MGMT 3323 FINAL EXM STUDY GUIDE.

MGMT 3323 FINAL EXM STUDY GUIDE.Analyzing the Firm Multiple Choice Questions 1. Suppose the utility function for a firm manager is U = π + bQ, where Q is output, π is profit, and b is a positive constant. How would the firm's output compare with what it would be if the manager's objective was to maximize profit? A. It would be greater than the profit-maximizing output. B. It would be less than the profit-maximizing output. C. It would be the same as the profit-maximizing output. D. None of the statements is correct. 2. Suppose a consumer with an income of $100 is faced with Px = 1 and Py = 1/2. What is the market rate of substitution between good X (horizontal axis) and good Y (vertical axis)? A. 0.5 0 B. - 1.0 C. - 2.0 D. - 4.0 3. The difference between a price decrease and an increase in income is that A. A price decrease does not affect the consumption of other goods, while an increase in income does. B. An increase in income does not affect the slope of the budget line, while a decrease in price does change the slope. C. A price decrease decreases real income, while an increase in income increases real income. D. A price decrease leaves real income unchanged, while an increase in income increases real income. 4. Joe prefers a three-pack of soda to a six-pack. What properties does this preference violate? A. Completene ss B. Transitivi ty C. More is better D. Diminishing MRS 5. Which of the following is true? A. Indifference curves may intersect. B. At a point of consumer equilibrium, the MRS always equals 1. C. If income increases, a consumer will always consume more of a good. D. None of the statements is correct. 6. If the price of good X is $10 and the price of good Y is $5, how much of good X will the consumer purchase if her income is $15? A. 0 B. 2 C. 3 D. Cannot tell based on the above information. 7. Individuals who purchase services and goods for the purpose of consumption are: A. consumer s. B. manager s. C. worker s. D. agent