Management Studies
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Course Introduction
Management Studies is an interdisciplinary course that explores the principles and practices of managing organizations effectively in a dynamic business environment. The course covers foundational topics such as organizational behavior, strategic planning, leadership, human resource management, decision-making, and financial management. Students will analyze real-world business cases, develop problem-solving skills, and learn how to adapt management strategies to diverse organizational contexts. Emphasis is placed on ethical leadership, innovation, communication, and the ability to navigate complex business challenges in both local and global settings.
Recommended Textbook
Economics for Managers Global Edition 3rd Edition by Paul G. Farnham
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Page 2
Chapter 1: Managers and Economics
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Sample Questions
Q1) Which of the following statements is false?
A)Price determination is the key element in any market system.
B)Input prices influence a firm's costs of production.
C)Output prices influence a firm's revenues.
D)While managers must understand how output prices are determined, determination of input prices is irrelevant because it is beyond the manager's control.
Answer: D
Q2) All else constant,a decrease in the level of economic activity in foreign countries could be expected to have an adverse effect on the domestic economy.
A)True
B)False
Answer: True
Q3) Which of the following is not a characteristic of a perfectly competitive market?
A)Large number of firms in the industry.
B)Outputs of the firms are perfect substitutes for one another.
C)Limited information is available to all market participants.
D)Ease of entry into the market.
Answer: C
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3
Chapter 2: Demand, supply, and Equilibrium Prices
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Sample Questions
Q1) All else constant,as more firms substitute alternative materials,e.g.,plastic,for copper,the market price of copper would be expected to:
A)increase.
B)stay the same.
C)decrease.
D)cannot be determined with the information given.
Answer: C
Q2) Using a change in supply and/or demand,explain the following phenomena:
a.All else constant,gasoline prices are higher in summer than winter months.
b.At the same time that the quality of personal computers has been increasing,the price of personal computers has been falling.
Answer: a.Demand for travel is higher in summer than winter months,which causes the demand for gasoline to be higher as well.
b.Supply (and quality)have increased as a result of technology improvements,while demand has not increased as rapidly,putting downward pressure on price.
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Chapter 3: Demand Elasticities
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Sample Questions
Q1) When the government decides to impose a tax on sellers of a good or service,sellers try to pass the tax on to consumers by raising the price of the good being sold.Assume the government decides to place a $1 tax on each unit of a good sold,e.g.,tires.Using the simple model of supply and demand,illustrate what would happen to the price and quantity of tires sold.Would the amount of tax paid by the consumer (as opposed to the producer)be greater when demand is elastic or inelastic? Why?
Answer: The imposition of the tax would cause the supply curve to shift left as suppliers raise the price of each unit offered by $1 in an effort to pass on the tax to consumers.This would cause the supply of tires to decrease,i.e.,the supply curve would shift left,causing equilibrium price to rise and equilibrium quantity to decrease.However,assuming the supply and demand curves for tires have the usual shapes,equilibrium price would rise by something less than $1.The actual increase in the per unit price of tires would depend,all else constant,on the price elasticity of demand.The more inelastic demand is (as illustrated by a steeper demand curve),the greater the increase in price and vice versa.
Q2) For a linear demand function,slope and the price elasticity of demand are equal. A)True
B)False
Answer: False
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Chapter 4: Techniques for Understanding Consumer Demand and Behavior
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Sample Questions
Q1) Cross-section data observed at several points in time are called inverted data.
A)True
B)False
Q2) All of the following are limitations of direct consumer surveys except:
A)the possibility that consumers' responses may not reflect their actual behavior in the market place.
B)the possibility of response biases because survey respondents may not want to reveal their true preferences.
C)the likelihood that respondents will deliberately and systematically mislead interviewers.
D)the possibility that the type of questions asked may unintentionally bias the respondent's answers.
Q3) Log-linear demand function is also called a constant-elasticity demand function. A)True
B)False
Q4) Least squares regression minimizes the sum of the absolute errors. A)True
B)False
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Q5) Why are estimated models of demand and consumer behavior useful to managers?
Chapter 5: Production and Cost Analysis in the Short Run
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Sample Questions
Q1) The "law of diminishing marginal returns" applies to:
A)the short run, but not the long run.
B)the long run, but not the short run.
C)both the short run and the long run.
D)neither the short run nor the long run.
Q2) A firm's decision to expand the size of its production facility would be considered a short-run decision so long as the expansion can be completed in less than a year.
