MANAGERIAL ECONOMICS AND BUSINESS
STRATEGY MIDTERM EXAM QUESTIONS AND
ANSWERS 100% CORRECT!!
, manager - ANSWER A person who directs resources to achieve a stated goal.
Economics - ANSWER The science of making decisions in the presence of scarce
resources.
managerial economics - ANSWER The study of how to direct scarce resources in the
way that most efficiently achieves a managerial goal.
economic profits - ANSWER The difference between total revenue and total opportunity
cost.
opportunity cost - ANSWER The cost of the explicit and implicit resources that are
forgone when a decision is made.
incentives - ANSWER Affect how resources are used and how hard workers work.
consumer-producer rivalry - ANSWER Occurs because of the competing interests of
consumers and producers.
consumer-consumer rivalry - ANSWER Reduces the negotiating power of consumers in
the marketplace.
producer-producer rivalry - ANSWER Functions only when multiple sellers of a product
compete in the marketplace.
present value - ANSWER The amount that would have to be invested today at the
prevailing interest rate to generate the given future value.
net present value - ANSWER The present value of the income stream generated by a
product minus the current cost of the project.
value of a firm - ANSWER Takes into account the long-term impact of managerial
decisions on profits.
managerial analysis - ANSWER States that optimal managerial decisions involve
comparing the marginal (or incremental) benefits of a decision with the marginal (or
incremental) costs.
average fixed cost - ANSWER Fixed costs divided by the number of units of output.
STRATEGY MIDTERM EXAM QUESTIONS AND
ANSWERS 100% CORRECT!!
, manager - ANSWER A person who directs resources to achieve a stated goal.
Economics - ANSWER The science of making decisions in the presence of scarce
resources.
managerial economics - ANSWER The study of how to direct scarce resources in the
way that most efficiently achieves a managerial goal.
economic profits - ANSWER The difference between total revenue and total opportunity
cost.
opportunity cost - ANSWER The cost of the explicit and implicit resources that are
forgone when a decision is made.
incentives - ANSWER Affect how resources are used and how hard workers work.
consumer-producer rivalry - ANSWER Occurs because of the competing interests of
consumers and producers.
consumer-consumer rivalry - ANSWER Reduces the negotiating power of consumers in
the marketplace.
producer-producer rivalry - ANSWER Functions only when multiple sellers of a product
compete in the marketplace.
present value - ANSWER The amount that would have to be invested today at the
prevailing interest rate to generate the given future value.
net present value - ANSWER The present value of the income stream generated by a
product minus the current cost of the project.
value of a firm - ANSWER Takes into account the long-term impact of managerial
decisions on profits.
managerial analysis - ANSWER States that optimal managerial decisions involve
comparing the marginal (or incremental) benefits of a decision with the marginal (or
incremental) costs.
average fixed cost - ANSWER Fixed costs divided by the number of units of output.
