question
if you want to establish and run your own business, but are very concerned about your liability should anything go wrong, which of the following would be the best kind of firm for you
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limited liability company
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which of the following is an example of a corporation
answer
coca-cola
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which of the following is an example of a proprietorship
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the owner of a local nail salon
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if Big Brothers Hot Dog stand sold 500 hot dogs at a price $2 per hot dog, the total revenue is
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1,000
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if the marginal ___ of an action exceeds its marginal ___ then the action ___ be performed
answer
benefit, cost, should
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at the 50th unit of action, the marginal benefit is equal to $20 and the marginal cost is equal to $25. which of the following is true
answer
the 50th unit of action should not be undertaken
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to maximize total profit, managers want to produce the quantity in which marginal benefit ___ marginal cost
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is equal to
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which of the following is a way in which this course in managerial economics will help you advance your career
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the information presented in this course will help you make better decisions as a manager
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economic models
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simplify the real world by ignoring minor details
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a firm owned by one person with unlimited liability is a
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proprietorship
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managers should use ___ cost when making managerial decisions because it considers the return from alternative uses of the firms resources
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opportunity
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an __ cost is defined as a cost that does not involve an outflow of cash
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implicit
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an ___ cost is defined as the return from the best-alternative use of a resource
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opportunity
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each hour a store remains open it incurs a marginal cost. if the marginal benefit of staying open does not change but the marginal cost doubles, then the manager will ___ the hours the store remains open
answer
decrease
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if the price of ground beef decreases, which of the following will occur
answer
there will be a movement down the demand curve for ground beef
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which of the following will cause a movement up the demand curve for digital printing services
answer
an increase in the price of digital printing services
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the demand function for Super Big LED bulbs is Qd= (45 million) - (3.5 million *P) if the company charged a price of $8 per bulb, how many will be demanded
answer
17 million
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the demand function for a pack of four Never Die Batteries is Qd= (62 million) - (8 million *P) if the company charged a price of $5 per package, how many packages will be demanded
answer
22 million
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which of the following will cause a movement down the supply curve for frozen chicken nuggets
answer
a decrease in the price of frozen chicken nuggets
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the supply function for a pack of four Never Die Batteries is Qs= (0) + (6 million *P) if the company charged a price of $5 per package, how many packages will be supplied
answer
30 million
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the supply function for a half gallon of Happy Cow Milk is Qs = (0) + (2 million *P) if the company charged a price of $3.5 per half gallon, how many half gallons will be supplied
answer
7 million
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if goods X and Y are substitutes in production, if the price of good X increases, this will cause a ___ the supply curve for good X and a ____ the supply curve for good Y
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movement along, shift in
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if goods R and S are complements in production, if the price of good R increases, this will cause a(n) ___ the supply curve for good S
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rightward shift in
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at any price higher than the equilibrium price, a ___ in quantity will be created and at any price lower than the equilibrium price, a ___ in quantity will be created
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surplus, shortage
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if the equilibrium price for a half gallon of organic milk is $4 and the current price for a half gallon of milk is $3.25, market forces will cause all of the following to occur except which one
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the quantity supplied to decrease
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if the Qd= (20 million) - (2 million P) and Qs= (0) + (3 million P), the equilibrium price for the product is
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$4
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if the Qd= (50 million) - (4 million P) and Qs= (0) + (1 million P), the equilibrium price for the product is
