TEST BANK FOR Managerial Economics and Strategy, 4th edition Jeffrey M. Perloff James A. Brander Chapter 1-17 Answers Are at the End of Each Chapter Chapter 1 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Microeconomics studies the allocation of A) decision makers. C) scarce resources.
B) models. D) unlimited resources.
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2) If a model's predictions are correct, then A) its assumptions must have been correct. C) Both A and B above.
B) it is proven to be correct. D) None of the above.
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3) Firms face trade-offs because A) markets set prices of goods they sell. B) inputs are scarce. C) managers don't know which inputs to use. D) marginal reasoning leads to uncertainty.
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4) Microeconomic models are used to A) evaluate production alternatives. C) make predictions.
B) explain real-life phenomena. D) All of the above.
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5) Behavioral economics is the study of why people A) optimize. C) choose not to optimize.
B) sometimes don't optimize. D) behave badly when buying and selling.
6) Economists tend to judge a model based upon A) its simplicity. C) the reality of its assumptions.
B) its complexity. D) the accuracy of its predictions.
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7) Managerial economics A) ensures managers always make good decisions. B) explains which products consumers will buy. C) helps managers make decisions in the face of scarcity. D) describes how pay for managers is set.
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8) Which of the following is an example of a normative statement? A) If you decrease the amount of sugar in soda drinks, sales to children will decrease. B) A higher price for a good causes people to want to buy less of that good. C) A lower price for a good causes people to want to buy more of that good. D) To make the good available to more people, a lower price should be set.
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9) Economic models are only useful in analyzing government policy. A) True, economists only model those questions for which they are hired. B) False, economic models can be used to predict individual and firm behavior. C) False, economic models are not even useful in analyzing government policy. D) True, individuals are irrational and therefore economic models are useless.
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