A)True
B)False
Q3) The full opportunity costs of production are calculated as the sum of both explicit and implicit costs.
A)True
B)False
Q4) In the context of a production function,the remote order takers in the fast food industry would be classified as:
A)a fixed input.
B)a marginal input.
C)a variable input.
D)an inframarginal input.
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Chapter 6: Production and Cost Analysis in the Long Run
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Sample Questions
Q1) Economies of scale are illustrated by:
A)a downward sloping long-run average cost curve.
B)a flat long-run average cost curve.
C)an upward-sloping long-run average cost curve.
D)a downward-sloping short-run average total cost curve.
Q2) Briefly summarize the empirical literature on the long-run costs typically incurred by firms in a variety of industries.In particular,is there reason to believe that firms' long-run cost curves assume the typical U-shape? Why or why not?
Q3) Over the past several decades,technological change has led to a significant amount of consolidation in the U.S.brewing industry.
A)True
B)False
Q4) Assume that firms A and B have the same minimum efficient scale of operation and,at current production levels,both firms are incurring the same average costs of production.However,firm A's output is 5 times larger than firm B's output.How is this possible?
Q5) Explain how "learning by doing" and transportation costs each affect the long-run average cost curve.
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Chapter 7: Market Structure: Perfect Competition
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Sample Questions
Q1) Suppose a perfectly competitive firm is in long-run equilibrium and there is a decrease in demand.Suppose also that the firm operates in an industry in which the prices of productive inputs vary with the level of output,increasing when output increases and decreasing when output decreases.Which of the following will occur at the new long-run equilibrium?
A)Price will be lower than it was at the initial long-run equilibrium.
B)Price will be the same as it was at the initial long-run equilibrium.
C)Price will be higher than it was at the initial long-run equilibrium.
D)The industry supply function will shift to the right.
Q2) Fill in the blanks to complete the following statements.
"Assume a perfectly competitive market is initially in long-run equilibrium.In the short run,a decrease in raw materials prices will cause the firm's average costs to ________.As a result,the profits of existing firms will ________.However,over the long run,this will cause the number of firms in the market to ________,and market price will ________ until firms once again earn a ________."
Q3) There is an inverse relationship between the price-cost margin and the level of competition in a particular industry.
A)True
B)False
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Page 9
Chapter 8: Market Structure: Monopoly and Monopolistic Competition
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Sample Questions
Q1) Even if production of a good is characterized by economies of scale,consumers of the good would be best served by having a large number of small firms produce the good because of the effects of increased competition.
A)True
B)False
Q2) Assuming instead that the market depicted in Figure 8.1 is perfectly competitive,the equilibrium price and output would be:
A)P and Q .
B)P and Q .
C)P and Q .
D)P and Q .
Q3) All of the following are strategies a firm with market power can adopt to increase it profits over time except:
A)mergers with, and acquisitions of, competing firms.
B)erecting barriers to entry.
C)setting price equal to the marginal costs of production.
D)influencing the regulatory process.
Q4) Explain how network externalities act as a barrier to entry.
10
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Chapter 9: Market Structure: Oligopoly
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Sample Questions
Q1) Summarize the three conditions cited in the text under which a cartel is most likely to succeed.Of these three,which do you think is most important? Why?
Q2) A predatory pricing strategy will have the greatest chance of success when the predatory price is set below the cost of the firm's competitors,new rivals are unlikely to enter after the strategy ends,and profits can be recouped in a relatively short period of time.
A)True B)False
Q3) A firm could gain from cheating on a cartel agreement by doing all of the following except:
A)raising its price above the agreed level.
B)lowering its price below the agreed level.
C)selling more than its agreed quota.
D)increasing production.
Q4) In game theory,a Nash equilibrium is the set of strategies each of the players chooses by selecting the strategy that maximizes her payoff independent of what the other players might choose.
A)True B)False
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Chapter 10: Pricing Strategies for the Firm
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Sample Questions
Q1) Which of the following would not be categorized as a form of third-degree price discrimination?
A)Group pricing.
B)Promotional pricing.
C)Versioning.
D)Personalized pricing.
Q2) When demand is elastic,the marginal revenue resulting from a decrease in price is:
A)positive.
B)zero.
C)negative.
D)cannot be determined without more information.
Q3) Certain vendors that market their goods via mail order have been known to send out catalogues to different regions of the country with items priced differently across regions.Assuming prices are matched to regions on a random basis,this practice would be considered an example of group pricing,or third-degree price discrimination.
