Managerial Economics Test 1

The supply function for good X is given by Qxs = 1,000 + PX - 5PY - 2PW, where PX is the price of X, PY is the price of good Y and PW is the price of input W. If PX = 100, PY = 150, PW = 50, then the supply curve is

Qxs = 150 + Px

Under producer-producer rivalry, individual firms want to sell the product at the maximum price consumers will pay, but are unable to do this because of:

competition among sellers

Suppose the demand for X is given by Qxd = 65 - 0.50PX - 0.16PY + 3M - 5A, where PX represents the price of good X, PY is the price of good Y, M is income and A is the amount of advertising on good X. Based on this information, we know that good X is a

complement for good Y and a normal good.

The price elasticity of demand is -2.0 for a certain firm's product. If the firm raises price, the firm manager can expect total revenue to

decrease

If marginal benefits is less than marginal costs, it is profitable to:

decrease Quantity

Suppose the own-price elasticity of demand for good X is -0.78, and that the price of good X increases by 12%. We would expect the quantity demanded of good X to

decrease by 9.36%.

To maximize profits, a firm should continue to increase production of a good until:

marginal revenue equals marginal cost

In a competitive market, the market demand is Qd = 80 - 8P and the market supply is Qs = 20 + 2P. A price ceiling of $2 will result in a

shortage of 40 units

In a competitive market, the market demand is Qd = 80 - 8P and the market supply is Qs = 20 + 2P. The full economic price under a price ceiling of $2 is

7

Suppose demand is given by Q xd = 50 - 4Px + 6Py + Ax, where Px = $4, Py = $2, and Ax = $50. What is the advertising elasticity of demand for good x?

0.52

Suppose market demand and supply are given by Qd = 120 - 3P and QS = 9P. The equilibrium price is:

10

Suppose market demand and supply are given by Qd = 120 - 3P and QS = 9P. At a price ceiling of $5.00, the producer surplus is:

112.50

Suppose market demand and supply are given by Qd = 120 - 3P and QS = 9P. At a price ceiling of $5.00, the consumer surplus is:

1237.5

Suppose market demand and supply are given by Qd = 120 - 3P and QS = 9P. At a price ceiling of $5.00, the social welfare loss is

450

Suppose market demand and supply are given by Qd = 120 - 3P and QS = 9P. The equilibrium Quantity is:

90

As more firms exit an industry

Economic profit increases

Accounting Profits are:

total revenue - total cost