The best definition of economics is:
A) how goods and services are produced.
B) how choices are made under conditions of scarcity.
C) how businesses maximize profits.
D) how money is used. - ANSWERSB) how choices are made under conditions of scarcity
Managerial economics is best defined as t...
ECON 528 Final Exam Review Questions
& Answers
The best definition of economics is:
A) how goods and services are produced.
B) how choices are made under conditions of scarcity.
C) how businesses maximize profits.
D) how money is used. - ANSWERSB) how choices are made under conditions of
scarcity
Managerial economics is best defined as the economic study of:
A) how businesses can decide on the best use of scarce resources.
B) how businesses can make the most profits.
C) how businesses can sell the most products.
D) how businesses can operate at the lowest costs. - ANSWERSA) how businesses
can decide on the best use of scarce resources
A firm's managers are constrained by:
A) workers.
B) government.
C) consumers.
D) All three. - ANSWERSD) All three
Most private firms seek to:
A) minimize headcount.
B) maximize revenue.
C) maximize employee salaries.
D) maximize profit. - ANSWERSD) maximize profit
Einstein was quoted saying "Everything should be made as simple as possible, but not
simpler." When it comes to economic models this means that:
A) models shouldn't be too simple.
B) models should have a level of abstraction appropriate to the topic investigated.
C) models shouldn't be too complex.
D) All of these. - ANSWERSD) All of these
Economic models are only useful in analyzing government policy.
A) False, economic models can be used to predict individual and firm behavior.
B) False, economic models are not even useful in analyzing government policy.
C) True, individuals are irrational and therefore economic models are useless.
D) True, economists only model those questions for which they are hired. -
ANSWERSA) False, economic models can used to predict individual and firm behavior.
, Economic models are most useful in:
A) generating untestable hypotheses.
B) explaining the future with the past.
C) predicting the direction of the stock market.
D) explaining outcomes resulting from management decisions. - ANSWERSD)
explaining outcomes resulting from management decisions.
Scarcity:
A) used to exist everywhere but has been eliminated in advanced economies.
B) applies only to people living in poverty.
C) is the inability to satisfy all our wants.
D) leads to higher prices.
E) is not something that affects very rich people. - ANSWERSC) is the inability to satisfy
all our wants.
A good that is similar to another, and can be consumed in place of it, is called:
A) a complementary good.
B) a normal good.
C) an inferior good.
D) a substitute good. - ANSWERSD) a substitute good.
Two goods are ________ if the quantity consumed of one increases when the price of
the other decreases.
A) superior
B) substitute
C) normal
D) complementary - ANSWERSD) complementary
Marginal utility is equal to which of the following?
A) total income divided by the price of the product
B) the satisfaction obtained from consuming any number of units of a good
C) the change in total utility from consuming one more unit of a good
D) total utility divided by the number of units of the good
E) None of the answers is correct. - ANSWERSC) the change in total utility from
consuming one more unit of a good
Coke and Pepsi are substitutes if:
A) the demand for Coke increases when the price of Pepsi rises
B) the demand for Coke increases when the price of Pepsi falls
C) the demand for Coke and Pepsi rise and fall together
D) the supply of Coke increases when the price of Pepsi falls - ANSWERSA) the
demand for Coke increases when the price of Pepsi rises
The price elasticity of demand is a measure of:
A) the responsiveness of the quantity demanded to price changes.
B) the demand for a product holding price constant.
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