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$10
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if the Qd= (40 million) - (8 million P) and Qs= (10 million) + (2 million P), the equilibrium price for the product
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$3
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for the particular product the Qd= (20 million) - (2.5 million P) and Qs= (0) + (2.5 million P) if the current price is $5 which of the following is true
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there is a surplus of the product in the market
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for a particular product the Qd= (45 million) - (3 millionP) and Qs= (0) + (2 million P) if the current price is $7 which of the following is true
answer
there is a shortage of the product in the market
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if the Qd= (18 million) - (3 millionP) and Qs= (0) + (3 million P) the equilibrium quantity for the product is
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9 million
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If the Qd= (20 million) - (2.5 million P) and Qs= (0) + (2.5 millionP) the equilibrium quantity for the product is
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10 million
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if the Qd= (50 million) - (4 millionP) and Qs= (2 million) + (4 millionP) the equilibrium quantity for the product is
answer
26 million
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the maximum price a consumer is willing to pay for a second slice of pizza is
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the consumers marginal benefit of a second slice of pizza
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if a competitive market is producing at the efficient quantity
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total surplus is maximized
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if deadweight loss exists in a competitive market, which one of the following is true
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the market is either under- or overproducing
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if the price of hot dogs increases, this will cause a(n) ___ the demand curve for hot dog buns and a(n) ___ in the equilibrium price of hot dog buns
answer
decrease, decrease
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an increase in consumer incomes will shift the demand curve for luxury vehicles to the ___ and ___ both the equilibrium price and quantity of luxury vehicles
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right, increases
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an increase in the cost of flour will shift the supply curve for bread to the ___ and ___ the equilibrium quantity of bread
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left, decrease
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a price ceiling is a ___ legal price set by the government that causes a ___ in the market
answer
maximum, shortage
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a price ceiling is set ___ the equilibrium quantity and results in a ___
answer
below, shortage
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a price floor is a ___ legal price set by the government that causes a ___ in the market
answer
minimum ,surplus
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suppose there is a decrease in the price of jet fuel
this will affect the ____ which will shift the ____ for airline travel to the ____
this will affect the ____ which will shift the ____ for airline travel to the ____
answer
-cost faced by airline travel suppliers
- supply curve
- right
- supply curve
- right
question
if a 2% increase in the price of a good leads to a 10% decrease in the quantity demanded, the price elasticity of demand for the good equals ___
answer
5.0
question
if a 2% decrease in the price of a good leads to a 6% increase in the quantity demanded, the price elasticity of demand for the good equals ____
answer
3.0
question
if the price elasticity of demand for Clean Sheets laundry detergent is 0.50, a 2% increase in the price will lead to which of the following
answer
a 1 percent decrease in quantity
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if the price elasticity of demand for Clean Sheets laundry detergent is 1.50, a 5% decrease in the price will lead to which of the following
answer
a 7.5 increase in quantity
question
using excel, Big Poppas estimates the weekly demand function for its BBQ sandwiches to be Qd=580.25 - (25.50*P) what is the point elasticity of demand at a price of $5
answer
0.28
question
using excel, Big Poppas estimates the weekly demand function for its BBQ sandwiches to be Qd=580.25 - (25.50*P) what is the point elasticity of demand at a price of $10
answer
0.78
question
the price elasticity for insulin (a life-saving drug for diabetics) is likely to be ___
answer
perfectly inelastic
question
the owner of Mr. Piggys Bacon estimates that the price elasticity of demand for a package of their bacon to be 3.48. in relation to the price elasticity of demand for the entire bacon market, which of the following is most likely true
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the price elasticity for all bacon will be less responsive to price changes
question
consider a 20% increase in the price of a 2 pound bag of sugar and a 20 percent increase in the price of first-class airline travel. in response to the price changes, which of the following is most likely to be true
answer
the percentage change in the quantity demanded for first-class airline travel will be larger than the percentage change in the quantity demanded for a 2 pound bag of sugar
question
consider a 15% increase in the price of a box of 50 of mailing envelopes and a 15% increase in the price of designer leather goods. in response to the price changes, which of the following is most likely to be true
answer
the percentage change in the quantity demanded for designer leather goods will be larger thaan the percentage change in the quantity demanded for a box of 50 of mailing envelopes
