ECON 528 Midterm EXAM 2026
COMPREHENSIVE EXAM QUESTIONS
||RECENTLY TESTING REAL EXAM
QUESTIONS|VERIFIED SOLUTIONS (100%
CORRECT)
Managerial economics is best defined as the economic study of: -CORRECTANSWER
how businesses can decide on the best use of scarce resources.
Managerial economics helps managers -CORRECTANSWER make decisions in the
face of scarcity.
Microeconomics includes the study of the -CORRECTANSWER choices made by
individuals and businesses
The form of economics most relevant to managerial decision-making within the firm -
CORRECTANSWER microeconomics
CEOs should focus on -CORRECTANSWER maximizing firm profits.
Managerial economics generally refers to the integration of economic theory with
business -CORRECTANSWER Practice
,A managerial decision is not profitable if -CORRECTANSWER 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. -
CORRECTANSWER . False
Why is it useful to study Managerial Economics? -CORRECTANSWER 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? -CORRECTANSWER 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 -CORRECTANSWER scarce resources
Microeconomic models are used to -CORRECTANSWER make predictions.
explain real-life phenomena.
evaluate production alternatives.
Managerial Economics as a specialized branch of Economics -CORRECTANSWER
Provide logic and methodology to find solutions to business problems
Unlike an accountant, an economist measures costs on a(n) ________ basis -
CORRECTANSWER replacement
, When an economist uses the term "cost" referring to a firm, the economist refers to the -
CORRECTANSWER opportunity cost of producing a good or service, which includes
both implicit and explicit cost
Accounting costs -CORRECTANSWER are historical costs
A firm earns a normal profit when its total revenues just offset both the ________ cost
and ________ cost. -CORRECTANSWER accounting; opportunity
If Melissa owns a software company that incurs no fixed costs, then -
CORRECTANSWER 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 -CORRECTANSWER fixed cost.
Because the amount of labor a firm employs can be changed, the cost of labor is known
as -CORRECTANSWER variable cost.
Marginal cost equals -CORRECTANSWER 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
COMPREHENSIVE EXAM QUESTIONS
||RECENTLY TESTING REAL EXAM
QUESTIONS|VERIFIED SOLUTIONS (100%
CORRECT)
Managerial economics is best defined as the economic study of: -CORRECTANSWER
how businesses can decide on the best use of scarce resources.
Managerial economics helps managers -CORRECTANSWER make decisions in the
face of scarcity.
Microeconomics includes the study of the -CORRECTANSWER choices made by
individuals and businesses
The form of economics most relevant to managerial decision-making within the firm -
CORRECTANSWER microeconomics
CEOs should focus on -CORRECTANSWER maximizing firm profits.
Managerial economics generally refers to the integration of economic theory with
business -CORRECTANSWER Practice
,A managerial decision is not profitable if -CORRECTANSWER 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. -
CORRECTANSWER . False
Why is it useful to study Managerial Economics? -CORRECTANSWER 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? -CORRECTANSWER 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 -CORRECTANSWER scarce resources
Microeconomic models are used to -CORRECTANSWER make predictions.
explain real-life phenomena.
evaluate production alternatives.
Managerial Economics as a specialized branch of Economics -CORRECTANSWER
Provide logic and methodology to find solutions to business problems
Unlike an accountant, an economist measures costs on a(n) ________ basis -
CORRECTANSWER replacement
, When an economist uses the term "cost" referring to a firm, the economist refers to the -
CORRECTANSWER opportunity cost of producing a good or service, which includes
both implicit and explicit cost
Accounting costs -CORRECTANSWER are historical costs
A firm earns a normal profit when its total revenues just offset both the ________ cost
and ________ cost. -CORRECTANSWER accounting; opportunity
If Melissa owns a software company that incurs no fixed costs, then -
CORRECTANSWER 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 -CORRECTANSWER fixed cost.
Because the amount of labor a firm employs can be changed, the cost of labor is known
as -CORRECTANSWER variable cost.
Marginal cost equals -CORRECTANSWER 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
