1-1
,TESTBANKFORManagerialEconomics,9thEdition
William F. Samuelson, Stephen G. Marks, Jay L.
oo
Zagorsky
File: Ch01; CHAPTER 1: Introduction to Economic Decision
jj jj jj jj jj jj jj
jj Making MULTIPLE CHOICE
j j j j
1. Managerial economics can best be defined as the: jj j j j j jj jj jj j j
a) macroeconomics and microeconomics for managers. jj jj j j jj
b) studyof economic incentives on consumer behavior and demand.
j j j j j j j j j j j j j j j
c) analysis of the labor market through the behavior of workers and managers.
jj j j jj jj j j jj jj j j j j j j j j
d) analysis of major management decisions using economic tools.
j j jj jj j j j j jj j j
e) studyof the strategic interaction between firms in a market.
j j j jj j j j j j j j j j j j j
ANSWER: d j j
SECTION REFERENCE: Introduction jj jj
DIFFICULTY LEVEL: Easy
jj j j j j
2. Which of the following is not one of the steps in managerial decision making?
jj jj j j jj j j j j j j j j jj j j j j j j j j
a) Predicting the consequences of a decision. jj j j j j j j j j
b) Exploring the alternatives to the decision. jj j j j j j j j j
c) Defining the problem and the objectives of the decision.
jj j j j j j j j j j j j j j j
d) Negotiating a consensus to implement the decision. jj j j j j j j j j j j
e) Performing sensitivity analysis. jj jj
ANSWER: d j j
SECTION REFERENCE: Six Steps to Decision Makingjj jj jj jj jj jj
DIFFICULTY LEVEL: Easy
jj j j j j
3. Profit maximization is an ambiguous guide to decision making in the private sector
jj jj j j jj j j j j j j j j jj j j jj j j
because:
j j
a) firms in the private sector usually do not aim at profit maximization.
jj j j j j j j j j jj j j j j j j j j j j
b) the goal of profit maximization contradicts the goal of satisfying the firm‘s
jj j j jj j j j j jj j j j j j j jj jj
shareholders.
j j
c) of the presence of risk and uncertainty.
jj j j j j j j j j j j
d) profit-maximization ignores social costs and benefits. jj jj j j jj j j
e) None of the above answers is correct.
jj j j j j j j j j j j
ANSWER: c j j
SECTION REFERENCE: Six Steps to Decision Makingjj jj jj jj jj jj
DIFFICULTY LEVEL: Easy
jj j j j j
1-2
,4. Which of the following is true of economic models?
jj jj j j jj j j j j j j j j
a) Models are too theoretical to be applicable in real world decisions.
jj jj j j j j j j jj j j j j j j j j
b) Models are not useful because uncertainty prevents accurate forecasts.
jj jj j j j j j j jj j j j j
c) Models are simplified descriptions of processes, relationships, or other phenomena.
jj jj j j j j jj j j j j j j jj
d) Models describe real world situations in complete detail.
j j jj j j j j j j jj j j
e) Models are not useful because they do not take into account complicating and
jj jj jj jj jj jj jj jj jj jj jj jj
less important features of a problem.
j j j j j j j j j j j j
ANSWER: c j j
SECTION REFERENCE: Six Steps to Decision Making
jj jj jj jj jj jj
DIFFICULTY LEVEL: Medium
jj j j j j
5. Which of the following correctly describes a deterministic economic model?
jj jj j j jj jj j j jj j j j j
a) A deterministic model is a model for which the outcome is predicted with
jj j j j j j j jj j j j j j j j j jj j j j j
certainty.
j j
b) A deterministic model can only be used to explain short-run economic phenomena.
jj j j j j j j jj jj j j j j jj j j j j
c) A deterministic model is most useful in identifying long-term trends.
jj jj j j j j j j j j j j jj j j
d) A deterministic model is used in the study of normative economics.
jj j j j j j j j j j j j j jj j j j j
e) The outcome of a deterministic model is random and has probabilities attached.
jj j j j j j j j j jj j j j j j j j j j j
ANSWER: a j j
SECTION REFERENCE: Six Steps to Decision Making
jj jj jj jj jj jj
DIFFICULTY LEVEL: Easy
jj j j j j
6. Which of the following
jj jj j j j j correctly explains a probabilistic model? jj j j j j j j
a) A probabilistic model
jj j j j j gives a description of real world economic phenomena.
j j jj j j jj j j j j j j
b) A probabilistic model
jj j j j j shows the possibility of a range of outcomes.
j j j j jj j j j j j j j j
c) A probabilistic model
jj j j j j examines the changes in economic variables over a period of
j j jj j j j j jj j j j j j j j j
time.
jj
d) A probabilistic model
jj j j j j is based on value judgments.
jj j j j j j j
e) A probabilistic model
jj j j j j is used to explain long-run economic phenomena
j j j j j j j j j j j j
ANSWER: b j j
SECTION REFERENCE: Six Steps to Decision Making
jj jj jj jj jj jj
DIFFICULTY LEVEL: Easy
jj j j j j
7. Maximizing profit by enumerating the profit outcomes of different courses of action
jj j j jj jj jj j j j j j j j j j j j j
a) Is only applicable to problems with a small number of alternatives.
