Managerial Economics Quiz 1

Topic: Fundamentals of Economics

Answers:
1. a. a question of positive economics.
2. b, c, and d are positive statements
3. True. Because it uses “should” which is a normative
4. False, Because to coordinate decisions among millions of customers and producers, the
pricing system uses decentralized mechanisms.
5. False. It is the assumption that is most commonly employed in economic models. It is not
also a prediction.
6. False. Scarcity is the situation that arises when people want more than they can get with
their limited resources.
7. We must simplify all models due to the complexity of both the environment and the
economy. Because of this, all models are vulnerable to the accusation that their
assumptions do not represent reality.
8. Dr. Mergatroid's idea would be rejected by the majority of economists. There's one flaw
with the idea that can't be overcome, even though it's accurate. Theory cannot be used to
make predictions or prove its validity.
9. A market is a system of exchange that allows buyers and sellers to interact. People can
meet in a variety of places (schools,Park, Church and etc.) and through a range of areas
such as dating appsm mutual friend and etc. In the marriage market, it's less clear who's
buying and who's selling, compared to other markets. Buyers and sellers appear to be
involved in the transaction.
10. None. Assuming that the lightbulb needed to be screwed in, the market would
have taken care of it by now. It’s comes down to is how much you're paid. The economist
are not the one who would work on it.