Managerial Economics Test Preparation
Course Introduction
Managerial Economics bridges economic theory and practical business decision-making, providing students with the analytical tools required to tackle management challenges. The course focuses on concepts such as demand and supply analysis, production and cost functions, market structures, pricing strategies, and risk analysis. Emphasizing both quantitative and qualitative approaches, it equips future managers with methods for optimizing resource allocation, forecasting, and strategic planning in competitive environments. Case studies and real-world applications enhance students ability to apply economic reasoning to solve complex organizational problems.
Recommended Textbook
Microeconomics 1st Canadian Edition by R. Glenn Hubbard
Available Study Resources on Quizplus
17 Chapters
2441 Verified Questions
2441 Flashcards
Source URL: https://quizplus.com/study-set/1385
Page 2
Chapter 1: Economics: Foundations and Models
Available Study Resources on Quizplus for this Chatper
145 Verified Questions
145 Flashcards
Source URL: https://quizplus.com/quiz/27590
Sample Questions
Q1) How are the fundamental economic questions answered in a market economy?
A)The government alone decides the answers.
B)Individuals, firms, and the government interact in markets to decide the answers to these questions.
C)Households and firms interact in markets to decide the answers to these questions.
D)Large corporations alone decide the answers.
Answer: C
Q2) If the price of milk was $2.50 a litre and it is now $3.25 a litre, what is the percentage change in price?
A)13 percent
B)30 percent
C)75 percent
D)77 percent
Answer: B
Q3) List the five main factors of production.
Answer: The five main factors of production are labor, capital, human capital, natural resources, and entrepreneurial ability.
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Trade-Offs, Comparative Advantage, and the Market System
Available Study Resources on Quizplus for this Chatper
151 Verified Questions
151 Flashcards
Source URL: https://quizplus.com/quiz/27591
Sample Questions
Q1) Refer to Figure 2.3.Sergio Vignetto raises cattle and llamas on his land.Half the land is more suitable for raising cattle and half the land is better suited for raising llamas.Which of the graphs in Figure 2.3 represent his production possibilities frontier?
A)Graph A
B)Graph B
C)Graph C
D)either Graph A or Graph C
E)either Graph B or Graph C
Answer: C
Q2) Refer to Table 2.4.Does either China or South Korea have an absolute advantage and if so, in what product?
A)South Korea has an absolute advantage in wheat.
B)China has an absolute advantage in wheat.
C)South Korea has an absolute advantage in both products.
D)China has an absolute advantage in digital cameras.
Answer: C
To view all questions and flashcards with answers, click on the resource link above.
4
Chapter 3: Where Prices Come From: the Interaction of
Demand and Supply
Available Study Resources on Quizplus for this Chatper
159 Verified Questions
159 Flashcards
Source URL: https://quizplus.com/quiz/27592
Sample Questions
Q1) Technological advancements have led to lower prices and an increase in the sale of digital cameras.How does this affect the digital photo printing paper market?
A)The demand curve for digital photo printing paper shifts to the right.
B)The demand curve for digital photo printing paper shifts to the left.
C)The supply curve for digital photo printing paper shifts to the right.
D)The supply curve for digital photo printing paper shifts to the left.
Answer: A
Q2) The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in purchasing power as a result of the price change.
A)True
B)False
Answer: True
Q3) If the demand for a product increases and the supply of the same product increases, the equilibrium price will increase.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Economic Efficiency, Government Price Setting, and Taxes
Available Study Resources on Quizplus for this Chatper
127 Verified Questions
127 Flashcards
Source URL: https://quizplus.com/quiz/27593
Sample Questions
Q1) When the government taxes a good or service, it
A)affects the market equilibrium for that good or service.
B)eliminates the deadweight loss associated with the good or service.
C)increases consumer surplus for the good or service.
D)increases producer surplus for the good or service.
Q2) What is the difference between a price ceiling and a price floor? Compared to the competitive equilibrium price, where must price ceilings and price floors be set to have an effect on the market.
Q3) Refer to Figure 4.8.As a result of the tax, is there a loss in consumer surplus?
A)Yes, because consumers paying a price above the economically efficient price.
B)No, because the producer pays the tax.
C)No, because the market reaches a new equilibrium.
D)No, because consumers are charged a lower price to cover their tax burden.
Q4) The minimum wage is an example of a price ceiling.
A)True
B)False
Q5) What is producer surplus? What does producer surplus measure?
Q6) Rent control is an example of a price ceiling.
