Managerial Economics:
z
A Problem-
z
Solving Approach 3rdEdition
z z
End-of-Chapter Questions and Answers
z z z
,TablezofzContents
Chapterz2..................................................................................................................................................... 1
Chapterz3..................................................................................................................................................... 5
Chapterz4..................................................................................................................................................... 9
Chapterz5.................................................................................................................................................. 13
Chapterz6.................................................................................................................................................. 17
Chapterz7.................................................................................................................................................. 21
Chapterz8.................................................................................................................................................. 25
Chapterz9.................................................................................................................................................. 30
Chapterz10 ............................................................................................................................................... 34
Chapterz11 ............................................................................................................................................... 38
Chapterz12 ............................................................................................................................................... 41
Chapterz(13)-14..................................................................................................................................... 45
Chapterz15 ............................................................................................................................................... 50
Chapterz16 ............................................................................................................................................... 55
Chapterz17 ............................................................................................................................................... 60
Chapterz18 ............................................................................................................................................... 65
Chapterz19 ............................................................................................................................................... 70
Chapterz20 ............................................................................................................................................... 74
Chapterz21 ............................................................................................................................................... 78
Chapterz22 ............................................................................................................................................... 82
Chapterz23 ............................................................................................................................................... 87
,Chapter 2 z
MultiplezChoicezQuestions
1. Anzindividual’szvaluezforzazgoodzorzserviceziszthe
a. Thezamountzofzmoneyzhezorzshezusedztozpayzforzazgood
b. Thezamountzofzmoneyzhezorzsheziszwillingztozpayzforzit
c. Thezamountzofzmoneyzhezorzshezhasztozspendzonzgoods
d. Nonezofzthezabove
2. Thezbiggestzadvantagezofzcapitalismzis
a. Generateszwealthzwithzthezhelpzofzgovernmentzintervention
b. Thatzpriceszassistszinzmovingzassetszfromzhighzvaluedztozlowzvaluezuses
c. Itzforceszinvoluntaryzexchanges
d. Createszwealthzbyzlettingzazpersonzfollowzhiszorzherzownzself-interest
3. Wealthzcreatingztransactionszarezmorezlikelyztozoccur
a. Withzprivatezpropertyzrights
b. Withzcontractzenforcement
c. Withzblackzmarkets
d. azandzb
4. Governmentz regulation
a. provideszincentivesztozconductzbusinesszinzanzillegalzblackzmarket
b. playsznozrolezinzgeneratingzwealth
c. iszthezbestzwayztozeliminatezpoverty
d. doesznotzenforcezpropertyzrights
5. Anzexamplezofzpricezfloorzis
a. Minimumzwages
b. RentzcontrolszinzNewzYork
c. Bothzazandzb
d. Nonezofzthezabove
6. Azpricezceiling:
a. Iszazgovernment-setzpricezabovezmarketzequilibriumzprice.
b. Iszthezequivalentzofzanzimplicitztaxzonzproducerszandzanzimplicitzsubsidyzto
zconsumers.
c. Willzcreatezazsurplus.
d. Causeszanzincreasezinzconsumerzandzproducerzsurplus.
7. Taxes:
a. Impedezthezmovementzofzassetsztozhigherzvaluedzuses
b. Reducezincentivesztozwork
c. Decreasesztheznumberzofzwealthzcreatingztransactions
d. Allzthezabove
1
, 8. Azconsumerzvalueszazcarzatz$30,000zandzazproducerzvalueszthezsamezcarzatz$20,000.zIfzthe
ztransactionziszcompletedzatz$24,000,ztheztransactionzwillzgenerate:
a. Nozsurplus
b. $4,000zworthzofzsellerzsurpluszandzunknownzamountzofzbuyerzsurplus
c. $6,000zworthzofzbuyerzsurpluszandz$4,000zofzsellerzsurplus
d. $6,000zworthzofzbuyerzsurpluszandzunknownzamountzofzsellerzsurplus
9. Azconsumerzvalueszazcarzatz$525,000zandzazproducerzvalueszthezsamezcarzatz$485,000.zIfzsales
ztaxzisz8%zandziszleviedzonzthezseller,zthenzthezsellerszbottomzlinezpricezis
a. $527,000
b. $523,800
c. $525,000
d. $500,000
10. Efficiencyzimplieszopportunity,
a. Always
b. Never
c. Onlyzifzaccompaniedzbyzsecurezpropertyzrights
d. Nonezofzthezabove
MultiplezChoicezKey
1. B
2. D
3. D
4. A
5. A
6. B
7. D
8. C
9. B
10.z B
ShortzAnswerzQuestions
2-1 AirlinezDelays
Howzwillzcommercialzairlineszrespondztozthezthreatzofznewz$27,500zfineszforzkeepingzpassengerszonzt
heztarmaczforzmorezthanz3zhours?zWhatzinefficiencyzwillzthiszcreate?
2-2 SellingzUsedzCars
Izrecentlyzsoldzmyzusedzcar.zIfznoznewzproductionzoccurredzforzthisztransaction,zhowzcouldzitzhavezcre
atedzvalue?
2-3 FloodzInsurance
ThezU.S.zgovernmentzsubsidizeszfloodzinsurancezbecausezthosezwhozwantztozbuyzitzlivezinzthezfloodzpl
ainzandzcannotzgetzitzatzreasonablezrates.zWhatzinefficiencyzdoeszthiszcreate?