jj jj j j j j j j j j j j j j j j j j
b) Becomes increasingly costly as the number of choices increase.
jj jj jj j j j j j j j j j j
c) Always discovers the best possible choice.
j j j j j j j j j j
1-3
, d) Provides a useful shortcut to finding the optimal choice.
jj j j j j j j j j jj j j j j
e) Answers b and c are both correct. j j j j j j j j j j j j
ANSWER: b j j
SECTION REFERENCE: Six Steps to Decision Making
jj jj jj jj jj jj
DIFFICULTY LEVEL: Medium
jj j j j j
8. A beverages company wants to launch a new diet soda aimed at
j j j j j j j j j j j j j j j j j j j j j j
diabetics and health- conscious customers. It will use a
j j j j economic jj j j j j j j j j j j j j j j
model to identify its target customers.
jj jj jj jj jj jj
a) deterministic
b) dynamic
c) qualitative
d) stochastic
e) probabilistic
ANSWER: a j j
SECTION REFERENCE: Six Steps to Decision Making
jj jj jj jj jj jj
DIFFICULTY LEVEL: Medium
jj j j j j
9. Given that the market share of a firm depends on many unpredictable factors, a
jj jj jj jj jj jj jj jj jj jj jj jj jj
firm will use a
jj jj economic model to estimate the market share for one
jj j j j j j j j j j j j j j j j j j j j j j j j j
of its products.
j j j j j j
a) deterministic
b) dynamic
c) qualitative
d) probabilistic
e) comparative statics jj
ANSWER: d j j
SECTION REFERENCE: Six Steps to Decision Making
jj jj jj jj jj jj
DIFFICULTY LEVEL: Medium
jj j j j j
10. Sensitivityanalysis is used by a firm to: j j j j j j j jj j j j j
a) analyze the impact of a change in the price of the good on the demand for the
jj j j j j j j j j j j j j j j jj j j j j j j j j j j j j j j
good.
j j
b) examine the static effects of an economic decision on the firm‘s profitability.
jj j j jj j j j j jj jj j j j j j j j j
c) analyze the social costs and benefits of an economic decision.
jj j j j j j j j j j j j j j j j j
d) examine the opportunity costs of an economic decision.
jj j j jj j j j j j j j j
e) examine how an optimal decision is affected if key economic facts vary.
jj j j j j jj j j j j j j j j jj j j j j
ANSWER: e j j
1-4
,TESTBANKFORManagerialEconomics,9thEdition
William F. Samuelson, Stephen G. Marks, Jay L.
oo
Zagorsky
File: Ch01; CHAPTER 1: Introduction to Economic Decision
jj jj jj jj jj jj jj
jj Making MULTIPLE CHOICE
j j j j
1. Managerial economics can best be defined as the: jj j j j j jj jj jj j j
a) macroeconomics and microeconomics for managers. jj jj j j jj
b) studyof economic incentives on consumer behavior and demand.
j j j j j j j j j j j j j j j
c) analysis of the labor market through the behavior of workers and managers.
jj j j jj jj j j jj jj j j j j j j j j
d) analysis of major management decisions using economic tools.
j j jj jj j j j j jj j j
e) studyof the strategic interaction between firms in a market.
j j j jj j j j j j j j j j j j j
ANSWER: d j j
SECTION REFERENCE: Introduction jj jj
DIFFICULTY LEVEL: Easy
jj j j j j
2. Which of the following is not one of the steps in managerial decision making?
jj jj j j jj j j j j j j j j jj j j j j j j j j
a) Predicting the consequences of a decision. jj j j j j j j j j
b) Exploring the alternatives to the decision. jj j j j j j j j j
c) Defining the problem and the objectives of the decision.
jj j j j j j j j j j j j j j j
d) Negotiating a consensus to implement the decision. jj j j j j j j j j j j
e) Performing sensitivity analysis. jj jj
ANSWER: d j j
SECTION REFERENCE: Six Steps to Decision Makingjj jj jj jj jj jj
DIFFICULTY LEVEL: Easy
jj j j j j
3. Profit maximization is an ambiguous guide to decision making in the private sector
jj jj j j jj j j j j j j j j jj j j jj j j
because:
j j
a) firms in the private sector usually do not aim at profit maximization.
jj j j j j j j j j jj j j j j j j j j j j
b) the goal of profit maximization contradicts the goal of satisfying the firm‘s
jj j j jj j j j j jj j j j j j j jj jj
shareholders.
j j
c) of the presence of risk and uncertainty.
jj j j j j j j j j j j
d) profit-maximization ignores social costs and benefits. jj jj j j jj j j
e) None of the above answers is correct.
jj j j j j j j j j j j
ANSWER: c j j
SECTION REFERENCE: Six Steps to Decision Makingjj jj jj jj jj jj
DIFFICULTY LEVEL: Easy
jj j j j j
1-2
,4. Which of the following is true of economic models?