A)True
B)False Page 6
To view all questions and flashcards with answers, click on the resource link above.
Page 7
Chapter 5: Externalities, Environmental Policy, and Public Goods
Available Study Resources on Quizplus for this Chatper
141 Verified Questions
141 Flashcards
Source URL: https://quizplus.com/quiz/27594
Sample Questions
Q1) Briefly explain the command-and-control approach in dealing with an externality such as pollution.Give an example of the U.S.government using the command-and-control approach to deal with the pollution problem.
Q2) Anyone can purchase sulfur dioxide emissions allowances on the Chicago Mercantile Exchange.Several environmental groups have raised money to buy allowances (which they subsequently destroy).As part of their fund-raising, these groups have urged contributors to buy the allowances as gifts.As one newspaper story put it, "For the environmentalist in your life, here's a gift that is sold by the ton, fits in an envelope and will last forever."
Source for quote: Randall Edwards, "Dear Santa: Please Bring Me Sulfur Dioxide for Christmas," Columbus Dispatch, December 19, 1999.
What would be the impact on the price of the emission allowances in the market?
A)The price rises.
B)The price falls to zero.
C)The price falls but not to zero.
D)The price remains unchanged because the allowances purchased by the environmental groups are destroyed.
Q3) State the Coase theorem.
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 6: Elasticity: the Responsiveness of Demand and Supply
Available Study Resources on Quizplus for this Chatper
149 Verified Questions
149 Flashcards
Source URL: https://quizplus.com/quiz/27595
Sample Questions
Q1) What factors would make you more sensitive or less sensitive to price when purchasing gasoline?
Q2) If at a price of $50, Ghani sells 20 hand-made leather cell-phone covers but at a price of $60, zero units are sold.Based on this information, the demand for his cell-phone covers is
A)elastic or perfectly inelastic.
B)elastic or perfectly elastic.
C)unit-elastic.
D)perfectly inelastic.
Q3) Suppose the value of the price elasticity of supply is 4.What does this mean?
A)A 4 percent increase in the price of the good causes quantity supplied to increase by 1 percent.
B)A 1 percent increase in the price of the good causes the supply curve to shift upward by 4 percent.
C)A 1 percent increase in the price of the good causes quantity supplied to increase by 4 percent.
D)For every $1 increase in price, quantity supplied increases by 4 units.
Q4) Explain the relationship between price elasticity of demand and total revenue.
Page 9
To view all questions and flashcards with answers, click on the resource link above.
Chapter 7: Comparative Advantage and the Gains From International Trade
Available Study Resources on Quizplus for this Chatper
125 Verified Questions
125 Flashcards
Source URL: https://quizplus.com/quiz/27596
Sample Questions
Q1) Which of the following is not an example of a trade restriction?
A)tariffs
B)quotas and voluntary export restraints
C)legislation requiring that cars sold in a country have a 50 percent domestic content
D)consumer preferences for goods produced domestically
Q2) The selling of a product for a price below its cost of production is called A)fair competition.
B)dumping.
C)unfair competition.
D)operating at a loss.
Q3) Assume that China has a comparative advantage in producing corn and exports corn to Japan.We can conclude that
A)China also has an absolute advantage in producing corn relative to Japan.
B)China has a lower opportunity cost of producing corn relative to Japan.
C)Japan has an absolute disadvantage in producing corn relative to China.
D)labour costs are higher for corn producers in Japan than in China.
Q4) Magna International's sales are larger outside Canada than inside Canada. A)True
B)False
Page 10
To view all questions and flashcards with answers, click on the resource link above.
Chapter 8: Consumer Choice and Behavioral Economics
Available Study Resources on Quizplus for this Chatper
154 Verified Questions
154 Flashcards
Source URL: https://quizplus.com/quiz/27597
Sample Questions
Q1) The economic model of consumer behavior explains how consumers' tastes and preferences are formed.
A)True
B)False
Q2) Economists Robert Jensen and Nolan Miller reasoned that to be a Giffen good, with an income effect larger than its substitution effect, a good must be ________ and make up a ________ portion of a consumer's budget.
A)a normal good; very small
B)an inferior good; very small
C)a normal good; very large
D)an inferior good; very large
Q3) What is the common feature displayed by the following items?
a)eating in a newly opened "fusion" cuisine restaurant
b)attending a Toronto Maple Leafs game at Air Canada Centre
c)wearing Lucky Brand designer jeans
A)They are all highly inelastic goods.
B)The consumption of these goods takes place privately.
C)The consumption of these goods takes place publicly.
