Question 1

A change in demand refers to:
A) a movement along the demand curve.
B) a change in a non-price variable in the demand function resulting in a shift in the demand curve.
C) a change in quantity demanded because of a change in price.
D) movement along the demand curve due to a change in income.
E) movement along the demand curve due to a change in the price of a related good.

Accepted Answer

A change in demand refers to a shift in the entire demand curve due to a non-price variable, such as changes in consumer preferences, income, demographics, or availability of substitutes/complements. This is different from a change in quantity demanded, which is a movement along the demand curve due to a change in price.

Question 2

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:
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.

Accepted Answer

The marginal or incremental approach suggests that changes made by a corporation should add more to its revenues than to its costs. This approach allows companies to maximize profitability by focusing on changes that increase revenue while minimizing costs. Therefore, choice C, which states that changes should add more to the firm's revenues than to its costs, is the best choice.

Question 3

Given the equations Q_d_s = 300 - 10P_s and Q_s_s = - 600 + 40P_s, if the price for a pair of sandals were $25.00, the market would be in: A) shortage B) surplus C) equilibrium D) perfect competition E) none of the above

Accepted Answer

The answer of Given the equations Q_d_s = 300 -...

Question 4

Given the following supply and demand curves for six-packs of beer, a price of $7.00 would produce:
Demand Q = 31,000 - 2000P
Supply Q = 10,000 + 1500P
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 17,000 six-packs of beer.
E) a surplus of 20,500 six-packs of beer.

Accepted Answer

At a price of $7.00, the quantity demanded is calculated by substituting P with 7 in the demand equation: Q = 31,000 - 2000(7) = 17,000. The quantity supplied is calculated by substituting P with 7 in the supply equation: Q = 10,000 + 1500(7) = 20,500. The quantity supplied (20,500) exceeds the quantity demanded (17,000) by 3,500, indicating a surplus of 3,500 six-packs of beer.

Question 5

Most models to be emphasized in Managerial Economics will assume the following as a goal.
A) revenue maximization
B) social welfare minimization
C) profit maximization
D) cost minimization
E) all of the goals identified above

Accepted Answer

Profit maximization is the primary goal of most firms in managerial economics, as it aims to increase the financial value of the company for its shareholders. While revenue maximization and cost minimization are also important considerations, they are typically viewed as secondary to profit maximization. Social welfare minimization is not a typical goal of individual firms, although it may be a consideration in industries with significant externalities or public goods.

Question 6

A change in quantity demanded of CDs can be caused by to:
A) a shift in the demand curve for CDs.
B) a change in an income variable in the CD demand function.
C) a change in the price of a related good.
D) a change in consumer tastes.
E) a change in a good's own price.

Accepted Answer

A change in quantity demanded is a movement along the demand curve due to a change in the price of the good itself. The other choices would cause a shift in the demand curve, resulting in a change in both price and quantity demanded.

Question 7

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

Accepted Answer

After identifying the problem, determining relevant data, and evaluating alternative solutions, the final step in the problem solving approach in managerial economics is to choose the best possible solution. Therefore, option C is the correct answer.

Question 8

Given the following supply and demand curves for six-packs of beer, a price of $6.00 would produce:
Demand Q = 31,000 - 2000P
Supply Q = 10,000 + 1500P
A) equilibrium.
B) a shortage of 20,000 six-packs of beer.
C) a surplus of 20,000 six-packs of beer.
D) a shortage of 15,000 six-packs of beer.
E) a surplus of 15,000 six-packs of beer.

Accepted Answer

To find the equilibrium price, we set demand equal to supply:
31,000 - 2000P = 10,000 + 1500P
Solving for P, we get P = $6.00. This is the price at which the quantity demanded equals the quantity supplied, so there is no shortage or surplus. Therefore, the answer is A, equilibrium.

