of demand for a good is negative, then the good is:
Answer
  • a normal good
  • an inferior good
  • a luxury good
  • a Giffen good

Question 33

Question
What kind of relationship exists between the price of a good and demand of its complementary good?
Answer
  • Direct
  • Inverse
  • No effect
  • Can be direct or inverse

Question 34

Question
Law of Demand does not hold in case of:
Answer
  • Emergency
  • Expectation of price rise
  • Conspicuous goods
  • All of the answers

Question 35

Question
If value of Es < 1, it is called:
Answer
  • Elastic supply
  • Inelastic supply
  • Perfectly elastic supply
  • Perfectly inelastic supply

Question 36

Question
In the short-run, which of the following always gets smaller as output increases?
Answer
  • Average fixed cost
  • Average variable cost
  • Short-run average cost
  • Short-run marginal cost

Question 37

Question
Which of the following statements about a profit-maximising firm is false?
Answer
  • 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.

Question 38

Question
Implicit costs are:
Answer
  • 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

Question 39

Question
If a firm's revenues just cover all its opportunity costs, then;
Answer
  • normal profit is zero
  • economic profit is zero
  • total revenues equal its explicit costs
  • total revenues equal its implicit costs

Question 40

Question
The short-run is a time period in which...
Answer
  • 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

Question 41

Question
The law of diminishing returns only applies in cases where:
Answer
  • 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

Question 42

Question
Variable costs are:
Answer
  • 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

Question 43

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

Question 44

Question
When a firm doubles its inputs and finds that its output has more than doubled, this is known as:
Answer
  • economies of scale
  • constant returns to scale
  • diseconomies of scale
  • a violation of the law of diminishing returns

Question 45

Question
Economies and diseconomies of scale explain why the:
Answer
  • 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

Question 46

Question
The law of diminishing returns states that:
Answer
  • 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

Question 47

Question
Opportunity costs arise in production because:
Answer
  • 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

Question 48

Question
Costs which increase with an increase in output are called:
Answer
  • Fixed costs
  • Changeable costs
  • Variable costs
  • Unchangeable costs

Question 49

Question
Costs which do not increase with an increase in output are called:
Answer
  • Fixed costs
  • Changeable costs
  • Variable costs
  • Unchangeable costs

Question 50

Question
Marginal cost is:
Answer
  • 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
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