2-4 GoalzAlignmentzamongzPhysicians
Anzelderlyzphysicianzhaszbuiltzupzhiszownzpracticezintozazquitezvaluablezbusiness.zNowzthatzhezis
2
z
A Problem-
z
Solving Approach 3rdEdition
z z
End-of-Chapter Questions and Answers
z z z
,TablezofzContents
Chapterz2..................................................................................................................................................... 1
Chapterz3..................................................................................................................................................... 5
Chapterz4..................................................................................................................................................... 9
Chapterz5.................................................................................................................................................. 13
Chapterz6.................................................................................................................................................. 17
Chapterz7.................................................................................................................................................. 21
Chapterz8.................................................................................................................................................. 25
Chapterz9.................................................................................................................................................. 30
Chapterz10 ............................................................................................................................................... 34
Chapterz11 ............................................................................................................................................... 38
Chapterz12 ............................................................................................................................................... 41
Chapterz(13)-14..................................................................................................................................... 45
Chapterz15 ............................................................................................................................................... 50
Chapterz16 ............................................................................................................................................... 55
Chapterz17 ............................................................................................................................................... 60
Chapterz18 ............................................................................................................................................... 65
Chapterz19 ............................................................................................................................................... 70
Chapterz20 ............................................................................................................................................... 74
Chapterz21 ............................................................................................................................................... 78
Chapterz22 ............................................................................................................................................... 82
Chapterz23 ............................................................................................................................................... 87
,Chapter 2 z
MultiplezChoicezQuestions
1. Anzindividual’szvaluezforzazgoodzorzserviceziszthe
a. Thezamountzofzmoneyzhezorzshezusedztozpayzforzazgood
b. Thezamountzofzmoneyzhezorzsheziszwillingztozpayzforzit
c. Thezamountzofzmoneyzhezorzshezhasztozspendzonzgoods
d. Nonezofzthezabove
2. Thezbiggestzadvantagezofzcapitalismzis
a. Generateszwealthzwithzthezhelpzofzgovernmentzintervention
b. Thatzpriceszassistszinzmovingzassetszfromzhighzvaluedztozlowzvaluezuses
c. Itzforceszinvoluntaryzexchanges
d. Createszwealthzbyzlettingzazpersonzfollowzhiszorzherzownzself-interest
3. Wealthzcreatingztransactionszarezmorezlikelyztozoccur
a. Withzprivatezpropertyzrights
b. Withzcontractzenforcement
c. Withzblackzmarkets
d. azandzb
4. Governmentz regulation
a. provideszincentivesztozconductzbusinesszinzanzillegalzblackzmarket
b. playsznozrolezinzgeneratingzwealth
c. iszthezbestzwayztozeliminatezpoverty
d. doesznotzenforcezpropertyzrights
5. Anzexamplezofzpricezfloorzis
a. Minimumzwages
b. RentzcontrolszinzNewzYork
c. Bothzazandzb
d. Nonezofzthezabove
6. Azpricezceiling:
a. Iszazgovernment-setzpricezabovezmarketzequilibriumzprice.
b. Iszthezequivalentzofzanzimplicitztaxzonzproducerszandzanzimplicitzsubsidyzto
zconsumers.
c. Willzcreatezazsurplus.
d. Causeszanzincreasezinzconsumerzandzproducerzsurplus.
7. Taxes:
a. Impedezthezmovementzofzassetsztozhigherzvaluedzuses
b. Reducezincentivesztozwork
c. Decreasesztheznumberzofzwealthzcreatingztransactions
d. Allzthezabove
1
, 8. Azconsumerzvalueszazcarzatz$30,000zandzazproducerzvalueszthezsamezcarzatz$20,000.zIfzthe
ztransactionziszcompletedzatz$24,000,ztheztransactionzwillzgenerate:
a. Nozsurplus
b. $4,000zworthzofzsellerzsurpluszandzunknownzamountzofzbuyerzsurplus
c. $6,000zworthzofzbuyerzsurpluszandz$4,000zofzsellerzsurplus
d. $6,000zworthzofzbuyerzsurpluszandzunknownzamountzofzsellerzsurplus
9. Azconsumerzvalueszazcarzatz$525,000zandzazproducerzvalueszthezsamezcarzatz$485,000.zIfzsales
ztaxzisz8%zandziszleviedzonzthezseller,zthenzthezsellerszbottomzlinezpricezis
a. $527,000
b. $523,800
c. $525,000
d. $500,000
10. Efficiencyzimplieszopportunity,
a. Always
b. Never
c. Onlyzifzaccompaniedzbyzsecurezpropertyzrights
d. Nonezofzthezabove
MultiplezChoicezKey
1. B
2. D
3. D
4. A
5. A
6. B
7. D
8. C
9. B
10.z B
ShortzAnswerzQuestions
2-1 AirlinezDelays
Howzwillzcommercialzairlineszrespondztozthezthreatzofznewz$27,500zfineszforzkeepingzpassengerszonzt
heztarmaczforzmorezthanz3zhours?zWhatzinefficiencyzwillzthiszcreate?
2-2 SellingzUsedzCars
Izrecentlyzsoldzmyzusedzcar.zIfznoznewzproductionzoccurredzforzthisztransaction,zhowzcouldzitzhavezcre
atedzvalue?
2-3 FloodzInsurance
ThezU.S.zgovernmentzsubsidizeszfloodzinsurancezbecausezthosezwhozwantztozbuyzitzlivezinzthezfloodzpl
ainzandzcannotzgetzitzatzreasonablezrates.zWhatzinefficiencyzdoeszthiszcreate?
2-4 GoalzAlignmentzamongzPhysicians
Anzelderlyzphysicianzhaszbuiltzupzhiszownzpracticezintozazquitezvaluablezbusiness.zNowzthatzhezis
2