question
if a 10% increase in price leads to a 15% decrease in the quantity demanded of the good, as a result of the price change, the total revenue for this product will
answer
decrease
question
if a 12% increase in price leads to a 6% decrease in the quantity demanded of the good, as a result of the price change, the total revenue for this product will ___
answer
increase
question
if a 5% increase in consumer incomes leads to a 10% increase in the quantity demanded for a good, the good is a(n) ___ good with an income elasticity of __
answer
normal, 2.0
question
if a 10% increase in consumer incomes leads to a 15% increase in the quantity demanded for a good, the good is a ___ good with an income elasticity of ___
answer
luxury, 1.5
question
if the cross- price between goods X and Y is 2.0 the goods are ___ and an increase in the price of good X will cause a(n) ___ in the quantity demanded of good Y
answer
substitutes, increase
question
suppose the brand manager of Honey Bunches of Oats cereal lowers the price of the product by 4%
what will be the impact of this move in the short run and the long run
what will be the impact of this move in the short run and the long run
answer
- the increase in quantity demanded will be larger in the long run than in the short run
- demand will be more elastic in the long run than it will be in the short run
- demand will be more elastic in the long run than it will be in the short run
question
you own a small business and want to increase the total revenue you collect from sales of your product
- the demand for your product is inelastic
-the demand for your product is elastic
- the demand for your product is unit elastic
- the demand for your product is inelastic
-the demand for your product is elastic
- the demand for your product is unit elastic
answer
- price of the product should be increased
- price of the product should be decreased
- total revenue cannot increase with changes in price
- price of the product should be decreased
- total revenue cannot increase with changes in price
question
as a manager for the fresh chicken division of a firm like Tyson Foods Inc. you know that the price elasticity of demand for broiler chickens is 0.5. one of your assistants suggests raising the price of your chicken by 10% asserting that such a move would increase revenue
answer
you would NOT ACCEPT his suggestion without further research as such a move COULD DECREASE the firms revenue
question
1. the price elasticity of demand uses the absolute value because it is ____
2. the income and cross elasticities of demand do not use the absolute value because they can be ___
3. the income elasticity of demand is positive for a ___ good and a negative for an ___ good
4. the cross-price elasticity of demand is positive for ___ goods and negative for ___ goods
2. the income and cross elasticities of demand do not use the absolute value because they can be ___
3. the income elasticity of demand is positive for a ___ good and a negative for an ___ good
4. the cross-price elasticity of demand is positive for ___ goods and negative for ___ goods
answer
1. always negative
2. positive or negative
3. normal, inferior
4. substitute, complementary
2. positive or negative
3. normal, inferior
4. substitute, complementary
question
economists estimate that the income elasticity of demand for fine dining is 2.56
as incomes grow, the fraction of income spent on fine dining gets ___
as incomes grow, the fraction of income spent on fine dining gets ___
answer
larger
question
the price elasticity of demand is equal to the absolute value of the
answer
percentage change in the quantity demanded divided by the percentage change in the price
question
suppose the price elasticity of demand for gas is 0.5 then a 10% increase in the price of gas leads to a ___ decrease in the quantity of gas demanded
answer
5 %
question
suppose your marketing department estimates that the demand for your product is given by Qd=500,000 units - (200 units per dollar) *P. at a price of 1,000 per unit what is the price elasticity of demand
answer
0.67
question
suppose a downward-sloping linear demand curve has a slope of -4 dollars per unit. moving downward along this demand curve, the price elasticity of demand
answer
falls in value
question
if a demand curve is vertical, then the demand is ___ and the price elasticity if demand equals __
answer
perfectly inelastic, zero
question
which of the following does not affect the size of the price elasticity of demand
answer
the total revenue collected from sales of the product
question
the price elasticity of demand is smaller
answer
the fewer substitutes for the product
question
you are a manager for Royal Caribbean Cruises. you realize that (a) there are many substitutes for your cruises, which makes the demand for cruises ___ and (b) the families that buy your cruises spend a large fraction of their income on the cruises which makes the demand for cruises ___
answer
elastic, elastic
question
if the demand for a product is inelastic, an increase in the price ___ the total revenue from sales of the product
answer
increases
question
analyzing sales data, you discover that a fall in your price decreases your total revenue. therefore, you know that the demand for your product ___
answer
is inelastic
question
the income elasticity of demand for dining out is positive. dining out is therefore
answer
a normal good
question
if a 4% decrease in income results in an 8% increase in the demand for boxed mac and cheese, the income elasticity of demand for mac and cheese is
answer
-2.00
question
for two goods that are substitutes the
answer
cross elasticity of demand is positive
question
if a 4% increase in the price of golf clubs leads to a 3% increase in the demand for tennis rackets, then the cross elasticity of demand is ___ and golf cubs and tennis rackets are ___
answer
0.75, substitutes
question
if the cross-price elasticity between goods X and Y is -2.0 the goods are ___ and in increase in the price of good X will cause a(n) ___ in the quantity demanded of good Y
answer
complements, decrease
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