jj jj j j jj j j j j j j j j
a) Models are too theoretical to be applicable in real world decisions.
jj jj j j j j j j jj j j j j j j j j
b) Models are not useful because uncertainty prevents accurate forecasts.
jj jj j j j j j j jj j j j j
c) Models are simplified descriptions of processes, relationships, or other phenomena.
jj jj j j j j jj j j j j j j jj
d) Models describe real world situations in complete detail.
j j jj j j j j j j jj j j
e) Models are not useful because they do not take into account complicating and
jj jj jj jj jj jj jj jj jj jj jj jj
less important features of a problem.
j j j j j j j j j j j j
ANSWER: c j j
SECTION REFERENCE: Six Steps to Decision Making
jj jj jj jj jj jj
DIFFICULTY LEVEL: Medium
jj j j j j
5. Which of the following correctly describes a deterministic economic model?
jj jj j j jj jj j j jj j j j j
a) A deterministic model is a model for which the outcome is predicted with
jj j j j j j j jj j j j j j j j j jj j j j j
certainty.
j j
b) A deterministic model can only be used to explain short-run economic phenomena.
jj j j j j j j jj jj j j j j jj j j j j
c) A deterministic model is most useful in identifying long-term trends.
jj jj j j j j j j j j j j jj j j
d) A deterministic model is used in the study of normative economics.
jj j j j j j j j j j j j j jj j j j j
e) The outcome of a deterministic model is random and has probabilities attached.
jj j j j j j j j j jj j j j j j j j j j j
ANSWER: a j j
SECTION REFERENCE: Six Steps to Decision Making
jj jj jj jj jj jj
DIFFICULTY LEVEL: Easy
jj j j j j
6. Which of the following
jj jj j j j j correctly explains a probabilistic model? jj j j j j j j
a) A probabilistic model
jj j j j j gives a description of real world economic phenomena.
j j jj j j jj j j j j j j
b) A probabilistic model
jj j j j j shows the possibility of a range of outcomes.
j j j j jj j j j j j j j j
c) A probabilistic model
jj j j j j examines the changes in economic variables over a period of
j j jj j j j j jj j j j j j j j j
time.
jj
d) A probabilistic model
jj j j j j is based on value judgments.
jj j j j j j j
e) A probabilistic model
jj j j j j is used to explain long-run economic phenomena
j j j j j j j j j j j j
ANSWER: b j j
SECTION REFERENCE: Six Steps to Decision Making
jj jj jj jj jj jj
DIFFICULTY LEVEL: Easy
jj j j j j
7. Maximizing profit by enumerating the profit outcomes of different courses of action
jj j j jj jj jj j j j j j j j j j j j j
a) Is only applicable to problems with a small number of alternatives.
jj jj j j j j j j j j j j j j j j j j
b) Becomes increasingly costly as the number of choices increase.
jj jj jj j j j j j j j j j j
c) Always discovers the best possible choice.
j j j j j j j j j j
1-3
, d) Provides a useful shortcut to finding the optimal choice.
jj j j j j j j j j jj j j j j
e) Answers b and c are both correct. j j j j j j j j j j j j
ANSWER: b j j
SECTION REFERENCE: Six Steps to Decision Making
jj jj jj jj jj jj
DIFFICULTY LEVEL: Medium
jj j j j j
8. A beverages company wants to launch a new diet soda aimed at
j j j j j j j j j j j j j j j j j j j j j j
diabetics and health- conscious customers. It will use a
j j j j economic jj j j j j j j j j j j j j j j
model to identify its target customers.
jj jj jj jj jj jj
a) deterministic
b) dynamic
c) qualitative
d) stochastic
e) probabilistic
ANSWER: a j j
SECTION REFERENCE: Six Steps to Decision Making
jj jj jj jj jj jj
DIFFICULTY LEVEL: Medium
jj j j j j
9. Given that the market share of a firm depends on many unpredictable factors, a
jj jj jj jj jj jj jj jj jj jj jj jj jj
firm will use a
jj jj economic model to estimate the market share for one
jj j j j j j j j j j j j j j j j j j j j j j j j j
of its products.
j j j j j j
a) deterministic
b) dynamic
c) qualitative
d) probabilistic
e) comparative statics jj
ANSWER: d j j
SECTION REFERENCE: Six Steps to Decision Making
jj jj jj jj jj jj
DIFFICULTY LEVEL: Medium
jj j j j j
10. Sensitivityanalysis is used by a firm to: j j j j j j j jj j j j j
a) analyze the impact of a change in the price of the good on the demand for the
jj j j j j j j j j j j j j j j jj j j j j j j j j j j j j j j
good.
j j
b) examine the static effects of an economic decision on the firm‘s profitability.
jj j j jj j j j j jj jj j j j j j j j j
c) analyze the social costs and benefits of an economic decision.
jj j j j j j j j j j j j j j j j j
d) examine the opportunity costs of an economic decision.
jj j j jj j j j j j j j j
e) examine how an optimal decision is affected if key economic facts vary.
jj j j j j jj j j j j j j j j jj j j j j
ANSWER: e j j
1-4
