(Combined) ECON 3125 Metzgar, MGMT Econ final
multiple choice, Managerial Economics Final, econ
quiz 1 review, Econ Test 1, ECO Finale, Managerial
Economics Final, Managerial Econ 3125 Exam 1 Study
Guide, BA6010 Midterm (Homework Questions), ECN
4010 MASTER, With Complete Verified Solutions 2023/2024
An increase in the demand for motorcycles has led to an increase in the demand
for motorcycle helmets. Based on this information, which of the following is likely
to be true?
The increase in demand for helmets will be represented as a movement along the
demand curve for motor cycle helmets.
Given that digital music players are used to play music downloaded from the
internet, a fall in the price of digital music players will lead to:
An increase in the demand for downloaded songs.
Given the total cost equation for a firm, the marginal cost equation can be derived
by...
Taking the direst derivative of the cost function with respect to quantity.
When the demand for a product is said to be perfectly inelastic, it implied that:
The profit per-unit increases with an increase in price (straight up and down).
Suppose a firm's inverse demand function is P = 40 - 8Q. What is the firm's
revenue function?
R = 40Q - 8Q^2
The price elasticity of demand is defined as the ratio of the ___ other factors held
constant.
Percentage change in quantity demanded to the percentage change in price.
According to the model of the firm, the management's main goal is to
Maximize profit
Which of the following is NOT one of the steps in managerial decision making?
Negotiating a consensus to implement the decision.
In evaluating public programs, benefit-cost analysis...
States that a program should be undertaken only if total benefits exceed total costs.
Given the inverse demand function P = 50 - 0.5Q and the cost function C = 600 +
40Q, what is the firm's fixed cost?
600
Which of the following is true of economic models?
Models are simplified descriptions of processes, relationships, or other phenomena.
A firm's total revenue function is given by R = 100 + 100Q - 2Q^2. At Q = 10, which
of the following is true?
(MR - 100 - 4Q) The firm's marginal revenue is $60.
Which of the following correctly defines marginal revenue?
(R = P x Q) Marginal revenue is the additional revenue from a unit increase in output
and sales.
,If a firm's profit is given by pi = -150 + 360Q - 36Q^2, then its optimal output is...
5 units (-72Q)
Given the inverse demand function P = 50 - 0.5Q and the cost function C = 600 +
40Q, what is the profit maximizing price?
45
A good that has highly elastic demand is most likely to:
have a large number of substitute
Suppose a firm's profit is given by the equation pi = -200 + 80Q - .2Q^2. Which of
the following is true?
The firm's profit maximizing output is Q = 200
Assume that a firm is producing at its profit-maximizing level of output. A
decrease in fixed cost implies that...
Marginal revenue will not change but marginal cost will decrease.
Sensitivity analysis is used by a firm to
Examine how an optimal decision is affected if key economic facts vary
A firm's demand curve is given by Q = 800 - 2P, where P = price and Q = quantity.
Therefore, its inverse demand equation is..
(Add 2P to both sides, subtract Q, then divide by 2) P = 400 - .5Q
Ceteris Paribus, if the price of a good or service increases, what happens to the
firm's demand curve?
There is an upward movement along the demand curve.
If a firm's demand function is of the form P = a-bQ, what is its marginal revenue
equation?
MR = a - 2bQ
Profit is maximized at the quantity where:
-MR = MC
-The slope of the Revenue Curve is equal to the slope of the Cost Curve
-The 1st derivative of the Revenue function is equal to the 1st derivative of the Cost
Function.
Given that a firm's inverse demand function is P = 100 - 5Q and total cost is given
by C = 550 + 10Q, what is the firm's profit-maximizing level of output?
9 units
When Rita was a student, she consumed beer with her dinner. Over the years, as
her income increased, she substituted beer for a glass of wine. From this
information, one can imply that.
Rita considered beer an inferior good.
The demand for a product is given by Q = 600 - 30P. At P = $15, the firm sells..
150 units
The initial price for an item is $5.00, and the quantity demanded is 400 units.
