HBS CORE - ECONOMICS FOR
MANAGERS QUESTIONS AND
ANSWERS 100% CORRECT
A market's equilibrium outcome maximizes __ - ANSWER-Total Surplus. Sum of
Producer and Consumer Surplus
How does Price affect WTP? - ANSWER-Price does not affect WTP
Marginal Cost - ANSWER-Additional cost incurred in producing an extra unit of
output
Marginal Revenue - ANSWER-Additional revenue earned by producing one extra
unit
Markets that exhibit network effects are often ____ - ANSWER-Winner Take All
Perfectly Inelastic Demand - ANSWER-When demand for a good or service does not
change when price does. e = 0
Price elasticity of demands tends to __ increase over time. Why? - ANSWER-
Increase. As time increases, the more likely substitute goods become available and
the more likely competition increases
Are auctions more effective when buyers' valuations are within a narrow range? Or
when buyers' valuations are widely spread out? - ANSWER-Auctions are more
effective when valuations are within a narrow range, ensuring that the sale price will
be close to the WTP of the second highest bidder
As a business that exhibits network effects gains market share, buyers' WTP should
__ - ANSWER-Increase. Buyers should be willing to pay more for their products
As more substitute goods become available, price elasiticity of demand ___ -
ANSWER-Increases. The more substitute goods are available, the less willing
consumers will be to put up with increases in price
As more substitute goods become available, price elasticity of demand __. Why? -
ANSWER-Increases. The more available are subtitute goods, the less willing
consumers will be to put up with increases in price
As price increases, the price elasticity of demand __? Why? - ANSWER-Increases.
The higher the price, the less willing consumers will be to put up with additional
increases in price
MANAGERS QUESTIONS AND
ANSWERS 100% CORRECT
A market's equilibrium outcome maximizes __ - ANSWER-Total Surplus. Sum of
Producer and Consumer Surplus
How does Price affect WTP? - ANSWER-Price does not affect WTP
Marginal Cost - ANSWER-Additional cost incurred in producing an extra unit of
output
Marginal Revenue - ANSWER-Additional revenue earned by producing one extra
unit
Markets that exhibit network effects are often ____ - ANSWER-Winner Take All
Perfectly Inelastic Demand - ANSWER-When demand for a good or service does not
change when price does. e = 0
Price elasticity of demands tends to __ increase over time. Why? - ANSWER-
Increase. As time increases, the more likely substitute goods become available and
the more likely competition increases
Are auctions more effective when buyers' valuations are within a narrow range? Or
when buyers' valuations are widely spread out? - ANSWER-Auctions are more
effective when valuations are within a narrow range, ensuring that the sale price will
be close to the WTP of the second highest bidder
As a business that exhibits network effects gains market share, buyers' WTP should
__ - ANSWER-Increase. Buyers should be willing to pay more for their products
As more substitute goods become available, price elasiticity of demand ___ -
ANSWER-Increases. The more substitute goods are available, the less willing
consumers will be to put up with increases in price
As more substitute goods become available, price elasticity of demand __. Why? -
ANSWER-Increases. The more available are subtitute goods, the less willing
consumers will be to put up with increases in price
As price increases, the price elasticity of demand __? Why? - ANSWER-Increases.
The higher the price, the less willing consumers will be to put up with additional
increases in price