Question 9

Fill in the blanks in the table. 
A) 160, 100, 300, 640, 200
B) 160, -120, 300, 100, 240
C) 240, 340, 300, 120, 460
D) 240, 340, 300, -120, 200
E) -240, 100, 600, 640, 20

Accepted Answer

The answer of Fill in the blanks in the table....

Question 10

Managerial economics derives primarily from a branch of economic analysis is called:
A) microeconomics
B) macroeconomics
C) profit maximization
D) revenue maximization
E) none of the above

Accepted Answer

Managerial economics primarily stems from microeconomics, which is the study of economic behavior at the individual or firm level.

Question 11

Given the equations, Q_d_h = 500 - 25P_h and Q_s_h= - 250 + 50P_h, what is the equilibrium price for Alaskan halibut? A) $5.00 B) $10.00 C) $15.00 D) $20.00 E) $25.00

Accepted Answer

To find the equilibrium price for Alaskan halibut, we need to set the quantity demanded equal to the quantity supplied, and solve for the price. Q_d_h = Q_s_h 500 - 25P_h = -250 + 50P_h 750 = 75P_h P_h = 10 Therefore, the equilibrium price for Alaskan halibut is $10.00, which corresponds to answer choice B.

Question 12

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
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.

Accepted Answer

At a price of $8.00, the demand quantity is 31,000 - 2000(8) = 15,000, and the supply quantity is 10,000 + 1500(8) = 22,000. The difference between supply and demand at this price is 22,000 - 15,000 = 7,000, indicating a surplus of 7,000 six-packs of beer.

Question 13

Given the following supply and demand curves for coupon books, a price of $10.00 would produce:
Demand Q = 55,000 - 4000P
Supply Q = 5000 + 1000P
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.

Accepted Answer

To find the equilibrium price and quantity, we set the demand and supply equations equal to each other and solve for P:
55,000 - 4000P = 5000 + 1000P
54,000 = 5000 + 5000P
P = $8.80 per coupon book.
To find the equilibrium quantity, we substitute the equilibrium price into either the supply or demand equation:
Q = 55,000 - 4000(8.80) = 21,200 coupon books.
Therefore, a price of $10.00 would be above the equilibrium price and would lead to a surplus of coupon books.

Question 14

Given the equations Q_d_h = 500 - 25P_h and Q_s_h= - 250 + 50 P_h, what is the equilibrium quantity demanded and quantity supplied for fresh Alaskan halibut? A) 375 B) 250 C) 125 D) 500 E) 425

Accepted Answer

The equilibrium quantity demanded and supplied can be found by setting Q_d_h equal to Q_s_h and solving for the value of P. 500 - 25P_h = -250 + 50 P_h 750 = 75 P_h P = 10 Now that we have found the value of P, we can substitute it back into either the demand or supply equation to find the equilibrium quantity. Using the demand equation: Q_d_h = 500 - 25(10) Q_d_h = 250 Therefore, the equilibrium quantity is 250 units.

Question 15

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

Accepted Answer

Evaluation of the social benefits and social costs of the various problem solutions is typically not a consideration for private sector firms in their approach to problem solving, whereas it may be more relevant for public sector agencies. The other options listed (A, B, C, D) are all key components of the problem-solving approach used in Managerial Economics for private sector firms.

Question 16

The Law of Demand refers to:
A) a shift in the demand curve that occurs when a variable other than the good's own price changes
B) movement along a given good's demand curve when the price of that good changes, but other variables do not.
C) the proposition that that price and quantity demanded can be expected to be inversely related so that consumers will be willing and able to buy more of a good at lower prices that they are at higher prices.
D) a functional relationship between the various possible prices of a good and the quantity supplied by sellers of it per time period.
E) the amounts of a good that that consumers are willing and able to buy and other relevant variables such as income or the prices of other goods.

Accepted Answer

The Law of Demand states that there is an inverse relationship between the price of a good and the quantity demanded of that good. This means that as the price of a good decreases, the quantity demanded of that good will increase, and vice versa. This relationship holds assuming all other factors (such as income and the prices of other goods) remain constant. The Law of Demand is depicted graphically by a downward-sloping demand curve.

