MBA Economics
Midterm Exam
Course Introduction
MBA Economics is designed to provide students with a comprehensive understanding of key economic principles and their real-world applications in business decision-making. The course covers fundamental concepts in microeconomics and macroeconomics, including market structures, supply and demand analysis, pricing strategies, economic policy, and global economic trends. Emphasis is placed on interpreting economic data, assessing risks and opportunities in various markets, and applying economic reasoning to strategy, operations, and financial planning within organizations. By integrating theory with case studies and practical examples, the course equips MBA students with the analytical tools necessary for effective leadership and strategic management in a dynamic business environment.
Recommended Textbook
Economics for Managers Global Edition 3rd Edition by Paul G. Farnham
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16 Chapters
1464 Verified Questions
1464 Flashcards
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Chapter 1: Managers and Economics
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68 Verified Questions
68 Flashcards
Source URL: https://quizplus.com/quiz/28136
Sample Questions
Q1) The key characteristic of an oligopolistic market is:
A)production of a homogeneous product.
B)mutual interdependence among firms in the market.
C)the absence of market power by any one firm.
D)ease of entry into, and exit out of, the market.
Answer: B
Q2) All else constant,as the barriers to entry into a particular market increase,so will the ability of firms in that market to earn above-average profits.
A)True
B)False
Answer: True
Q3) 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
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Chapter 2: Demand, supply, and Equilibrium Prices
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94 Verified Questions
94 Flashcards
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Sample Questions
Q1) Assume that in an effort to help consumers,the government decides to reduce the amount of taxes it imposes on sellers of gasoline,that is,sellers are required to pay the government a smaller fee for each gallon of gas they sell.In the market for gas,this would have the effect of causing an increase in the supply of gas and a decrease in equilibrium price.
A)True
B)False
Answer: True
Q2) All else constant,an increase in the price of a good will cause the quantity supplied to increase.
A)True
B)False
Answer: True
Q3) Consider the market for air travel.A simultaneous increase in the price of fuel and another terrorist attack on United States soil would cause the equilibrium quantity of air travel to go down,but have an uncertain effect on equilibrium price.
A)True
B)False
Answer: True
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Page 4
Chapter 3: Demand Elasticities
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112 Verified Questions
112 Flashcards
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Sample Questions
Q1) If the percentage change in quantity demanded is less than the percentage change in price,we would say that over this range,demand is:
A)elastic.
B)unit elastic.
C)inelastic.
D)perfectly elastic.
Answer: C
Q2) Knowledge about the price elasticity of demand is especially useful to managers because it allows them to predict how a change in price would affect a firm's total profit.
A)True
B)False
Answer: False
Q3) 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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67 Verified Questions
67 Flashcards
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Sample Questions
Q1) Refer to Scenario 2.If the age of a house is 25 years with 1,500 square feet,what is the estimated market value of the house?
Q2) An estimated regression coefficient is 10 with a standard error of 5.The null hypothesis is that the partial regression coefficient equals zero.What is the value of the t-statistic for testing the null hypothesis of the regression coefficient?
A)1
B)2
C)0.5
D)5
Q3) In a multiple regression problem involving two independent variables,if b is computed to be +2.0,it means that:
A)the relationship between X and Y is significant.
B)the estimated value of Y increases by an average of 2 units for each increase of 1 unit of X , holding X constant.
C)the estimated value of Y increases by an average of 2 units for each increase of 1 unit of X , without regard to X .
D)the estimated average value of Y is 2 when X equals zero.
Q4) Why are estimated models of demand and consumer behavior useful to managers?
Page 6
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Chapter 5: Production and Cost Analysis in the Short Run
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101 Verified Questions
101 Flashcards
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Sample Questions
Q1) Refer to Scenario 1.What is the total output when 2 hours of labor are employed?
A)80
B)100
C)180
D)200
Q2) One of the interesting findings of a survey of firm managers by Blinder et al.is that:
A)the vast majority of firms pay considerable attention to marginal costs in making decisions about how much output to produce.
B)the majority of respondents suggested that fixed costs are a relatively unimportant consideration when making output decisions.
C)approximately 75 percent of respondents indicated that their marginal costs of production are rising over the relevant range of output.
D)a significant percentage of respondents to the survey did not appear to understand the concept of marginal cost.
Q3) Explain the difference between the short run and the long run as it relates to the firm's production function.Why is this distinction important to a firm's manager?
