MANAGERIAL ECONOMICS &
BUSINESS STRATEGY
PRACTICE EXAM QUESTIONS
WITH CORRECT DETAILED
ANSWERS | ALREADY GRADED
A+<RECENT VERSION>
1. Managerial economics - answer application of microeconomic theory
to business problems, aiming to achieve profit maximization.
2. Microeconomics - answer study of individual consumer, business
firm, and market behavior to understand business practices and tactics.
3. Industrial organization - answer specialized branch of
microeconomics focusing on behavior and structure of firms and
industries.
4. Strategic decisions - answer business actions altering market
conditions and rivals' behavior to increase and protect the firm's profit.
,5. Opportunity cost - answer cost of using resources for production,
including market-supplied and owner-supplied resources.
6. Total economic cost - answer sum of opportunity costs of market-
supplied and owner-supplied resources, including explicit and implicit
costs.
7. Economic profit - answer total revenue minus total economic cost,
including explicit and implicit costs.
8. Accounting profit - answer total revenue minus explicit costs, not
accounting for implicit costs.
9. Value of a firm - answer price for which a firm can be sold, equal to
the present value of expected future profits.
10.Risk premium - answer increase in the discount rate compensating
investors for uncertainty about future profits.
11.Principal-agent problem - answer conflict arising when the objectives
of a firm's owner and manager are not aligned, and monitoring the
manager is costly or impossible.
12.Complete contract - answer employment contract protecting owners
from deviations by managers from value-maximizing decisions.
13.Moral hazard - answer managers taking hidden actions that harm the
owners but further their own interests.
,14.Internal control mechanisms - answer requirements for managers to
hold firm equity, increase outsider representation on the board, and
finance investments with debt.
15.External mechanism - answer corporate takeovers as a means of
control.
16.Price-taking firm - answer unable to set product price, determined
strictly by market forces of demand and supply.
17.Price-setting firm - answer able to set product price, with a degree of
market power to raise price without losing all sales.
18.Market - answer any arrangement for buyers and sellers to exchange
goods or services, reducing transaction costs.
19.Market structures - answer characteristics determining the economic
environment for a firm, including number and size of firms, product
differentiation, and entry likelihood.
20.Perfect competition - answer large number of small firms,
undifferentiated product, no market power, and no barriers to entry.
21.Monopoly - answer single firm with no close substitutes, protected by
entry barriers, allowing price increase without new entrants.
22.Monopolistic competition - answer large number of small firms with
differentiated products, some market power, and no barriers to entry.
, 23.Oligopoly - answer few firms producing most of the market output,
with interdependent profits and actions.
24.Globalization of markets - answer economic integration of markets
worldwide, providing opportunities to sell more goods and services, but
also increasing competition.
25.Marginal analysis - answer provides the foundation for understanding
everyday business decisions using microeconomics.
26.Mcgraw-hill connect® plus economics - answer digital solution for
improving student readiness, engagement, and comprehension
27.Learnsmart™ - answer adaptive learning program identifying student
knowledge gaps and aiding faster learning
28.Graphing tool - answer allows students to interact with and analyze
graphs in online assignments
29.Ebooks - answer media-rich digital books with note-sharing and
interactive features
30.Lecture capture - answer records classes for on-demand review,
search, and playback
31.Instructor access - answer includes assignment management, auto-
graded tests, and detailed reporting
32.Student access - answer provides online homework, tests, quizzes,
immediate feedback, and tech support
BUSINESS STRATEGY
PRACTICE EXAM QUESTIONS
WITH CORRECT DETAILED
ANSWERS | ALREADY GRADED
A+<RECENT VERSION>
1. Managerial economics - answer application of microeconomic theory
to business problems, aiming to achieve profit maximization.
2. Microeconomics - answer study of individual consumer, business
firm, and market behavior to understand business practices and tactics.
3. Industrial organization - answer specialized branch of
microeconomics focusing on behavior and structure of firms and
industries.
4. Strategic decisions - answer business actions altering market
conditions and rivals' behavior to increase and protect the firm's profit.
,5. Opportunity cost - answer cost of using resources for production,
including market-supplied and owner-supplied resources.
6. Total economic cost - answer sum of opportunity costs of market-
supplied and owner-supplied resources, including explicit and implicit
costs.
7. Economic profit - answer total revenue minus total economic cost,
including explicit and implicit costs.
8. Accounting profit - answer total revenue minus explicit costs, not
accounting for implicit costs.
9. Value of a firm - answer price for which a firm can be sold, equal to
the present value of expected future profits.
10.Risk premium - answer increase in the discount rate compensating
investors for uncertainty about future profits.
11.Principal-agent problem - answer conflict arising when the objectives
of a firm's owner and manager are not aligned, and monitoring the
manager is costly or impossible.
12.Complete contract - answer employment contract protecting owners
from deviations by managers from value-maximizing decisions.
13.Moral hazard - answer managers taking hidden actions that harm the
owners but further their own interests.
,14.Internal control mechanisms - answer requirements for managers to
hold firm equity, increase outsider representation on the board, and
finance investments with debt.
15.External mechanism - answer corporate takeovers as a means of
control.
16.Price-taking firm - answer unable to set product price, determined
strictly by market forces of demand and supply.
17.Price-setting firm - answer able to set product price, with a degree of
market power to raise price without losing all sales.
18.Market - answer any arrangement for buyers and sellers to exchange
goods or services, reducing transaction costs.
19.Market structures - answer characteristics determining the economic
environment for a firm, including number and size of firms, product
differentiation, and entry likelihood.
20.Perfect competition - answer large number of small firms,
undifferentiated product, no market power, and no barriers to entry.
21.Monopoly - answer single firm with no close substitutes, protected by
entry barriers, allowing price increase without new entrants.
22.Monopolistic competition - answer large number of small firms with
differentiated products, some market power, and no barriers to entry.
, 23.Oligopoly - answer few firms producing most of the market output,
with interdependent profits and actions.
24.Globalization of markets - answer economic integration of markets
worldwide, providing opportunities to sell more goods and services, but
also increasing competition.
25.Marginal analysis - answer provides the foundation for understanding
everyday business decisions using microeconomics.
26.Mcgraw-hill connect® plus economics - answer digital solution for
improving student readiness, engagement, and comprehension
27.Learnsmart™ - answer adaptive learning program identifying student
knowledge gaps and aiding faster learning
28.Graphing tool - answer allows students to interact with and analyze
graphs in online assignments
29.Ebooks - answer media-rich digital books with note-sharing and
interactive features
30.Lecture capture - answer records classes for on-demand review,
search, and playback
31.Instructor access - answer includes assignment management, auto-
graded tests, and detailed reporting
32.Student access - answer provides online homework, tests, quizzes,
immediate feedback, and tech support
