University of Economics, HCMC MBA Program

International School of Business Q1

ECONOMICS PG
QUIZ 1
Due date: 13:30 Nov. 23, 2019
CHAPTER 1

Matching Definitions
accounting profit microeconomics
business practices and tactics moral hazard
economic profit opportunity cost
equity capital owner-supplied resources
explicit costs price-setting firm
globalization of markets price-taking firm
implicit costs principal-agent problem
industrial organization risk premium
marginal analysis strategic decisions
market total economic cost
market power transaction costs
market structure value of a firm
market-supplied resources
1. ___________________ Sum of opportunity costs of market-supplied resources plus opportunity costs
of owner-supplied resources.
2. ___________________ Nonmonetary opportunity costs of using owner-supplied resources.
3. ____________________Decisions that attempt to alter the conditions of competition in order to
increase long-run profits.
4. ___________________Price for which a firm can be sold, or equivalently, the present value of the
expected future profits of the firm.
5. ___________________Amount added to the riskless discount rate to account for uncertainty associated
with the expected future profits.
6. ___________________ Conflict arising when the objectives of the agent differ from those of the
principal, and the principal has difficulty enforcing and monitoring the agent.
7. ___________________ Exists when either party to an agreement has an incentive not to abide to the
agreement and one party cannot cost-effectively monitor the agreement or
cannot effectively enforce the agreement.
8. ___________________ Set of characteristics that determines the economic environment in which a
firm does business.
9. ___________________ Ability to raise price without losing all sales.

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University of Economics, HCMC MBA Program
International School of Business Q1
CHAPTER 2
Matching Definitions
ceiling price equilibrium quantity normal good
change in demand excess demand (shortage) producer surplus
change in quantity demanded excess supply (surplus) qualitative forecasts
change in quantity supplied floor price quantitative forecasts
complements general demand function quantity demanded
complements in production general supply function quantity supplied
consumer surplus increase in demand slope parameters
decrease in demand increase in supply social surplus
decrease in supply indeterminate substitutes
demand inferior good substitutes in production
demand price inverse demand function supply
determinants of demand inverse supply function supply price
determinants of supply law of demand technology
economic value market clearing price
equilibrium price market equilibrium

1. ___________________ Relation between quantity demanded and the six principal variables affecting
quantity demanded.
2. ___________________ Two goods for which a decrease in the price of one causes an increase in
consumption of the other, all other things constant.
3. ___________________ Parameters in a linear function that measure the effect on the dependent
variable of a one-unit change in the value of an independent variable, holding
all others variables constant.
4. ___________________ Price is expressed as a function of quantity demanded.
5. ___________________ A movement along a given demand curve caused by a change in the good’s
own price.
6. ___________________ The five principal variables that determine the location of the demand curve
(M,PR ,ℑ,Pe ,N) . These are the demand shifting variables.
7. ___________________ Two goods for which an increase in the price of one good causes a decrease in
the production of the other good.
8. ___________________ Another name for equilibrium price.
9. ___________________ Area below demand and above supply over the range of output produced and
consumed.
CHAPTER 3
Matching Definitions
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University of Economics, HCMC MBA Program
International School of Business Q1
activities or choice variables marginal cost
average (or unit) cost maximization problem
constrained optimization minimization problem
continuous variable objective function
discrete variable optimal level of activity
fixed costs sunk costs
marginal analysis unconstrained optimization
marginal benefit
1. ___________________ The analytical process of making incremental changes to the level of the
choice variables to arrive at the point where no further improvements in the
objective function are possible.
2. ___________________ The level of activity that maximizes net benefit.
3. ___________________ The additional cost realized per unit increase in activity.
4. ___________________ Costs that have already been paid and cannot be recovered.
5. ___________________ Costs that are constant and must be paid no matter what level of activity is
chosen.

ANSWERS
CHAPTER 1: CHAPTER 2: 9. social surplus
1. total economic cost 1. general demand function
2. implicit costs 2. complements CHAPTER 3:
3. strategic decisions 3. slope parameters 1. marginal analysis
4. value of the firm 4. inverse demand function 2. optimal level of activity
5. risk premium 5. change in quantity 3. marginal cost
6. principal-agent problem demanded 4. sunk costs
7. moral hazard 6. determinants of demand 5. fixed costs
8. market structure 7. substitutes in production
9. market power 8. market clearing price