ECON 528 Midterm || WITH ANSWERS 100%
PASSED!!
Managerial economics is best defined as the economic study of: correct answers how
businesses can decide on the best use of scarce resources.
Managerial economics helps managers correct answers make decisions in the face of scarcity.
Microeconomics includes the study of the correct answers choices made by individuals and
businesses
The form of economics most relevant to managerial decision-making within the firm correct
answers microeconomics
CEOs should focus on correct answers maximizing firm profits.
Managerial economics generally refers to the integration of economic theory with business
correct answers Practice
A managerial decision is not profitable if correct answers it increases costs more than revenue
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. correct answers .
False
Why is it useful to study Managerial Economics? correct answers Studying and
understanding Managerial Economics is important to make crucial business decisions to
maximize profit and create value for the product or service one is providing. By blending
economic theory and empirical data, managers can understand the "how" and "why" a certain
business decision will maximize wealth. Once managers understand this reasoning behind
economic theories, they can use data to refine the theory aspect of managerial economics to
better fit their business, yielding continuous improved decisions and ultimately the most
desirable results. This helps managers to create value. Consumers, just like firms, have scare
resources. Consumers will invest their resources in the product or service that meets their
needs with the greatest value. Understanding managerial economics gives managers an edge
in creating value for their products.
Why can Managerial Economics be applied to any business decision making process,
regardless of the industry? correct answers Managerial Economics is applicable to different
types of organizations like for-profit firms, not-for profit-firms, and government agencies. All
of these types of organizations provide goods and services, even though they do not all have
the same objectives when it comes to maximizing wealth. According to the text, "[economic]
models are simplified representations of a real-world organization and its environment" and
managers can use these models to make decisions in a timely and cost effective manner. The
models to do match every detail of an organization so, although the over arching objectives
may be different from firm to firm, business transactions generally conform to similar
standards and processes. A model can be used to redirect the outcome of a decision and it
does not judge wether the outcome does/does not support the organizations objectives.
, Microeconomics studies the allocation of correct answers scarce resources
Microeconomic models are used to correct answers make predictions.
explain real-life phenomena.
evaluate production alternatives.
Managerial Economics as a specialized branch of Economics correct answers Provide logic
and methodology to find solutions to business problems
Unlike an accountant, an economist measures costs on a(n) ________ basis correct answers
replacement
When an economist uses the term "cost" referring to a firm, the economist refers to the
correct answers opportunity cost of producing a good or service, which includes both implicit
and explicit cost
Accounting costs correct answers are historical costs
A firm earns a normal profit when its total revenues just offset both the ________ cost and
________ cost. correct answers accounting; opportunity
If Melissa owns a software company that incurs no fixed costs, then correct answers her total
cost equals her total variable cost
In the short run, a firm cannot change the amount of capital it uses. Therefore the cost of
capital is a correct answers fixed cost.
Because the amount of labor a firm employs can be changed, the cost of labor is known as
correct answers variable cost.
Marginal cost equals correct answers the change in total cost that results from a one-unit
increase in output
Lauren runs a chili restaurant in San Francisco. Her total revenue last year was $110,000. The
rent on her restaurant was $48,000, her labor costs were $42,000, and her materials, food and
other variable costs were $20,000. Lauren could have worked as a biologist and earned
$50,000 per year. An economist calculates her implicit costs as correct answers $50,000
A factor of production that can be easily changed in the relevant time period is called a:
correct answers variable input.
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 implicit costs? correct answers
41,500
Accounting costs exclude implicit costs. correct answers true
PASSED!!
Managerial economics is best defined as the economic study of: correct answers how
businesses can decide on the best use of scarce resources.
Managerial economics helps managers correct answers make decisions in the face of scarcity.
Microeconomics includes the study of the correct answers choices made by individuals and
businesses
The form of economics most relevant to managerial decision-making within the firm correct
answers microeconomics
CEOs should focus on correct answers maximizing firm profits.
Managerial economics generally refers to the integration of economic theory with business
correct answers Practice
A managerial decision is not profitable if correct answers it increases costs more than revenue
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. correct answers .
False
Why is it useful to study Managerial Economics? correct answers Studying and
understanding Managerial Economics is important to make crucial business decisions to
maximize profit and create value for the product or service one is providing. By blending
economic theory and empirical data, managers can understand the "how" and "why" a certain
business decision will maximize wealth. Once managers understand this reasoning behind
economic theories, they can use data to refine the theory aspect of managerial economics to
better fit their business, yielding continuous improved decisions and ultimately the most
desirable results. This helps managers to create value. Consumers, just like firms, have scare
resources. Consumers will invest their resources in the product or service that meets their
needs with the greatest value. Understanding managerial economics gives managers an edge
in creating value for their products.
Why can Managerial Economics be applied to any business decision making process,
regardless of the industry? correct answers Managerial Economics is applicable to different
types of organizations like for-profit firms, not-for profit-firms, and government agencies. All
of these types of organizations provide goods and services, even though they do not all have
the same objectives when it comes to maximizing wealth. According to the text, "[economic]
models are simplified representations of a real-world organization and its environment" and
managers can use these models to make decisions in a timely and cost effective manner. The
models to do match every detail of an organization so, although the over arching objectives
may be different from firm to firm, business transactions generally conform to similar
standards and processes. A model can be used to redirect the outcome of a decision and it
does not judge wether the outcome does/does not support the organizations objectives.
, Microeconomics studies the allocation of correct answers scarce resources
Microeconomic models are used to correct answers make predictions.
explain real-life phenomena.
evaluate production alternatives.
Managerial Economics as a specialized branch of Economics correct answers Provide logic
and methodology to find solutions to business problems
Unlike an accountant, an economist measures costs on a(n) ________ basis correct answers
replacement
When an economist uses the term "cost" referring to a firm, the economist refers to the
correct answers opportunity cost of producing a good or service, which includes both implicit
and explicit cost
Accounting costs correct answers are historical costs
A firm earns a normal profit when its total revenues just offset both the ________ cost and
________ cost. correct answers accounting; opportunity
If Melissa owns a software company that incurs no fixed costs, then correct answers her total
cost equals her total variable cost
In the short run, a firm cannot change the amount of capital it uses. Therefore the cost of
capital is a correct answers fixed cost.
Because the amount of labor a firm employs can be changed, the cost of labor is known as
correct answers variable cost.
Marginal cost equals correct answers the change in total cost that results from a one-unit
increase in output
Lauren runs a chili restaurant in San Francisco. Her total revenue last year was $110,000. The
rent on her restaurant was $48,000, her labor costs were $42,000, and her materials, food and
other variable costs were $20,000. Lauren could have worked as a biologist and earned
$50,000 per year. An economist calculates her implicit costs as correct answers $50,000
A factor of production that can be easily changed in the relevant time period is called a:
correct answers variable input.
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 implicit costs? correct answers
41,500
Accounting costs exclude implicit costs. correct answers true
