1|Page
MBA EXIT NEWEST 2025/2026 ACTUAL EXAM WITH COMPLETE
QUESTIONS AND CORRECT DETAILED ANSWERS (100% VERIFIED
ANSWERS) |ALREADY GRADED A+| ||PROFESSOR VERIFIED||
If there is an increase in demand when supply is perfectly elastic,
this will cause the equilibrium quantity to .... - ANSWER-increase,
but price will remain the same.
What guides economic behavior? - ANSWER--price movements
guide economic behavior-reduce surpluses and shortages
If a market is not equilibrium and there is no intervention
preventing price movement, then price is expected to do what two
things? - ANSWER-1. decrease (surplus)
2. increase (shortage)
Market failures and market intervention impedes the ___ from
functioning as an efficient "coordinating" mechanism. - ANSWER-
- prices
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Broadly elasticities measure the ______ of one variable to a
change in another variable. - ANSWER-- responsiveness
Elasticities and total revenue: if demand is inelastic, then total
revenue is expected to ___following a piece increase (and vice
versa). - ANSWER--increase
Elasticities and total reveue: If demand is elastic, then total
revenue is expected to ___ following a price increase (and vice
versa). - ANSWER--decrease
The optimal price for a firm with market power can be recovered
using the Lerner Index or ____ rule. - ANSWER-inverse-elasticity
rule
T/F: Elasticities can be recovered from estimated demand
functions - ANSWER-True
- ex:regression of quantity demanded on data including price, and
other relevant variables
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Competitive markets exhibit what four features? - ANSWER-1.
There are many buyers and sellers (firms are small compared to
the market).
2. Firms produce perfect substitutes
3. There are free entry/exit into the market
4. Firms and consumers both have perfect information and have
low/no transaction costs
Given the competitive market features, firms in competitive
markets have ___some/no) power to choose a price different from
the market price.
-ex: perfectly elastic demand curve at the market price -
ANSWER-no
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Firms will profit maximize by choosing an ___amount. -
ANSWER--output
The optimal production level/quantity is when marginal revenues
(MR).... - ANSWER--equal marginal costs (MC)
(MC)->MR=MC
What does the optimal production level/quantity imply? -
ANSWER--That price is equal to marginal cost (ex: no market
power).
The level of product a firm earns depends on the market price
relative to the ____costs. - ANSWER-firm's
What are the four distinct possibilities that exist that affect both
short-run and long-run behavior? - ANSWER-1. P>ATC firm
earns short-run economic profit, expects entry/expansion in the
long-run which spurs downward pressure on prices.
MBA EXIT NEWEST 2025/2026 ACTUAL EXAM WITH COMPLETE
QUESTIONS AND CORRECT DETAILED ANSWERS (100% VERIFIED
ANSWERS) |ALREADY GRADED A+| ||PROFESSOR VERIFIED||
If there is an increase in demand when supply is perfectly elastic,
this will cause the equilibrium quantity to .... - ANSWER-increase,
but price will remain the same.
What guides economic behavior? - ANSWER--price movements
guide economic behavior-reduce surpluses and shortages
If a market is not equilibrium and there is no intervention
preventing price movement, then price is expected to do what two
things? - ANSWER-1. decrease (surplus)
2. increase (shortage)
Market failures and market intervention impedes the ___ from
functioning as an efficient "coordinating" mechanism. - ANSWER-
- prices
,2|Page
Broadly elasticities measure the ______ of one variable to a
change in another variable. - ANSWER-- responsiveness
Elasticities and total revenue: if demand is inelastic, then total
revenue is expected to ___following a piece increase (and vice
versa). - ANSWER--increase
Elasticities and total reveue: If demand is elastic, then total
revenue is expected to ___ following a price increase (and vice
versa). - ANSWER--decrease
The optimal price for a firm with market power can be recovered
using the Lerner Index or ____ rule. - ANSWER-inverse-elasticity
rule
T/F: Elasticities can be recovered from estimated demand
functions - ANSWER-True
- ex:regression of quantity demanded on data including price, and
other relevant variables
,3|Page
Competitive markets exhibit what four features? - ANSWER-1.
There are many buyers and sellers (firms are small compared to
the market).
2. Firms produce perfect substitutes
3. There are free entry/exit into the market
4. Firms and consumers both have perfect information and have
low/no transaction costs
Given the competitive market features, firms in competitive
markets have ___some/no) power to choose a price different from
the market price.
-ex: perfectly elastic demand curve at the market price -
ANSWER-no
, 4|Page
Firms will profit maximize by choosing an ___amount. -
ANSWER--output
The optimal production level/quantity is when marginal revenues
(MR).... - ANSWER--equal marginal costs (MC)
(MC)->MR=MC
What does the optimal production level/quantity imply? -
ANSWER--That price is equal to marginal cost (ex: no market
power).
The level of product a firm earns depends on the market price
relative to the ____costs. - ANSWER-firm's
What are the four distinct possibilities that exist that affect both
short-run and long-run behavior? - ANSWER-1. P>ATC firm
earns short-run economic profit, expects entry/expansion in the
long-run which spurs downward pressure on prices.