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Chapter 6: Production and Cost Analysis in the Long Run
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) Which of the following is least likely to limit the ability of a firm to minimize production costs?
A)Resistance by labor.
B)The fact that the firm is a nonprofit organization.
C)An increase in the amount of competition faced by the firm.
D)Legislated input combinations for firms in particular industries, e.g, health care.
Q2) In which of the following examples cited in the text is there the least amount of evidence of the potential for input substitution?
A)Automobile production.
B)Pipe organ production.
C)French fry production.
D)Production of health care services.
Q3) 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.
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Chapter 7: Market Structure: Perfect Competition
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106 Verified Questions
106 Flashcards
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Sample Questions
Q1) Assume a perfectly competitive firm is in long-run equilibrium and there is a decrease in market demand for the firm's output.Which of the following will occur?
A)Existing firms will maintain the original level of output, but they will shift their cost functions down in the short run.
B)Existing firms will raise price to cover the reduction in quantity demanded and maintain total revenue in the short run.
C)Existing firms will reduce output in the short run.
D)Market price will be above its original level.
Q2) The larger firms in the red-meat industry have blunted the effects of competition by relying on product differentiation,which in effect,creates a downward-sloping demand curve for each firm's product.
A)True
B)False
Q3) Explain why a firm maximizes its profits by producing the level of output at which marginal revenue equals marginal costs.
Q4) What assumptions in the perfect competition model ensure that economic profit is zero in the long run? Explain.
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Chapter 8: Market Structure: Monopoly and Monopolistic Competition
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107 Verified Questions
107 Flashcards
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Sample Questions
Q1) Patents and copyrights create incentives for individuals to create information that might not be produced otherwise.
A)True
B)False
Q2) Suppose the firms in a monopolistically competitive market are incurring economic losses.What will happen to move the market to its long-run equilibrium?
A)More close substitutes will appear in the market until economic profits are zero.
B)The firms that dropped out of the market will reenter once the level of economic losses is zero.
C)Firms will continue to exit the market until economic losses are equal to zero.
D)The demand functions of all the firms remaining in the market will become relatively more elastic.
Q3) The various antitrust laws are written in very specific terms.Thus,there is little or no question as to when a firm has run afoul of one or more of these laws.
A)True
B)False
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Chapter 9: Market Structure: Oligopoly
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96 Verified Questions
96 Flashcards
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Sample Questions
Q1) Which of the following best describes the basic characteristics of noncooperative oligopoly models?
A)Managers make decisions based on the strategy they think their rivals will pursue.
B)Managers attempt to deliberately mislead their rivals regarding the strategy they will pursue.
C)When making decisions, managers basically ignore the mutual interdependence that exists among rivals.
D)Managers refuse to negotiate with their rivals when it comes to such decisions as what price to charge.
Q2) Firms have tried a number of different strategies to reduce the negative effects of competition on their ability to earn economic profits.Which of the following strategies is most desirable from the viewpoint of economic efficiency and consumer well being?
A)Collusion.
B)Price leadership.
C)Formation of cartels.
D)Investment in research and development.
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11
Chapter 10: Pricing Strategies for the Firm
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67 Verified Questions
67 Flashcards
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Sample Questions
Q1) Applying a uniform markup to each of a firm's products is less profitable than varying the markup based on the elasticity of demand because the latter is able to exploit the sensitivity of quantity demanded to a change price.
A)True
B)False
Q2) Is the profit-maximizing price-taking firm able to mark up price above the marginal costs of production at the profit-maximizing level of output? Why or why not?
Q3) By and large,the price of each item on a restaurant menu is:
A)an accurate reflection of the item's marginal cost.
B)based strictly on consumer demand.
C)a function of cost and the price elasticity of demand for the item.
D)a fixed multiple of the item's total cost.
Q4) The situation in which a firm charges different prices for different blocks of output is referred to as:
A)first-degree price discrimination.
B)second-degree price discrimination.
C)third-degree price discrimination.
D)fourth-degree price discrimination.
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Page 12
Chapter 11: Measuring Macroeconomic Activity
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102 Verified Questions
102 Flashcards
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Sample Questions
Q1) Declining real GDP for two quarters in a row is often called a recession.
A)True
B)False
Q2) A French citizen lives in Detroit,but works in Windsor,Canada; his income is counted in U.S.GDP.
A)True
B)False
Q3) What are the two policy options used to influence the economy?
