Managerial Economics Test 1

"Demand is best defined as the relationship between: a) the price of a good and the quantity consumers are willing and able to buy at each price b) the amount of income someone has and the price he is willing to pay for a good c) the quantity supplied and the price people are willing to pay for a good d) the current price of a good and the quantity demanded at that price

A) the price of a good and quantity consumers are willing and able to buy at each price

Many people consider hot dogs to be an inferior good. For such people, all else constant, a decrease in income would cause their demand for hot dogs to: a) decrease b) stay the same c) increase d) cannot be determined wight the information given

C) increase

Which of the Following is correct? a) managers need to understand supply and demand to develop their own competitive strategies and to respond to the actions of their competitors. b) managers need to understand how the structure of the market that their firm operates in impacts supply an demand. c) managers need to understand how public policy will impact supply and demand d) all of the above are correct

D) All of the above are correct

If we ranked the four market structures on the basis of degree of competition, perfect competition and monopolistic competition would be at opposite end sod the spectrum True or False

False

Macroeconomics is conceded wight eh behavior of all the firms in a particular industry, while microeconomics focuses on a single firm in the same industry True or False

False

A typical question addressed in microeconomics is "What determines the price of gasoline in a particular city or town?" True or False

True

Sound business decision making requires a firm understand both microeconomics and macroeconomic concepts True or False

True

Market Equilibrium is a) a price at which quantity demanded equal quantity supplied b) a price at which quantity demanded exceeds quantity supplied c) identical supply and demand curves a price at which quantity supplied exceeds quantity demanded

a) a price at which quantity demanded equal quantity supplied

Gross Domestic Product (GDP) is defined as the market value of a) all final goods and services produced during the year by domestic and foreign-supplied resources b) all intermediate goods produced during the year by domestic and foreign suppliers c) all final consumer goods produced during the year by domestic and foreign suppliers d) al goods and services sold during the year by domestic and foreign producers

a) all final goods and services produced during the year by domestic and foreign-supplied resources

As the price of milk increases, what would reasonably be expected to happen to the equilibrium price and equilibrium quantity of cereal? (Milk and cereal are complements) a) equilibrium price and quantity would both decrease b)equilibrium price and quantity would both increase c) equilibrium price would decrease and equilibrium quantity would increase d) equilibrium price would increase and equilibrium quantity would decrease

a) equilibrium price and quantity would both decrease

Assuem declining profits int he market for Internet service force several firms in the area to drop out of the market. All else constant, this would cause the a) equilibrium price to increase and equilibrium quantity to decrease b) equilibrium price and quantity to decrease c) equilibrium price to decrease and equilibrium quantity to increase d) equilibrium price and quantity to increase

a) equilibrium price to increase and equilibrium quantity to decrease

Referring to the previous question, all else constant, a one unit increase in the price of good Y would cause the quantity demanded of good X to : a) increase by 2 Units b) decrease by 1 unit c) decrease by 2 units d) decrease by 5 units

a) increase by 2 units

Which of the following statements is correct? a) managerial decisions are affected by both microeconomics and macroeconomic forces b) by and large, managerial decision are not affect by either microeconomics or microeconomic forces c) managerial decisions are affected primarily by microeconomic forces d) managerial decisions are affected primarily by macroeconomic focus

a) managerial decisions are affected by both microeconomic and macroeconomics forces

Which of the following is not considered a factor that influences supply? a) the number of buyers b) resource prices c) taxes and subsidies d) technology

a) the number of buyers

"Supply" is best defined as the relationship between: a) the price of a good of service and the quantity supplied by producers at each price during a period of time b) the current price of a good and the quantity supplied at that price c) the quantity supplied and the price people are willing to pay for a good d) the cost of pro ducting a good and the price consumers are wiling to pay for it

a) the price of a good of service and the quantity supplied by producers at each price during period of time

