ECON 528 FINAL EXAM COMPLETE STUDY
GUIDE WITH SOLVED QUESTIONS
◉ Managerial economics helps managers.
Answer: make decisions in the face of scarcity.
◉ Microeconomics includes the study of the.
Answer: choices made by individuals and businesses
◉ The form of economics most relevant to managerial decision-
making within the firm.
Answer: microeconomics
◉ CEOs should focus on.
Answer: maximizing firm profits.
◉ Managerial economics generally refers to the integration of
economic theory with business.
Answer: Practice
◉ A managerial decision is not profitable if.
Answer: it increases costs more than revenue
,◉ According to the profit-maximization goal, the firm should
attempt to maximize short-run profits since there is too much
uncertainty associated with long-run profits..
Answer: . False
◉ Why is it useful to study Managerial Economics?.
Answer: Studying and understanding Managerial Economics is
important to make crucial business decisions to maximize profit and
create value for the product or service one is providing. By blending
economic theory and empirical data, managers can understand the
"how" and "why" a certain business decision will maximize wealth.
Once managers understand this reasoning behind economic
theories, they can use data to refine the theory aspect of managerial
economics to better fit their business, yielding continuous improved
decisions and ultimately the most desirable results. This helps
managers to create value. Consumers, just like firms, have scare
resources. Consumers will invest their resources in the product or
service that meets their needs with the greatest value.
Understanding managerial economics gives managers an edge in
creating value for their products.
◉ Why can Managerial Economics be applied to any business
decision making process, regardless of the industry?.
Answer: Managerial Economics is applicable to different types of
organizations like for-profit firms, not-for profit-firms, and
government agencies. All of these types of organizations provide
,goods and services, even though they do not all have the same
objectives when it comes to maximizing wealth. According to the
text, "[economic] models are simplified representations of a real-
world organization and its environment" and managers can use
these models to make decisions in a timely and cost effective
manner. The models to do match every detail of an organization so,
although the over arching objectives may be different from firm to
firm, business transactions generally conform to similar standards
and processes. A model can be used to redirect the outcome of a
decision and it does not judge wether the outcome does/does not
support the organizations objectives.
◉ Microeconomics studies the allocation of.
Answer: scarce resources
◉ Microeconomic models are used to.
Answer: make predictions.
explain real-life phenomena.
evaluate production alternatives.
◉ Managerial Economics as a specialized branch of Economics.
Answer: Provide logic and methodology to find solutions to business
problems
, ◉ Unlike an accountant, an economist measures costs on a(n)
________ basis.
Answer: replacement
◉ When an economist uses the term "cost" referring to a firm, the
economist refers to the.
Answer: opportunity cost of producing a good or service, which
includes both implicit and explicit cost
◉ Accounting costs.
Answer: are historical costs
◉ A firm earns a normal profit when its total revenues just offset
both the ________ cost and ________ cost..
Answer: accounting; opportunity
◉ If Melissa owns a software company that incurs no fixed costs,
then.
Answer: her total cost equals her total variable cost
◉ In the short run, a firm cannot change the amount of capital it
uses. Therefore the cost of capital is a.
Answer: fixed cost.
GUIDE WITH SOLVED QUESTIONS
◉ Managerial economics helps managers.
Answer: make decisions in the face of scarcity.
◉ Microeconomics includes the study of the.
Answer: choices made by individuals and businesses
◉ The form of economics most relevant to managerial decision-
making within the firm.
Answer: microeconomics
◉ CEOs should focus on.
Answer: maximizing firm profits.
◉ Managerial economics generally refers to the integration of
economic theory with business.
Answer: Practice
◉ A managerial decision is not profitable if.
Answer: it increases costs more than revenue
,◉ According to the profit-maximization goal, the firm should
attempt to maximize short-run profits since there is too much
uncertainty associated with long-run profits..
Answer: . False
◉ Why is it useful to study Managerial Economics?.
Answer: Studying and understanding Managerial Economics is
important to make crucial business decisions to maximize profit and
create value for the product or service one is providing. By blending
economic theory and empirical data, managers can understand the
"how" and "why" a certain business decision will maximize wealth.
Once managers understand this reasoning behind economic
theories, they can use data to refine the theory aspect of managerial
economics to better fit their business, yielding continuous improved
decisions and ultimately the most desirable results. This helps
managers to create value. Consumers, just like firms, have scare
resources. Consumers will invest their resources in the product or
service that meets their needs with the greatest value.
Understanding managerial economics gives managers an edge in
creating value for their products.
◉ Why can Managerial Economics be applied to any business
decision making process, regardless of the industry?.
Answer: Managerial Economics is applicable to different types of
organizations like for-profit firms, not-for profit-firms, and
government agencies. All of these types of organizations provide
,goods and services, even though they do not all have the same
objectives when it comes to maximizing wealth. According to the
text, "[economic] models are simplified representations of a real-
world organization and its environment" and managers can use
these models to make decisions in a timely and cost effective
manner. The models to do match every detail of an organization so,
although the over arching objectives may be different from firm to
firm, business transactions generally conform to similar standards
and processes. A model can be used to redirect the outcome of a
decision and it does not judge wether the outcome does/does not
support the organizations objectives.
◉ Microeconomics studies the allocation of.
Answer: scarce resources
◉ Microeconomic models are used to.
Answer: make predictions.
explain real-life phenomena.
evaluate production alternatives.
◉ Managerial Economics as a specialized branch of Economics.
Answer: Provide logic and methodology to find solutions to business
problems
, ◉ Unlike an accountant, an economist measures costs on a(n)
________ basis.
Answer: replacement
◉ When an economist uses the term "cost" referring to a firm, the
economist refers to the.
Answer: opportunity cost of producing a good or service, which
includes both implicit and explicit cost
◉ Accounting costs.
Answer: are historical costs
◉ A firm earns a normal profit when its total revenues just offset
both the ________ cost and ________ cost..
Answer: accounting; opportunity
◉ If Melissa owns a software company that incurs no fixed costs,
then.
Answer: her total cost equals her total variable cost
◉ In the short run, a firm cannot change the amount of capital it
uses. Therefore the cost of capital is a.
Answer: fixed cost.