Q4) The Full Employment and Balanced Growth Act of 1978 is also called the Humphrey-Hawkins Act and requires the President to appear before Congress twice a year to present his forecast for the economy.
A)True
B)False
Q5) In a closed economy firms sell goods and services to:
A)households and foreigners.
B)households and the government.
C)just the government.
D)none of the above.
Q6) Why are transfer payments excluded from government expenditure in the national income accounts?
Page 13
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Chapter 12:
Spending by Individuals, firms, and
Governments on Real Goods and Services
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103 Verified Questions
103 Flashcards
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Sample Questions
Q1) Distinguish between the short-run and long-run factors that affect residential investment.
Q2) Decrease in the real interest rate will ________ the expenditure curve:
A)decrease.
B)increase.
C)not change.
D)none of the above.
Q3) Capacity utilization increases.What is the impact on aggregate expenditures and income?
A)Both increase.
B)Both decrease.
C)Aggregate expenditure increases and income decreases.
D)Aggregate expenditure decreases and income increases.
Q4) In 2009,the U.S.Congress approved a fiscal stimulus measure which included additional spending by the U.S.government sector.Using the Keynesian cross diagram,graphically illustrate and explain the impact of such a policy on aggregate expenditure and income.
Q5) Briefly explain how capacity utilization rates are used by forecasters.
Page 14
Q6) What factors will shift the aggregate expenditure function for a given level of real domestic income?
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Page 15
Chapter 13: The Role of Money in the Macro Economy
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90 Verified Questions
90 Flashcards
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Sample Questions
Q1) Institutions that accept deposits from individuals and organizations,against which depositors can write checks on demand for their market transactions and that use these deposits to make loans are called:
A)depository institutions.
B)financial market institutions.
C)insurance companies.
D)none of the above.
Q2) The interest rate the Federal Reserve charges banks which borrow reserves at the Federal Reserve's discount window is called the:
A)federal funds rate.
B)discount rate.
C)prime interest rate.
D)mortgage interest rate.
Q3) Open market purchase of government securities results in:
A)an increase in bank reserves.
B)a decrease in bank reserves.
C)an increase in interest rates.
D)none of the above.
Q4) Define the three functions of money.
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Chapter 14: The Aggregate Model of the Macro Economy
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98 Verified Questions
98 Flashcards
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Sample Questions
Q1) Average weekly hours in manufacturing is an example of a:
A)leading indicator.
B)coincident indicator.
C)lagging indicator.
D)none of the above.
Q2) An income tax system where higher tax rates are applied to increased amounts of income is called:
A)a regressive tax system.
B)a proportional tax system.
C)a progressive tax system.
D)a flat rate tax system.
Q3) Economic variables that generally turn down after a recession begins and turn back up after the recovery starts are called:
A)leading indicators.
B)coincident indicators.
C)lagging indicators.
D)none of the above.
Q4) Explain the long-run consequences of continued increases in the money supply.
Q5) Explain how the aggregate demand curve is derived.
Q6) Why did the Fed shift its policy target towards the federal funds rate.
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Chapter 15: International and Balance of Payments Issues
in the Macro Economy
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109 Verified Questions
109 Flashcards
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Sample Questions
Q1) The balance of payments accounts are divided into two sections: the current account and the financial account.
A)True
B)False
Q2) A record of all transactions between residents of the reporting country and residents of the rest of the world over a period of time is called the:
A)national income product accounts.
B)balance of payments accounting system.
C)accrual accounting system.
D)none of the above.
Q3) The political stability of countries has an impact on the foreign exchange market.
A)True
B)False
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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44 Verified Questions
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Sample Questions
Q1) In 2012,all of fast-food chains expanded their hours of operation,with nearly 40% of all McDonald's restaurants being open 24 hours per day.This strategy was aimed at increasing sales because:
A)it was estimated that nearly one-fifth of all employed Americans worked primarily in the evening contributing to the demand for fast-food in late hours.
B)it was estimated that consumers who shop at night tend to be more price sensitive.
C)it was believed that longer hours of operation would lead to greater brand loyalty.
D)none of the above.
Q2) The decrease in demand faced by McDonalds during 2001-2002 can be attributed to:
A)decrease in consumer preference for high-fat content food.
B)increase in lawsuits.
C)increase in competitive pressures.
D)all of the above.
Q3) Briefly state several reasons for the decline in sales for McDonald's in 2001-2002.
Q4) How did McDonalds address the obesity issue in China?
Q5) How did McDonalds address the drive-through innovation in China?
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