ECON 528 Midterm Exam Questions and
Answers 100% Correct
Microeconomics studies the allocation of - ANSWER-scarce resources
Managerial Economics - ANSWER-helps managers make decisions in the face of
scarcity
Microeconomics 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
Managerial Economics is best defined as the economic study of - ANSWER-how
businesses can decide on the best use of scarce resources
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 is:
- ANSWER-microeconomics
CEOS should focus on - ANSWER-maximizing firm profits
Managerial economics generally refers to the integration of economic theory with
business - ANSWER-practice
Suppose the fixed cost of production rises by $500 and the price per unit is still $8.
What happens to the firm's profit-maximizing output level? - ANSWER-it will remain the
same
The firm will not produce in the short run if the output price falls below - ANSWER-$2.80
Which of the following is a factor of production that generally is fixed in the short-run? -
ANSWER-a factory building
Which of the following is an example of a long run adjustment? - ANSWER-Wal-Mart
builds another supercenter
Academic book publishers hire editors, designers, and production and marketing
managers who help prepare books for publication. Because these employees work on
, several books simultaneously, the number of people the company hires will not go up
and down with the quantity of books the company publishes during any particular year.
The salaries and benefits of people in these job categories will be included in -
ANSWER-fixed cost and total cost but not variable cost
If, for a given output level, a perfectly competitive firm's price is less than its average
variable cost, the firm - ANSWER-should shut down
Which of the following statements best describes the economic short run? - ANSWER-it
is a period during which at least one of the firm's inputs is fixed
A managerial decision is not profitable if - ANSWER-it increases costs more than
revenue
true or False:
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
Golda Rush quit her job as a manager for Home Depot to start her own hair dressing
salon, Goldilocks. She gave up a salary of $40,000 per year, invested her savings of
$30,000 (which was earning 5 percent interest) and borrowed $10,000 from a close
friend, agreeing to pay 5 percent interest per year. In her first year, Golda spent $18,000
to rent a salon, hired a part-time assistant for $12,000 and incurred another $15,000 on
equipment and hairdressing material. Based on this information, what is the amount of
her explicit costs? - ANSWER-$45,500
True or False:
Economic costs include implicit costs but not explicit costs. - ANSWER-false
Table 12-1 shows the short-run cost data of a perfectly competitive firm that produces
plastic camera cases. Assume that output can only be increased in batches of 100
units.
3) Refer to Table 12-1. What is the fixed cost of production?
Total Cost = 1,360 & Total Variable Cost = 360 - ANSWER-$1,000
If the market price of each camera case is $8, what is the profit-maximizing quantity? -
ANSWER-400 units
If the market price of each camera case is $8, what is the firm's total revenue?
MC = 8 & Quantity = 400 - ANSWER-$3200
Answers 100% Correct
Microeconomics studies the allocation of - ANSWER-scarce resources
Managerial Economics - ANSWER-helps managers make decisions in the face of
scarcity
Microeconomics 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
Managerial Economics is best defined as the economic study of - ANSWER-how
businesses can decide on the best use of scarce resources
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 is:
- ANSWER-microeconomics
CEOS should focus on - ANSWER-maximizing firm profits
Managerial economics generally refers to the integration of economic theory with
business - ANSWER-practice
Suppose the fixed cost of production rises by $500 and the price per unit is still $8.
What happens to the firm's profit-maximizing output level? - ANSWER-it will remain the
same
The firm will not produce in the short run if the output price falls below - ANSWER-$2.80
Which of the following is a factor of production that generally is fixed in the short-run? -
ANSWER-a factory building
Which of the following is an example of a long run adjustment? - ANSWER-Wal-Mart
builds another supercenter
Academic book publishers hire editors, designers, and production and marketing
managers who help prepare books for publication. Because these employees work on
, several books simultaneously, the number of people the company hires will not go up
and down with the quantity of books the company publishes during any particular year.
The salaries and benefits of people in these job categories will be included in -
ANSWER-fixed cost and total cost but not variable cost
If, for a given output level, a perfectly competitive firm's price is less than its average
variable cost, the firm - ANSWER-should shut down
Which of the following statements best describes the economic short run? - ANSWER-it
is a period during which at least one of the firm's inputs is fixed
A managerial decision is not profitable if - ANSWER-it increases costs more than
revenue
true or False:
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
Golda Rush quit her job as a manager for Home Depot to start her own hair dressing
salon, Goldilocks. She gave up a salary of $40,000 per year, invested her savings of
$30,000 (which was earning 5 percent interest) and borrowed $10,000 from a close
friend, agreeing to pay 5 percent interest per year. In her first year, Golda spent $18,000
to rent a salon, hired a part-time assistant for $12,000 and incurred another $15,000 on
equipment and hairdressing material. Based on this information, what is the amount of
her explicit costs? - ANSWER-$45,500
True or False:
Economic costs include implicit costs but not explicit costs. - ANSWER-false
Table 12-1 shows the short-run cost data of a perfectly competitive firm that produces
plastic camera cases. Assume that output can only be increased in batches of 100
units.
3) Refer to Table 12-1. What is the fixed cost of production?
Total Cost = 1,360 & Total Variable Cost = 360 - ANSWER-$1,000
If the market price of each camera case is $8, what is the profit-maximizing quantity? -
ANSWER-400 units
If the market price of each camera case is $8, what is the firm's total revenue?
MC = 8 & Quantity = 400 - ANSWER-$3200