D)They tend to be consumed by better educated people.
Q4) What is a Giffen good?
Page 11
To view all questions and flashcards with answers, click on the resource link above.
Chapter 9: Technology, Production, and Costs
Available Study Resources on Quizplus for this Chatper
169 Verified Questions
169 Flashcards
Source URL: https://quizplus.com/quiz/27598
Sample Questions
Q1) Which of the following is a reason why a firm would experience diseconomies of scale?
A)To finance an increase in the size of its plant a firm must borrow more money or sell more shares of stock.
B)As the size of the firm increases, it becomes more difficult to find markets where it doesn't already have operations.
C)As the size of the firm increases it becomes more difficult to coordinate the operations of its manufacturing plants.
D)As the size of the firm increases, it must operate in other countries where differences in language, customs and laws increase its average costs.
Q2) The slope of an isocost line determines the marginal rate of substitution. A)True
B)False
Q3) What is the difference between explicit costs and implicit costs? List three examples each of explicit costs and implicit costs that may be experienced by a small business.
Q4) Describe how Magna International has used positive technological change to manage its inventory.
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 10: Firms in Perfectly Competitive Markets
Available Study Resources on Quizplus for this Chatper
153 Verified Questions
153 Flashcards
Source URL: https://quizplus.com/quiz/27599
Sample Questions
Q1) What is meant by productive efficiency? How does a perfectly competitive firm achieve productive efficiency?
Q2) Refer to Table 10.1.If the market price of each camera case is $8, what is the firm's total revenue?
A)$2,400
B)$3,200
C)$4000
D)$4,800
Q3) Market supply is found by
A)vertically summing the relevant part of each individual producer's marginal cost curve.
B)horizontally summing the relevant part of each individual producer's marginal cost curve.
C)vertically summing each individual producer's average total cost curve.
D)horizontally summing each individual producer's average total cost curve.
Q4) If a firm's fixed cost exceeds its total revenue, the firm should stop production by shutting down temporarily.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 11: Monopolistic Competition
Available Study Resources on Quizplus for this Chatper
140 Verified Questions
140 Flashcards
Source URL: https://quizplus.com/quiz/27600
Sample Questions
Q1) Which of the following characteristics is common to monopolistic competition and perfect competition?
A)Firms produce identical products.
B)Entry barriers into the industry are low.
C)Each firm faces a downward-sloping demand curve.
D)Firms take market prices as given.
Q2) How would a marketing campaign directed at single women improve the chances of success at a place like a cigar bar?
Q3) Consumers benefit from monopolistic competition by
A)being able to choose from products more closely suited to their tastes.
B)paying the lowest possible price for the product.
C)paying the same price as everyone else.
D)being able to purchase high-quality products at low prices.
Q4) In the long-run equilibrium, a monopolistically competitive firm earning normal profit produces the allocatively efficient output level.
A)True
B)False
Q5) What are the most important differences between perfectly competitive markets and monopolistically competitive markets?
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 12: Oligopoly: Firms in Less Competitive Markets
Available Study Resources on Quizplus for this Chatper
130 Verified Questions
130 Flashcards
Source URL: https://quizplus.com/quiz/27601
Sample Questions
Q1) Interdependence of firms is most common in A)monopolistically competitive industries.
B)monopolistic industries.
C)monopolistically competitive and oligopolistic industries.
D)oligopolistic industries.
Q2) An example of a barrier to entry is
A)product differentiation.
B)high profits.
C)superior technological knowledge.
D)increasing marginal costs.
Q3) Competition from substitute goods is more of a threat when switching costs are high.
A)True
B)False
Q4) An oligopolistic industry is characterized by a few large firms acting independently. A)True
B)False
Q5) What is a sequential game? How are decision trees used to analyze sequential games?
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 13: Monopoly and Antitrust Policy
Available Study Resources on Quizplus for this Chatper
146 Verified Questions
146 Flashcards
Source URL: https://quizplus.com/quiz/27602
Sample Questions
Q1) Consider the following characteristics:
a)a market structure with barriers to entry
b)demand curves that are easily identified
c)firm cannot make zero profits in the long run
d)firm can reap long run profits
Which of the characteristics in the list above is shared by an oligopolist and a monopolist?
A)a, b and d
B)a, c, and d
C)a and d
D)a, b, c and d
Q2) Refer to Figure 13.5.What is the difference between the monopoly's price and perfectly competitive industry's price?
A)The monopoly's price is higher by $9.50.
B)The monopoly's price is higher by $13.
