Question 1

The following are economic principles for managers EXCEPT:

Accepted Answer

A)   the role of manager is to make decisions
B)   the anticipated objective of management is to increase the firm's value
C)   the firm's sales revenue depends on demand for its product
D)   the firm must maximize cost for each level of output
E)   successful firms deal rationally and ethically with laws and regulations D

Question 2

When extending the concept of marginal or incremental analysis to the area of public sector management, the effect of changes in public output on social benefits and social costs are considered just as a private sector firm considers the incremental profit resulting from its revenue and cost decisions.

Accepted Answer

A) True 
 B)False  True

Question 3

The central themes of managerial economics is identifying problems and opportunities, analyzing alternatives from which choices can be made, maximizing revenue.

Accepted Answer

A) True 
 B)False  False

Question 4

Increased interdependence of nations and the efficiency with which we produce goods and services is a result of the rules that societies fashion to regulate their economic and political lives.

Accepted Answer

A) True 
 B)False

Question 5

A change in demand is a movement along a given good's demand curve when the price of the good changes but the other variables do not.

Accepted Answer

A) True 
 B)False

Question 6

Given the following supply and demand curves for six-packs of beer, a price of $5.00 would produce:
Demand Q = 31,000 - 2000P
Supply Q = 10,000 + 1500P

Accepted Answer

A)   equilibrium.
B)   a shortage of 3,500 six-packs of beer.
C)   a surplus of 3,500 six-packs of beer.
D)   a shortage of 21,000 six-packs of beer.
E)   a surplus of 17,500 six-packs of beer.

Question 7

Microeconomics is the branch of economic analysis that deals with aggregate economic variables such as the economy's total output, central government spending and tax policy, and money supply and interest rates.

Accepted Answer

A) True 
 B)False

Question 8

The quantity supplied of a good or service is the amount that producers will make available for purchase at a particular price along a supply curve.

Accepted Answer

A) True 
 B)False

Question 9

In managerial problem solving, the time period under consideration will often be an important factor in the decision analysis.

Accepted Answer

A) True 
 B)False

Question 10

The approach to problem solving in a private sector firm used in Managerial Economics includes all of the following EXCEPT:

Accepted Answer

A)   the choice of the best solution consistent with the firm's or agency's objectives.
B)   identification of the problem or decision to be made.
C)   a statement of alternative solutions to the problem.
D)   a determination of what data is relevant to the decision, and an analysis of that data relative to the alternative decision.
E)   evaluation of the social benefits and social costs of the various problem solutions.

Question 11

In managerial problem solving, the time period under consideration will very rarely be an important factor in the decision analysis.

Accepted Answer

A) True 
 B)False

Question 12

Equilibrium price is the prevailing market price when quantity demanded equals quantity supplied.

Accepted Answer

A) True 
 B)False

Question 13

Given the following supply and demand curves for six-packs of beer, a price of $8.00 would produce:
Demand Q = 31,000 - 2000P
Supply Q = 10,000 + 1500P

Accepted Answer

A)   equilibrium.
B)   a shortage of 7,000 six-packs of beer.
C)   a surplus of 7,000 six-packs of beer.
D)   a shortage of 15,000 six-packs of beer.
E)   a surplus of 22,000 six-packs of beer.

Question 14

To be an efficient producer, a business firm must determine three things: what kinds of inputs to use, where to obtain those inputs and where to obtain its technology.

Accepted Answer

A) True 
 B)False

Question 15

A change in the quantity demanded refers to a change in the amount of a good or service that consumers are willing to purchase over some period of time because of a change in one of the demand function variables other than the price of a good.

Accepted Answer

A) True 
 B)False

Question 16

Managerial economics is one of the three basic analytical areas that supply decision techniques to people working in what are sometimes called functional areas in business: accounting, finance, marketing and management.

Accepted Answer

A) True 
 B)False

Question 17

Opportunity cost is the cost as measured by the next best alternative given up when a choice is made.

Accepted Answer

A) True 
 B)False

Question 18

Given the following supply and demand curves for coupon books, a price of $12.00 would produce:
Demand Q = 55,000 - 4000P
Supply Q = 5000 + 1000P

Accepted Answer

A)   equilibrium.
B)   a shortage of 10,000 coupon books.
C)   a surplus of 10,000 coupon books.
D)   a shortage of 17,200 coupon books.
E)   a surplus of 17,200 coupon books.

Question 19

The underlying principle of the marginal or incremental approach is that changes in economic variables controlled by the corporation should be undertaken anytime such changes:

Accepted Answer

A)   increase social benefits.
B)   reduce social costs.
C)   add more to the firm's revenues than to its cost.
D)   add to the firm's revenues.
E)   reduce the firm's costs.

Question 20

The last step in the problem solving approach in the field of managerial economics is:

Accepted Answer

A)   identification of the problem
B)   determination of the data that is relevant to the problem
C)   choosing the best possible solution
D)   an evaluation of the alternative solutions
E)   none of the above

Exam 1: Introduction, Basic Principles, and Methodology

The following are economic principles for managers EXCEPT:

The central themes of managerial economics is identifying problems and opportunities, analyzing alternatives from which choices can be made, maximizing revenue.

Increased interdependence of nations and the efficiency with which we produce goods and services is a result of the rules that societies fashion to regulate their economic and political lives.

A change in demand is a movement along a given good's demand curve when the price of the good changes but the other variables do not.

Given the following supply and demand curves for six-packs of beer, a price of $5.00 would produce: Demand Q = 31,000 - 2000P Supply Q = 10,000 + 1500P

Microeconomics is the branch of economic analysis that deals with aggregate economic variables such as the economy's total output, central government spending and tax policy, and money supply and interest rates.

The quantity supplied of a good or service is the amount that producers will make available for purchase at a particular price along a supply curve.

In managerial problem solving, the time period under consideration will often be an important factor in the decision analysis.

The approach to problem solving in a private sector firm used in Managerial Economics includes all of the following EXCEPT:

In managerial problem solving, the time period under consideration will very rarely be an important factor in the decision analysis.

Equilibrium price is the prevailing market price when quantity demanded equals quantity supplied.

Given the following supply and demand curves for six-packs of beer, a price of $8.00 would produce: Demand Q = 31,000 - 2000P Supply Q = 10,000 + 1500P

To be an efficient producer, a business firm must determine three things: what kinds of inputs to use, where to obtain those inputs and where to obtain its technology.

A change in the quantity demanded refers to a change in the amount of a good or service that consumers are willing to purchase over some period of time because of a change in one of the demand function variables other than the price of a good.

Managerial economics is one of the three basic analytical areas that supply decision techniques to people working in what are sometimes called functional areas in business: accounting, finance, marketing and management.

Opportunity cost is the cost as measured by the next best alternative given up when a choice is made.

Given the following supply and demand curves for coupon books, a price of $12.00 would produce: Demand Q = 55,000 - 4000P Supply Q = 5000 + 1000P

The underlying principle of the marginal or incremental approach is that changes in economic variables controlled by the corporation should be undertaken anytime such changes:

The last step in the problem solving approach in the field of managerial economics is: