TEST BANK FOR Managerial Economics, 9th Edition William F. Samuelson, Stephen G. Marks, Jay L. Zagorsky All Chapters || Verified Solution.

TESTBANKFORManagerialEconomics,9thEdition Willi
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am F. Samuelson, Stephen G. Marks, Jay L. Zagorsky
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File: Ch01; CHAPTER 1: Introduction to Economic Decision Making
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1. Managerial economics can best be defined as the: tv tv tv tv tv tv tv



a) macroeconomics and microeconomics for managers. tv tv tv tv



b) study of economic incentives on consumer behavior and demand.
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c) analysis of the labor market through the behavior of workers and managers.
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d) analysis of major management decisions using economic tools.
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e) study of the strategic interaction between firms in a market.
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ANSWER: d tv



SECTION REFERENCE: Introduction tv tv



DIFFICULTY LEVEL: Easy
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2. Which of the following is not one of the steps in managerial decision making?
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a) Predicting the consequences of a decision. tv tv tv tv tv



b) Exploring the alternatives to the decision. tv tv tv tv tv



c) Defining the problem and the objectives of the decision.
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d) Negotiating a consensus to implement the decision. tv tv tv tv tv tv



e) Performing sensitivity analysis. tv tv




ANSWER: d tv



SECTION REFERENCE: Six Steps to Decision Making
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DIFFICULTY LEVEL: Easy
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3. Profit maximization is an ambiguous guide to decision making in the private sector because:
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a) firms in the private sector usually do not aim at profit maximization.
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b) the goal of profit maximization contradicts the goal of satisfying the firm‘s shareholders.
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c) of the presence of risk and uncertainty.
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d) profit-maximization ignores social costs and benefits. tv tv tv tv tv



e) None of the above answers is correct.
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ANSWER: c tv



SECTION REFERENCE: Six Steps to Decision Making
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DIFFICULTY LEVEL: Easy
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,4. Which of the following is true of economic models?
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a) Models are too theoretical to be applicable in real world decisions.
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b) Models are not useful because uncertainty prevents accurate forecasts.
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c) Models are simplified descriptions of processes, relationships, or other phenomena.
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d) Models describe real world situations in complete detail.
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e) Models are not useful because they do not take into account complicating and less
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important features of a problem.
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ANSWER: c tv



SECTION REFERENCE: Six Steps to Decision Making
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DIFFICULTY LEVEL: Medium
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5. Which of the following correctly describes a deterministic economic model?
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a) A deterministic model is a model for which the outcome is predicted with certainty.
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b) A deterministic model can only be used to explain short-run economic phenomena.
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c) A deterministic model is most useful in identifying long-term trends.
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d) A deterministic model is used in the study of normative economics.
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e) The outcome of a deterministic model is random and has probabilities attached.
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ANSWER: a tv



SECTION REFERENCE: Six Steps to Decision Making
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DIFFICULTY LEVEL: Easy
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6. Which of the following correctly explains a probabilistic model?
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a) A probabilistic model gives a description of real world economic phenomena.
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b) A probabilistic model shows the possibility of a range of outcomes.
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c) A probabilistic model examines the changes in economic variables over a period of time.
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d) A probabilistic model is based on value judgments.
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e) A probabilistic model is used to explain long-run economic phenomena
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ANSWER: b tv



SECTION REFERENCE: Six Steps to Decision Making
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DIFFICULTY LEVEL: Easy
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7. Maximizing profit by enumerating the profit outcomes of different courses of action
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a) Is only applicable to problems with a small number of alternatives.
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b) Becomes increasingly costly as the number of choices increase.
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c) Always discovers the best possible choice.
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, d) Provides a useful shortcut to finding the optimal choice.
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e) Answers b and c are both correct.
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ANSWER: b tv



SECTION REFERENCE: Six Steps to Decision Making
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DIFFICULTY LEVEL: Medium
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8. A beverages company wants to launch a new diet soda aimed at diabetics and health-
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conscious customers. It will use a
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a) deterministic
b) dynamic
c) qualitative
d) stochastic
e) probabilistic

ANSWER: a tv



SECTION REFERENCE: Six Steps to Decision Making
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DIFFICULTY LEVEL: Medium
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9. Given that the market share of a firm depends on many unpredictable factors, a firm will use a
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tv economic model to estimate the market share for one of its products.
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a) deterministic
b) dynamic
c) qualitative
d) probabilistic
e) comparative statics tv




ANSWER: d tv



SECTION REFERENCE: Six Steps to Decision Making
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DIFFICULTY LEVEL: Medium
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10. Sensitivityanalysis is used by a firm to:
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a) analyze the impact of a change in the price of the good on the demand for the good.
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b) examine the static effects of an economic decision on the firm‘s profitability.
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c) analyze the social costs and benefits of an economic decision.
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d) examine the opportunity costs of an economic decision.
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e) examine how an optimal decision is affected if key economic facts vary.
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ANSWER: e tv



SECTION REFERENCE: Six Steps to Decision Making
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1-3

, DIFFICULTY LEVEL: Easy tv tv




11. A cosmetics company is conducting a second-year review of one of its newest products. The
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marketing department expects that the firm will continue to earn profits from the sale of
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the product in the third year as it did in the past two years. Senior management, however,
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feels that the profit projections would vary based on other factors such as the price of the
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competitor's products, the actual level of sales, and the possibility of cost reductions. In
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other words, the senior management is undertaking
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a) a sensitivity analysis
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b) an enumeration study
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c) a benefit-cost analysis
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d) a contingent valuation study
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e) a strategic analysis
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ANSWER: a tv



SECTION REFERENCE: Six Steps to Decision Making
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DIFFICULTY LEVEL: Medium
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12. According to the satisficing model of management behavior, the goal of a firm is to:
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a) satisfy customers, employees, and shareholders.
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b) maximize the gain to society and not just to shareholders.
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c) achieve a satisfactory level of performance against a benchmark.
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d) maximize sales revenue and not necessarily the value of the firm.
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e) maximize its market share even at the cost of profit.tv tv tv tv tv tv tv tv tv




ANSWER: c tv



SECTION REFERENCE: Private and Public Decisions: An Economic View DIFFICULTY
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LEVEL: Easy
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13. According to the theory of the firm, the management‘s ultimate objective is to:
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a) maximize short-term profit, even if this sacrifices long-term profit.
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b) maximize the value of the firm. tv tv tv tv tv



c) increase production to the highest possible level.
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d) increase the market share of the firm.tv tv tv tv tv tv



e) diversify into as many product lines as the firm can.
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ANSWER: b tv



SECTION REFERENCE: Private and Public Decisions: An Economic View DIFFICULTY
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LEVEL: Easy
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