Managerial Economics Exam 2025
Questions and Answers
The best definition of economics is - ✔✔how choices are made under conditions of
scarcity
Managerial economics is best defined as the economic study of - ✔✔how businesses can
decide on the best use of scarce resources
Select the group that best represents the basic factors of production. - ✔✔land, labor,
capital, entrepreneurship
Which of the following is the best example of "what goods and services should be
produced?" - ✔✔the production of SUVs versus the production of sub-compact cars
Opportunity cost is best defined as - ✔✔the amount given up when choosing one
activity over the next best alternative.
The best example of an economic goal of a firm is - ✔✔increasing shareholder wealth.
A large corporation's profit objective may not be profit or wealth maximization, because
- ✔✔1. management is more interested in maximizing its own income.
2. stockholders have little power in corporate decision making.
3. managers are overly concerned with their own survival and may not take all prudent
risks.
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 1
, *All the above
A firm's "normal profit" is best characterized by the - ✔✔amount of profit a firm could
earn in its next best alternative activity.
Accounting costs - ✔✔are historical costs
Unlike an accountant, an economist measures costs on a(n) ________ basis. -
✔✔Replacement
The demand curve illustrates the fact that consumers: - ✔✔tend to purchase more of a
good as its price falls.
The entire group of buyers and sellers of a particular good or service makes up: - ✔✔a
market.
In a free market, if the price of a good is above the equilibrium price, then; -
✔✔suppliers, dissatisfied with growing inventories, will lower the price
Suppose you camped out in front of an electronics store to be one of the 200 lucky
people able to purchase the latest gaming system. You bought the system for $350. Two
weeks later you see that the same system can be sold on e-Bay for $600, so you sell your
system. Your market role is as: - ✔✔a consumer at the electronics store and as a seller
on e-Bay.
Suppose one could either rent a car or take a train to travel to Chicago from
Washington, D.C. If the price of train tickets increases: - ✔✔the demand for rental cars
will increase.
An increase in the quantity demanded of tea occurs whenever: - ✔✔the price of the tea
falls.
As the price of a good rises: - ✔✔more firms can cover their opportunity costs of
producing the good.
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 2
Questions and Answers
The best definition of economics is - ✔✔how choices are made under conditions of
scarcity
Managerial economics is best defined as the economic study of - ✔✔how businesses can
decide on the best use of scarce resources
Select the group that best represents the basic factors of production. - ✔✔land, labor,
capital, entrepreneurship
Which of the following is the best example of "what goods and services should be
produced?" - ✔✔the production of SUVs versus the production of sub-compact cars
Opportunity cost is best defined as - ✔✔the amount given up when choosing one
activity over the next best alternative.
The best example of an economic goal of a firm is - ✔✔increasing shareholder wealth.
A large corporation's profit objective may not be profit or wealth maximization, because
- ✔✔1. management is more interested in maximizing its own income.
2. stockholders have little power in corporate decision making.
3. managers are overly concerned with their own survival and may not take all prudent
risks.
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 1
, *All the above
A firm's "normal profit" is best characterized by the - ✔✔amount of profit a firm could
earn in its next best alternative activity.
Accounting costs - ✔✔are historical costs
Unlike an accountant, an economist measures costs on a(n) ________ basis. -
✔✔Replacement
The demand curve illustrates the fact that consumers: - ✔✔tend to purchase more of a
good as its price falls.
The entire group of buyers and sellers of a particular good or service makes up: - ✔✔a
market.
In a free market, if the price of a good is above the equilibrium price, then; -
✔✔suppliers, dissatisfied with growing inventories, will lower the price
Suppose you camped out in front of an electronics store to be one of the 200 lucky
people able to purchase the latest gaming system. You bought the system for $350. Two
weeks later you see that the same system can be sold on e-Bay for $600, so you sell your
system. Your market role is as: - ✔✔a consumer at the electronics store and as a seller
on e-Bay.
Suppose one could either rent a car or take a train to travel to Chicago from
Washington, D.C. If the price of train tickets increases: - ✔✔the demand for rental cars
will increase.
An increase in the quantity demanded of tea occurs whenever: - ✔✔the price of the tea
falls.
As the price of a good rises: - ✔✔more firms can cover their opportunity costs of
producing the good.
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 2
