ECON 528 MIDTERM PRE
TEST QUESTIONS AND
CORRECT ANSWERS
GRADED A+ 2025-2026
Managerial economics
a. helps managers make decisions in the face of scarcity.
b. describes how pay for managers is set.
c. ensures managers always make good decisions.
d. explains which products consumers will buy. - ANS-helps managers make decisions
in the face of scarcity
Economic costs of production differ from accounting costs in that
a. economic costs include expenditures for hired resources while accounting costs do
not.
b. accounting costs include expenditures for hired resources while economic costs do
not.
c. economic costs add the opportunity costs of a firm using its own resources while
accounting costs do not.
d. accounting costs are always larger than economic cost. - ANS-c. economic costs add
the opportunity costs of a firm using its own resources while accounting costs do not.
How many pounds of apples should Margie sell to maximize her profit? Refer to Table
12-2.
A table of market prices
, Table 12-2 lists the various pounds (lbs.) of apples that Margie Stattler can sell.
Assume that Margie operates in a perfectly competitive market.
a. This cannot be determined without knowing Margie's total or marginal production
costs.
b. 300 pounds
c. This can be determined only when all of the values for market price, total revenue,
average revenue and marginal revenue are given.
d. 400 pounds - ANS-a. This cannot be determined without knowing Margie's total or
marginal production costs
Figure 12-9 shows cost and demand curves facing a profit-maximizing, perfectly
competitive firm.
Identify the short-run shut down point for the firm.
Price and Cost Curves
a. a
b. c
c. b
d. d - ANS-c. b
Sally quit her job as an auto mechanic earning $50,000 per year to start her own
business. To save money she operates her business out of a small building she owns
which, until she started her own business, she had rented out for $10,000 per year. She
also invested her $20,000 savings (which earned a market interest rate of 5% per year)
in her business. You are given the following information about the first year of her
operations.
Total revenue: $120,000
Cost of labor: $40,000
Cost of materials: $15,000
TEST QUESTIONS AND
CORRECT ANSWERS
GRADED A+ 2025-2026
Managerial economics
a. helps managers make decisions in the face of scarcity.
b. describes how pay for managers is set.
c. ensures managers always make good decisions.
d. explains which products consumers will buy. - ANS-helps managers make decisions
in the face of scarcity
Economic costs of production differ from accounting costs in that
a. economic costs include expenditures for hired resources while accounting costs do
not.
b. accounting costs include expenditures for hired resources while economic costs do
not.
c. economic costs add the opportunity costs of a firm using its own resources while
accounting costs do not.
d. accounting costs are always larger than economic cost. - ANS-c. economic costs add
the opportunity costs of a firm using its own resources while accounting costs do not.
How many pounds of apples should Margie sell to maximize her profit? Refer to Table
12-2.
A table of market prices
, Table 12-2 lists the various pounds (lbs.) of apples that Margie Stattler can sell.
Assume that Margie operates in a perfectly competitive market.
a. This cannot be determined without knowing Margie's total or marginal production
costs.
b. 300 pounds
c. This can be determined only when all of the values for market price, total revenue,
average revenue and marginal revenue are given.
d. 400 pounds - ANS-a. This cannot be determined without knowing Margie's total or
marginal production costs
Figure 12-9 shows cost and demand curves facing a profit-maximizing, perfectly
competitive firm.
Identify the short-run shut down point for the firm.
Price and Cost Curves
a. a
b. c
c. b
d. d - ANS-c. b
Sally quit her job as an auto mechanic earning $50,000 per year to start her own
business. To save money she operates her business out of a small building she owns
which, until she started her own business, she had rented out for $10,000 per year. She
also invested her $20,000 savings (which earned a market interest rate of 5% per year)
in her business. You are given the following information about the first year of her
operations.
Total revenue: $120,000
Cost of labor: $40,000
Cost of materials: $15,000
