MBA 701 ECONOMICS| QUESTIONS WITH VERIFIED ANSWERS 100% SOLVED| LATEST UPDATE
GUARANTEED PASS
Excess Demand (shortage) exists when quantity demanded exceeds quantity supplied
(sellers don't produce enough to meet consumer demand)
Market equilibrium happens when quantity supplied and quantity demanded are equal, Qs-
Qd=0.
Scarcity situation in which unlimited wants exceed the limited resources available to fulfill
those wants.
*Scarcity is a concept of finite resources in a world of infinite needs and wants, economics
assumes people are greedy and forced to choose among their needs and wants
Optimization making the best choice possible with given information.
*Optimization explains most choices people make, people not always successful when using
optimization.
-Optimal choice can be found using cost and benefit analysis.
Cost-benefit analysis calculation that identifies the best option by summing benefits and
subtracting costs, with both benefits and costs denominated in a common measurement, like
dollars.
*used to identify alternative that has the highest net benefit
Net Benefit sum of benefits of choosing an alternative minus the sum of the costs of
choosing that alternative.
NB=TB-TC
, Unconstrained optimization An optimization problem in which the decision maker can
choose the level of activity from an unrestricted set of values
Constrained Optimization An optimization problem in which the decision maker chooses
values for the choice variables from a restricted set of values
discrete choice variables A choice variable that can take only specific integer values
Continuous choice variables A choice variable that can take any value between two end
points
Unconstrained optimization with a discrete choice variable using total values Highest Net
Benefit= Total Benefit - Total Cost.
Whichever level of activity gives the highest net benefit is the choice that should be picked.
Marginal analysis analysis that involves comparing marginal benefits and marginal costs
Marginal Benefit benefit from each additional increment or unit in level of activity.
MB= Change in total benefit/change in total activity
Marginal Cost cost from each additional increment or unit in level of activity.
MC= Change in total cost/change in total activity.
Unconstrained Optimization with a discrete choice variable using marginal analysis -increase
activity if MB > MC
-decrease activity if MB < MC
-optimal level of activity is the last level for which MB is greater than or equal to MC
GUARANTEED PASS
Excess Demand (shortage) exists when quantity demanded exceeds quantity supplied
(sellers don't produce enough to meet consumer demand)
Market equilibrium happens when quantity supplied and quantity demanded are equal, Qs-
Qd=0.
Scarcity situation in which unlimited wants exceed the limited resources available to fulfill
those wants.
*Scarcity is a concept of finite resources in a world of infinite needs and wants, economics
assumes people are greedy and forced to choose among their needs and wants
Optimization making the best choice possible with given information.
*Optimization explains most choices people make, people not always successful when using
optimization.
-Optimal choice can be found using cost and benefit analysis.
Cost-benefit analysis calculation that identifies the best option by summing benefits and
subtracting costs, with both benefits and costs denominated in a common measurement, like
dollars.
*used to identify alternative that has the highest net benefit
Net Benefit sum of benefits of choosing an alternative minus the sum of the costs of
choosing that alternative.
NB=TB-TC
, Unconstrained optimization An optimization problem in which the decision maker can
choose the level of activity from an unrestricted set of values
Constrained Optimization An optimization problem in which the decision maker chooses
values for the choice variables from a restricted set of values
discrete choice variables A choice variable that can take only specific integer values
Continuous choice variables A choice variable that can take any value between two end
points
Unconstrained optimization with a discrete choice variable using total values Highest Net
Benefit= Total Benefit - Total Cost.
Whichever level of activity gives the highest net benefit is the choice that should be picked.
Marginal analysis analysis that involves comparing marginal benefits and marginal costs
Marginal Benefit benefit from each additional increment or unit in level of activity.
MB= Change in total benefit/change in total activity
Marginal Cost cost from each additional increment or unit in level of activity.
MC= Change in total cost/change in total activity.
Unconstrained Optimization with a discrete choice variable using marginal analysis -increase
activity if MB > MC
-decrease activity if MB < MC
-optimal level of activity is the last level for which MB is greater than or equal to MC