When the price is raised to $5.25, the quantity demanded falls to 350 units. The
absolute value of the point elasticity of demand is..
(.125/.05) 2.5
To maximize profit, the firm should set output at the level where
Marginal revenue is equal to marginal cost
Which of the following correctly defines marginal cost?
Marginal cost is the additional cost of producing an extra unit of output.
,Marginal economics can best be defined as the...
Analysis of the labor market through the behavior of workers and managers
According to the law of demand, if a firm reduces the price of its good
Competing firms will reduce prices
The demand for a product is given by P = 1,750 - 25Q. If the firm wishes to sell 50
units, each unit should be priced at
$500
Suppose, at its current output level, a firm's marginal profit is positive. Therefore,
to maximize profit it should
Increase output because MR is greater than MC
A firm's demand curve is estimated to be Q = 400 - 5P, where Q is quantity and P
is the price of the good. At P = $20, the point elasticity of demand is..
-0.067
(Q = 400 - 5(20)
Q = 300
20/300 = -0.067)
Profit is maximized at the quantity where:
-The slope of the profit curve is equal to zero
-the 1st derivative of the profit function is equal to zero and the 2nd derivative is
negative
If someone buys a product but never actually uses it, is value being created?
Yes
When output increases and total profit increases, marginal profit must be..
Positive
At its current output level, a firm's marginal profit is negative. Therefore, it
should:
Reduce output because MR<MC
A firm's profit equation is given by: Total profit = -100+160Q=20Q^2. Therefore,
The firm's fixed cost is 100
The firm's profit maximizing output is Q=4
Marginal profit = 160-40Q
The price elasticity of demand for electricity is
Inelastic
If Q=400-2P, is revenue maximized at P=100?
Yes
When the price of smart phones decreases, the demand for data plans will:
Increase
If TC = 75+15Q and Ep=-2 is P=$30 the optimal price?
Yes
Is "ladies night" at a bar (where ladies pay no over) a form of price
discrimination?
Yes
A campus survey asks senior students if they would support a 3-year plan to
upgrade the cafeterias at a given cost. What pitfall does this survey exhibit?
Sample bias
, If all of the price-quantity demanded observations lie exactly on a predicted
equation line, the value of the sum of squared errors (SSE) will be:
0
If the sample coefficient of determination (R2) is 0.80, this means that
80 percent of the variation in the dependent variable is explained by the regression.
If the coefficient for a variable is -6.78 and the standard error is 2.20, is the
coefficient statistically significant?
Yes
True or False: a variable representing the age of a person in years is a dummy
variable.
False
Errors in forecasting are caused by all of the following EXCEPT:
Using a large sample of past observations for the regression.
Sum of Squared Errors
Sum of the differences between the predicted value and the actual value for each
observation
Total of Squares
Sum of the difference between the actual value and the average for each observation
R-Squares
Measures the goodness-of-fit for the linear regression model
Standard Error
The standard deviation of a regression coefficient
Statistical Significance
A measure to show that the relationship between two variables is more than chance
Confidence Interval
A type of interval estimate that may contain the true value of the unknown parameter
T-Statistic
Coefficient divided by the standard error; used to evaluate statistical significance of a
coefficient
Dummy Variables
Variables used to represent a specific state
• A firm negotiates a new labor contract with a higher average hourly wage. What
is the most likely effect of the higher wage on the firm's price and output?
o Price will increase and output will decrease
• For a downward-sloping demand curve, the associated marginal revenue curve:
o Has twice the slope as the demand curve
• A good's demand is given as: P= 10 - 0.02Q. At Q=200, the point-price elasticity
is?
o -1.5
Math: (1/-.02) * (10-.02(200)/200)
• A good that has highly inelastic demand is most likely to:
o Have no or few substitutes
• Suppose that the current price for a good is $20, and quantity sold is 400 units.
If the price elasticity is -2, and price is raised to $23, what is the new quantity
sold?
o 1 - -2(3/20) = .7 >>> .7*400 = 280
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller ACADEMICAIDSTORE. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $15.49. You're not tied to anything after your purchase.