A)True
B)False
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12
Chapter 11: Measuring Macroeconomic Activity
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Sample Questions
Q1) What is the relationship between unemployment and the price level in the short run?
Q2) The value of currently produced final goods and services measured in constant prices is called:
A)real GDP.
B)nominal GDP.
C)imputed values.
D)inflation.
Q3) The expenditure approach to calculating GDP for an open economy entails adding consumption,investment,and government purchases.
A)True
B)False
Q4) Many financial analysts use GDP as a measure of the economy's performance.However,GDP has several shortcomings in terms of measuring economic well-being.State at least three such shortcomings and explain how each affects the validity of GDP as a measure of economic well-being.
Q5) Fiscal policy is determined by the Federal Reserve System.
A)True B)False
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Chapter 12: Spending by
Individuals, firms, and
Governments on Real Goods and Services
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Sample Questions
Q1) Decreases in autonomous spending have a contractionary effect and make ________ levels of real income consistent with a given interest rate.
A)lower
B)higher
C)constant
D)none of the above.
Q2) In the consumption function,the real interest rate,consumer confidence,wealth,available consumer credit,and consumer debt are captured in the autonomous consumption term of the consumption function.
A)True
B)False
Q3) You are given the following consumption function C = 50 + .80YD.What is the amount of autonomous consumption expenditures?
A)75
B)100
C)5
D)50
Q4) Briefly explain how capacity utilization rates are used by forecasters.
Page 14
Q5) What are the determinants of investment spending?
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Chapter 13: The Role of Money in the Macro Economy
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Sample Questions
Q1) Large denomination time deposits are included in:
A)M1.
B)M2.
C)M3.
D)L)
Q2) Expansionary monetary policy is achieved by:
A)decreasing the amount of bank reserves and lowering the federal funds rate.
B)decreasing the amount of bank reserves and raising the federal funds rate.
C)increasing the amount of bank reserves and lowering the federal funds rate.
D)increasing the amount of bank reserves and raising the federal funds rate.
Q3) The currency deposit ratio,c,is 0.10.The reserve requirement,rr,is 0.08.The excess reserve ratio,e,is 0.05.What is the size of the money multiplier?
A)4.70
B)4.78
C)4.75
D)4.00
Q4) The barter system requires the double coincidence of wants to be fulfilled.
A)True
B)False
Q5) Why is the money multiplier smaller than the simple deposit multiplier?
Page 15
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Chapter 14: The Aggregate Model of the Macro Economy
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Sample Questions
Q1) An increase in consumer wealth would shift the aggregate demand curve rightward.
A)True
B)False
Q2) Federal spending and taxation both affect and are influenced by the overall level of economic activity.
A)True
B)False
Q3) The portion of the short-run aggregate supply that reflects the economy's resources are not fully employed is the:
A)vertical portion.
B)horizontal portion.
C)upward sloping portion.
D)none of the above.
Q4) What are the reasons for a decrease in the NAIRU.
Q5) Industrial production is an example of a:
A)leading indicator.
B)coincident indicator.
C)lagging indicator.
D)none of the above.
Q6) Explain the long-run consequences of continued increases in the money supply.
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Chapter 15: International and Balance of Payments Issues in the Macro Economy
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Sample Questions
Q1) Excess supply of dollars in the foreign exchange market represents a balance of payments deficit in the U.S.
A)True
B)False
Q2) The political stability of countries has an impact on the foreign exchange market.
A)True
B)False
Q3) An international organization created at the Bretton Woods conference in 1944 that helps coordinate international financial flows and can arrange short-term loans between countries is called the:
A)World Bank.
B)International Monetary Fund.
C)U)S. Treasury.
D)U)S. Agency for International Development.
Q4) Borrowing from abroad represents:
A)a capital outflow.
B)a capital inflow.
C)positive net savings.
D)none of the above.
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Chapter 16: Combining Micro and Macro Analysis for Managerial Decision Making
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Sample Questions
Q1) In 2002,this company was estimated to hold the largest share of the U.S.burger market:
A)McDonald's.
B)Burger King.
C)Wendy's.
D)none of the above.
Q2) A joint venture allows a foreign firm to easier adjust to a new market and often meet various institutional requirements.
A)True
B)False
Q3) Managers in firms with market power can:
A)not influence price.
B)develop strategies that involve both the demand and supply sides of the market.
C)only focus on the demand side of the market.
D)none of the above.
Q4) McDonalds has traditionally been popular among Chinese children.
A)True
B)False
Q5) How did McDonalds address the obesity issue in China?
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