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