Questions:

1. Below are determinants of supply or supply shifters except:

A. Input prices
B. Number of firms
C. Technology and government regulations
D. Consumer expectation-demand shifter

2. Below are determinants of demand or demand shifters except:

A. Substitution in production-supply shifter
B. Price of related good
C. Advertising and consumer taste
D. Population

3. Goods that the increase(decrease) in price will lead to an

increase(decrease) in the demand of the other goods is called
A. Inferior goods are goods that decreases(increases) in
demand when income increases(decreases)
B. Substitute goods
C. Normal goods are goods that increases(decreases) in
demand when income increases(decreases)
D. Superior goods are goods that are scarce and it must have a
high price

4. The change in total costs arising from a change in the managerial

control is called
A. Incremental cost also known as different cost is the additional
cost due to a change in the level or nature of business activity
B. Fixed cost those costs which are fixed whether production is
being carried on or there is no production at all
C. Marginal cost
D. Variable Cost those costs which are directly related to
production of a firm. They vary with the production.

5. When the own price elasticity is greater than 1 the demand is said to
be
A. Elastic
B. Inelastic if the absolute value of the own price elasticity is less
than 1.
C. Unitary if the absolute value of the own price elasticity is
equal to 1
D. Perfectly Elastic if own price elasticity is infinite or the price is
fixed and all output is sold
6. The maximum level of output that can be produced with a given
amount of input.
A. Average product is a measure of the output produced per unit
of input.
B. Total product
C. Marginal Product is the change in total output attributable to
the last unit of an input.
D. Production function is a function that defines the maximum
amount of output that can be produced with a given set of
inputs.

7. States that the marginal product of an additional unit of an input will

at some point be lower than the marginal product of the previous unit.
A. Law of Diminishing Marginal Return
B. Law of Diminishing Marginal Utility means that as an
individual increases consumption of a given product within a set
period of time, the marginal utility gained from consumption
eventually declines.
C. Law of Demand states that as the price of a good rises(falls)
and all other things remain constant, the quantity demanded of
the goods falls(rises).
D. Law of Supply states that as price increases the quantity
supplied increases but as price decreases the quantity supplied
decreases. Price and quantity supplied are directly proportional.

8. A situation where a firm produces the inputs required to make its

final product is called
A. Horizontal Integration refers to the merging of the production
of similar products into a single firm
B. Vertical Integration
C. Potential Entry or Entry one of Porters Five Forces
D. Conglomerate Merger involves the integration of different
product lines into a single Firm

9. A situation that involves the integration of different product lines into

a single firm is called
A. Horizontal Integration refers to the merging of the production
of similar products into a single firm
B. Vertical Integration is a situation where a firm produces the
inputs required to make its final product
C. Potential Entry or Entry one of Porter’s Five Forces
D. Conglomerate Merger

10. Porter’s Five Forces includes analysis of interrelated forces

which includes the following except:
A. Entry
B. Power of Input of Supplier
C. Power of buyers
D. Market competition
11. A market structure in which a single firm serves an entire market for
a good that has no close substitutes is called
A. Monopoly
B. Oligopoly is a market structure in which there are only a few
firms, each of which is large relative to total industry
C. Duopoly is an oligopoly composed of two firms
D. Monopsony is a market structure in which there is a single
buyer of a desired product

12. A market structure in which there is a single buyer of a desired

product is called
A. Monopoly is a market structure in which a single firm serves
an entire market for a good that has no close substitutes
B. Oligopoly is a market structure in which there are only a few
firms, each of which is large relative to total industry
C. Duopoly is an oligopoly composed of two firms
D. Monopsony is a market structure in which there is a single
buyer of a desired product

13. A game in which each player makes decisions without knowledge

of the other player’s decisions.
A. Simultaneous-move game
B. Sequential move game is a game in which one player makes
a move after observing the other player’s move
C. One-shot game is a game in which the underlying game is
played only once.
D. Repeated game is a game in which the underlying game is
played more than once.

14. A game in which one player makes a move after observing the
other players move.
A. Simultaneous-move is a game in which each player makes
decisions without knowledge of the other player’s decisions.
B.Sequential move game
C.One-shot game is a game in which the underlying game is
played only once.
D.Repeated game is a game in which the underlying game is
played more than once.

15. Characteristic of cartel includes the following except:

A. All producers or sellers in the industry are included in the
agreement
B. The agreement is definite and enforceable to all parties
involved
C. It covers both price to be charged and the quantity of output
to be produced by each agreeing seller and the output allocation
being calculated as to minimize the aggregate cost of producing the
total output of the industry
D. It does not includes a formula for distributing the profits
of the combined operations among the agreeing parties
16. Products that are very similar in physical composition as well as
quality and the only real difference between various manufacturer’s
product is price examples are gasoline and cement.
A. Homogeneous Products
B. Heterogeneous Products are products that cannot be easily
substituted or replaced by others because of the distinct
features that make them unique in certain brands and supplier
C. Industrial products are bought for industrial and business use
D. Consumer Products are products ready for the consumption
and satisfaction of human wants

17. An analytical technique used to study relations among costs,

revenues and profit.
A. Marginal Analysis refers to an evaluation of the additional
benefits of an activity contrasted to the additional costs of that
activity
B. Cost Volume Profit Analysis
C. Elasticity is a measure of the responsiveness of one variable
to changes in another variable.
D. Market Equilibrium is a situation where for a particular good
supply = demand

18. Economies of scale exist when the long-run average cost ______
as output expands. Labor specialization and technical factors often
give rise to economies of scale.
A. Increased
B. Decreased
C. Equal to marginal cost
D. None of the above

19. A pricing strategy where an incumbent maintains a price below the

monopoly level in order to prevent entry.
A. Limit pricing
B. Predatory pricing is a strategy where a firm temporarily prices
below its marginal cost to drive competitive out of the market
C. Cost Plus pricing is a cost based pricing where you add a
markup percentage (this is your profit margin) and this total sum
is your cost-plus price.
D. Geographical Pricing is one where different prices are
charged in different geographical locations or markets for the
exact same product or service.
20. When quantity demanded and quantity supplied are in perfect
balance at a given price.
A. Market Equilibrium
B. Surplus is an excess in supply
C. Shortage is an excess in demand
D. Change in quantity supplied is the movement along a given
supply curve reflecting a change in price.