Managerial Economics

Which of the following is the discipline that studies the use of statistical tools to estimate economic models?

Econometrics

Which theory of profit holds that a firm's profits can differ from zero only in the short run?

Frictional theory.

Which of the following is an example of a resource constraint?

Inadequate financial capital.

Which theory of profit views profit as a reward for introducing a new product or technique?

Innovation theory.

Which of the following is defined as the study of the aggregate economy studied as a whole?

Macroeconomics

Which theory of profit views profit as a firm's reward for keeping costs below or revenues above the levels experienced by other firms in the industry?

Managerial efficiency theory.

Which of the following functional areas of business has primary responsibility for a firm's total revenue?

Marketing

Which of the following areas of economic theory is the single most important element of managerial economics

Microeconomics

Which theory of profit holds that profit will be higher in industries where firms in the industry are able to prevent other firms from entering the industry?

Monopoly theory.

Management decision problems are comprised of three elements. Which of the following is not one of them?

Profitability

Which of the following is not a result of the spread of information technology?

Reduced productivity of workers.

Which theory of profit holds that profit will be higher in industries characterized by a high degree of variability in their revenues or their costs?

Risk-bearing theory.

Which of the alternatives to the modern theory of the firm holds that managers attempt to meet some goal that is defined in terms of a specified level of sales, profits, growth, or market share?

Satisficing model.

Which of the following is a question that is uniquely relevant to the subject of business ethics?

Should a firm use a production method in foreign countries that is banned in its home country?.

Which of the following is an example of an implicit cost?

The uncompensated services of the spouse of a firm's owner.

What social function is served by profits in a free-enterprise system?

They provide an incentive for the reallocation of resources.

Which of the following is the best definition of managerial economics? Managerial economics is

a field that applies economic theory and the tools of decision science..

Implicit cost is equal to

business profit minus economic profit..

The first stage in the five-step decision process described in the text is to

define the problem..

Business profit is equal to total revenue minus

explicit costs..

The value of an economic theory in practice is determined by

how well the theory can predict or explain..

The last stage in the five-step decision process described in the text is to

implement the decision..

Businesses have responded to incentives for ethical behavior by doing all of the following except

lobbying for the abolition of laws that require ethical behavior..

Firms do not continue to grow without limit because of

managerial limitations..

By tying a manager's compensation to the performance of the firm relative to that of its competitors, corporate stockholders and directors create incentives that tend to resolve the

principal-agent problem..

The tendency for managers to operate a firm in a way that maximizes their personal utility rather than the firm's profits is referred to as the

principal-agent problem..

The globalization of business is reflected in all of the following except

the increase in barriers to international trade..

The modern theory of the firm holds that firms behave in a way that is designed to maximize

the value of the firm

The economic term for the costs associated with negotiating and enforcing a contract is

transaction costs..

Business ethics refers to any behavior by businesses that may

violate social or moral standards..