Typically, front-line / floor managers answer which of

the basic economic questions

The correct answer is: How will it be produced

Which of the following circumstances is a topic most

applicable to managerial economics
The correct answer is: Whether or not a potential market is penetrable
and profitable to the firm.

Which of the following best illustrates the question,

How to produce
The correct answer is: "We just received an order for 5,000 new units.
Should I put the second shift on call?"

Which of the following combinations of theory and

application best represent the mix of managerial
economics
The correct answer is: Microeconomic theory and statistical analysis.

Which of the following would NOT be considered

scarce
The correct answer is: Corn husks in a landfill.

Which of the following would represent a

microeconomic decision or process
The correct answer is: Using forecasted interest rates to determine the
appropriate time to finance a new plant.
Which of the following best describes entrepreneurial
ability
The correct answer is: The ability to manage scarce resources, find new
methods to achieve objectives, and be willing and able to assume the
risk associated with achievement.

Economics can best be defined as

The correct answer is: The study of how individuals produce, distribute
and consume material goods and services.

Which of the following is NOT a type of basic

economic question
The correct answer is: All of the above are types of basic economic
questions.

Which of the following best describes opportunity

cost
The correct answer is: None of the above describes opportunity cost.

Which of the following best describes the process of

answering the basic economic questions in the United
States
The correct answer is: A mixed economy where most goods and
services produced are the result of market forces and government
uses direct and indirect incentives to provide the majority of the
remainder.
Which of the following aspects of Global Foods'
decision to enter the soft drink market was helped by
the fact that the brand name is well known
The correct answer is: Pricing, advertising, and promotion.

Which of the following best describes the opportunity

cost of a year of college
The correct answer is: The dollar value of tuition, books, all associated
explicit expenses, the interest that may have been earned on that sum,
and any foregone income from not working over that period.
INTRO QUIZ

When a firm is a price-taking firm,

The correct answer is: all of the above

Which of the following is NOT a feature characterizing

market structures
The correct answer is: the level of capital investment in research and
development

Economic profit is the best measure of a firm's

performance because
The correct answer is: the opportunity cost of using ALL resources is
subtracted from total revenue.

Moral hazard
The correct answer is: is the cause of principal-agent problems.
Suppose Dave, the owner-manager of Dave's Golf
Academy, earned $200,000 in revenue last year.
Dave's explicit costs of operation totaled $130,000.
Dave has a Bachelor of Science degree in civil
engineering and could be earning $60,000 annually as
a civil engineer.
c. Dave's implicit cost of using owner-supplied resources is $60,000.
d. Dave's economic profit is $70,000.
The correct answer is: both c and d.

A risk premium is
The correct answer is: a measure calculated to reflect the riskiness of
future profits.

Which of the following is a characteristic of a

monopoly market structure
The correct answer is: There are barriers to entry.

Owners of a firm want the managers to make business

decisions that will
The correct answer is: both a and c are correct when revenue and cost
conditions in one time period are independent of revenues and costs
in future time periods.

A market
a. is any arrangement that brings buyers and sellers together to
exchange goods or services.
 b.lowers the transaction costs of doing business.

The correct answer is: both a and b

This is the correct definition for economic profit

The correct answer is: negative when costs exceed revenues.

Consider a firm that employs some resources that are

owned by the firm. When economic profit is zero,
accounting profit is
The correct answer is: equal to the implicit costs of using owner-
supplied resources.

Which of the following statements is true

The correct answer is: Reducing the amount of debt financing can
reduce the divergence between the shareholders' interests and the
owner's interests.

The value of a firm is

The correct answer is: larger the lower is the risk premium used to
compute the firm's value.

Which of the following is a characteristic of a

perfectly-competitive market
The correct answer is: All firms produce and sell a standardized or
undifferentiated product.

This is the best mathematical model of Economic

profit
The correct answer is: the difference between total revenue and the
opportunity cost of all the resources used in production.

Which of the following statements is true

The correct answer is: Implicit costs are the opportunity cost of the
owner's resources.

A price-setting firm
a. can lower the price of its product and sell more units.
d. does not possess market power.
The correct answer is: both a and d