Question 17

The first step in the problem solving approach in the field of managerial economics is:
A) determination of the data that is relevant to the problem
B) identification of the problem
C) choosing the best possible solution
D) an evaluation of the alternative solutions
E) none of the above

Accepted Answer

The first step in the problem solving approach in the field of managerial economics is to identify the problem. This involves understanding the nature of the problem, its causes, and its effects on the organization. Once the problem is identified, the next steps can be taken to gather relevant data, explore alternative solutions, and evaluate the best possible solution.

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
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.

Accepted Answer

To determine the market condition at a price of $12.00, we substitute P = 12 into both the demand and supply equations:Demand Q = 55,000 - 4000(12) = 55,000 - 48,000 = 7,000Supply Q = 5000 + 1000(12) = 5000 + 12,000 = 17,000Supply exceeds demand by 10,000 coupon books (17,000 - 7,000), indicating a surplus of 10,000 coupon books.

Question 19

The following are economic principles for managers EXCEPT:
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

Accepted Answer

The economic principle that the firm must maximize cost for each level of output is incorrect. The correct principle should be that the firm must minimize cost for each level of output to maximize profits.

Question 20

Perfect competition most closely refers to a:
A) market structure that is characterized by the existence of only one firm in the industry
B) market structure that is characterized by the existence of many firms the in the industry
C) market structure that is characterized by the existence of a few dominant firms in an industry.
D) market structure that is characterized by many buyers and sellers, where each one believes that it is not possible to affect market prices by their own individual actions.
E) market industry that is characterized by many buyers and sellers, where each one believes that it is possible to affect market prices by their own individual actions.

Accepted Answer

Perfect competition is a market structure where there are many buyers and sellers, and each one believes that it is not possible to affect market prices by their own individual actions. This means that no single buyer or seller has enough market power to influence the market price.

Quiz 1: Introduction, Basic Principles, and Methodology

A change in demand refers to:

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:

Given the equations Qds = 300 - 10Ps and Qss = - 600 + 40Ps, if the price for a pair of sandals were $25.00, the market would be in:

Given the following supply and demand curves for six-packs of beer, a price of $7.00 would produce: Demand Q = 31,000 - 2000P Supply Q = 10,000 + 1500P

Most models to be emphasized in Managerial Economics will assume the following as a goal.

A change in quantity demanded of CDs can be caused by to:

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

Given the following supply and demand curves for six-packs of beer, a price of $6.00 would produce: Demand Q = 31,000 - 2000P Supply Q = 10,000 + 1500P

Fill in the blanks in the table.

Managerial economics derives primarily from a branch of economic analysis is called:

Given the equations, Qdh = 500 - 25Ph and Qsh= - 250 + 50Ph, what is the equilibrium price for Alaskan halibut?

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

Given the following supply and demand curves for coupon books, a price of $10.00 would produce: Demand Q = 55,000 - 4000P Supply Q = 5000 + 1000P

Given the equations Qdh = 500 - 25Ph and Qsh= - 250 + 50 Ph, what is the equilibrium quantity demanded and quantity supplied for fresh Alaskan halibut?

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

The Law of Demand refers to:

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

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 following are economic principles for managers EXCEPT:

Perfect competition most closely refers to a:

Given the equations Q_d_s = 300 - 10P_s and Q_s_s = - 600 + 40P_s, if the price for a pair of sandals were $25.00, the market would be in:

Given the equations, Q_d_h = 500 - 25P_h and Q_s_h= - 250 + 50P_h, what is the equilibrium price for Alaskan halibut?

Given the equations Q_d_h = 500 - 25P_h and Q_s_h= - 250 + 50 P_h, what is the equilibrium quantity demanded and quantity supplied for fresh Alaskan halibut?