Given the supply equation for product X, Qs = -240 + 20Px what is the minimum price at which the firm will supply any of good X at all a) P = -240 b) P = 12 c) P = 120 d) none of the above

b) P = 12

Which of the following would not cause the supply curve for gasoline to shift? a) a change in the number of gas stations b) a change in the income of drivers c) a significant war in the Middle East d) a decrease in price of oil

b) change in the income of drivers

An increase in the number of buyers in the market for LCD TVs would cause the market demand curve for LCD TVs to : a) shift left b) shift right c) stay the same d) shift left

b) shift right

Assume the demand function for good X can be written Qd = 80 - 3Px + 2Py + 10I, where Px = the price of X, Py = the price of Y, and I = consumer income. According to this equation: a) X is an inferior good b) X and Y are substitutes c) X and Y are complements d) none of the above

b) x and y are substitutes

All else constant, a large decrease in the number of people who want to own sport utility vehicles (SUVs) because of their poor fuel efficiency could be expected to cause: a) an increase in the supply of gasoline b) an increase in the equilibrium price of SUVs c) a decrease in the equilibrium price of gasoline d) an increase in the supply of SUVs

c) a decrease in the equilibrium price of gasoline

If movies on DVD for home rental and movies seen at a theater are substitutes, and the price of movies seen at a theater increases, the demands for movies on DVD will a) stay the same b) decrease c) increase d) cannot be determined

c) increase

Which of the following would be considered an example of a macroeconomic problem a) should Microsoft reduce the price of its Windows operating system b) should Mitsubishi eliminate one of its product shifts c) should the federal government extend the eligibility period for unemployment benefits d) should JP Morgan Chase increase the interest rate it charges its credit card customers

c) should the federal government extend the eligibility period for unemployment benefits

Consider the following demand function for copper, Q = 10 - 50P + .3I + 1.5TC + .5E were I is income, TC is telecom index, and E is an expectation index. if I = 100, TC = 10, and E=10 which of the following would represent the demand a) Q = 10 - 50P b) P = 20 - 12Q c) P = 1.2 + .02Q d) P = 1.2 - .02Q

d) P = 1.2 - .02Q

In perspective, economic way of thinking involves: a) scarcity and choice b) purposeful behavior c) marginalism d) all of the above

d) all of the above

A home theater system and a HD television would be considered an example of: a) unrelated goods b) substitute goods c) inferior goods d) complementary goods

d) complementary goods

The major categories of expenditure sin the economy are: a) consumption, gross investment, and government purchases b) consumption, fixed investment, government purchases and net imports c) consumption, net investment, and net exports d) consumption, gross investment, government purchases, and net export

d) consumption, gross investment, government purchases, and net export

File-sharing programs such as Napster, Kazaa, and iMesh made it possible for individuals to exchange music files over the Internet. All else constant, which of the follow statements best describes how the development of these programs had affected the market for new music CDs a) demand for CDs has increased, causing equilibrium price to increase and equilibrium quantity to decrease b) demand for CDs has increased causing equilibrium price to increase c) demand for CDs had decreased, causing equilibrium price to decrease and equilibrium quantity to increase d) demand for CDs has decreased, causing equilibrium price and quantity to decrease

d) demand for CDs and decreased, causing equilibrium price and quantity to decrease

Assume there is an improvement in the technology used to produce Blue-ray disk players. What could be expected to happen to the equilibrium price and quantity in the market for Blu-ray disk players a) equilibrium price and quantity would both decrease b)equilibrium price and quantity would both increase c) equilibrium price would increase and equilibrium quantity would decrease d) equilibrium price would decrease and equilibrium quantity would increase

d) equilibrium price would decrease and equilibrium quantity would increase

The market structure characterized by a small huber of large firms that have some market power is called a) monopolistic competition b) monopoly c) perfect competition d) oligopoly

d) oligopoly

All of the following are non-price factors that influence demand except: a) income b) taste and preferences c) the prices of related goods d) quantity supplied

d) quantity supplied