C)The monopoly's price is higher by $3.50.
D)The monopoly's price is higher by $21.
Q3) Provide two examples of a government barrier to entry?
Q4) How does a network externality serve as a barrier to entry? Is this barrier surmountable? Explain.
Page 16
To view all questions and flashcards with answers, click on the resource link above.
Chapter 14: The Markets for Labour and Other Factors of Production
Available Study Resources on Quizplus for this Chatper
149 Verified Questions
149 Flashcards
Source URL: https://quizplus.com/quiz/27603
Sample Questions
Q1) Refer to Figure 14.2.Which of the following statements is true?
A)Panel B correctly describes a situation in which the income effect dominates the substitution effect at low wages (segment i)and again at very high wages (segment iii).
B)Panel B incorrectly describes a situation in which the income effect dominates the substitution effect at low wages (segment i)and a situation in which the substitution effect dominates the income effect at very high wages (segment iii).
C)Panel B incorrectly describes a situation in which the income effect dominates the substitution effect at low wages (segment i).
D)Panel B incorrectly describes a situation in which the income effect dominates the substitution effect at very high wages (segment iii).
Q2) Refer to Figure 14.1.If Dale can sell her doilies at $2 each, what is the marginal product of the 5th worker?
A)$28
B)28 doilies
C)14 doilies
D)$56
Q3) What is a monopsony?
To view all questions and flashcards with answers, click on the resource link above.
Page 17
Chapter 15: Public Choice, Taxes, and the Distribution of Income
Available Study Resources on Quizplus for this Chatper
134 Verified Questions
134 Flashcards
Source URL: https://quizplus.com/quiz/27604
Sample Questions
Q1) Which of the following is not an example of rent seeking behavior?
A)competition for subsidies
B)lobbying the government to impose tariffs on certain imported products
C)competition for the exclusive right to import a product
D)engaging in aggressive advertising that slams a competitor's product
Q2) Unlike the market process, in the political market it is possible for some individuals to receive very large benefits from the political process without any significant impact on their tax bills.
A)True
B)False
Q3) Refer to Figure 15.1.The excess burden of the tax is represented by the area
A)B + C.
B)F + G.
C)E + H.
D)B + C + F + G.
Q4) What is the relationship between market failure and government failure?
Q5) Describe each of the principles governments consider when deciding which taxes to use.
Q7) Describe the main factors economists believe cause inequality of income. Page 18
Q6) Explain the effect of price elasticities of supply and demand on tax incidence.
To view all questions and flashcards with answers, click on the resource link above.
Page 19
Chapter 16: Pricing Strategy
Available Study Resources on Quizplus for this Chatper
132 Verified Questions
132 Flashcards
Source URL: https://quizplus.com/quiz/27605
Sample Questions
Q1) In the real world,
A)all sellers charge one price equal to the marginal cost of production.
B)profitable sellers will set one price based on the average elasticity of demand of buyers.
C)many firms charge different prices based on consumers' willingness to pay.
D)all sellers charge one price set by the government.
Q2) With perfect price discrimination there is
A)no deadweight loss.
B)no producer surplus.
C)one single price.
D)an increase in consumer surplus.
Q3) Refer to Figure 16.1.With perfect price discrimination, the firm will produce and sell
A)Q units.
B)Q units.
C)Q units.
D)Q units.
Q4) Are sellers who practice arbitrage taking advantage of buyers?
Q5) What is the difference between price discrimination and other forms of discrimination?
To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 17: Firms, the Stock Market, and Corporate Governance
Available Study Resources on Quizplus for this Chatper
137 Verified Questions
137 Flashcards
Source URL: https://quizplus.com/quiz/27606
Sample Questions
Q1) Jeremy is thinking of starting up a small business selling NASCAR memorabilia.He is considering setting up his business as a sole proprietorship.What is one advantage to Jeremy of setting up his business as a sole proprietorship?
A)As a sole proprietor, Jeremy would face limited liability.
B)As a sole proprietor, Jeremy would have the ability to share risk with shareholders.
C)As a sole proprietor, Jeremy would have both ownership and control over the business.
D)All of the above would be advantages of setting up his business as a sole proprietorship.
Q2) The interest payment on a bond is called
A)the coupon payment.
B)principal.
C)the interest rate.
D)the face value.
Q3) Corporations are legally owned by their shareholders.
A)True
B)False
Q4) What type of business has the potential for double taxation of profits and why?
Page 21
To view all questions and flashcards with answers, click on the resource link above.