Managerial Economics:
A Problem-Solving Approach
2nd Edition
End-of-Chapter Questions and Answers
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
,Table of Contents
Chapters 1 and 2 - Introduction and The One Lesson of Business...............................................................5
Multiple Choice Questions..................................................................................................................5
Multiple Choice Key............................................................................................................................5
Short Answer Questions......................................................................................................................6
Short Answer Key................................................................................................................................6
Chapter 3 - Benefits, Costs, and Decisions..............................................................................................8
Multiple Choice Questions..................................................................................................................8
Multiple Choice Key............................................................................................................................8
Short Answer Questions......................................................................................................................9
Short Answer Key..............................................................................................................................10
Chapter 4 - Extent (How Much) Decisions............................................................................................11
Multiple Choice Questions.................................................................................................................11
Multiple Choice Key..........................................................................................................................12
Short Answer Questions....................................................................................................................12
Short Answer Key..............................................................................................................................13
Chapter 5 - Investment Decisions: Look Ahead and Reason Back........................................................15
Multiple Choice Questions.................................................................................................................15
Multiple Choice Key..........................................................................................................................16
Short Answer Questions....................................................................................................................16
Short Answer Key..............................................................................................................................17
Chapter 6 – Simple Pricing....................................................................................................................18
Multiple Choice Questions.................................................................................................................18
Multiple Choice Key..........................................................................................................................18
Short Answer Questions....................................................................................................................19
Short Answer Key..............................................................................................................................19
Chapter 7 - Economies of Scale and Scope............................................................................................21
Multiple Choice Questions.................................................................................................................21
Multiple Choice Key..........................................................................................................................22
Short Answer Questions....................................................................................................................22
Short Answer Key..............................................................................................................................23
Chapter 8 – Understanding Markets and Industry Changes...................................................................25
Multiple Choice Questions.................................................................................................................25
Multiple Choice Key..........................................................................................................................26
Short Answer Questions....................................................................................................................26
Short Answer Key..............................................................................................................................28
Chapter 9 – Relationships between Industries........................................................................................31
Multiple Choice Questions.................................................................................................................31
Multiple Choice Key..........................................................................................................................31
Short Answer Questions....................................................................................................................32
Short Answer Key..............................................................................................................................32
Chapter 10 – Strategy-The Quest to Keep Profit from Eroding.............................................................34
Multiple Choice Questions.................................................................................................................34
Multiple Choice Key..........................................................................................................................34
Short Answer Questions....................................................................................................................35
Short Answer Key..............................................................................................................................35
Chapter 11 – Using Supply and Demand...............................................................................................38
Multiple Choice Questions.................................................................................................................38
2
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
, Multiple Choice Key..........................................................................................................................38
Short Answer Questions....................................................................................................................39
Short Answer Key..............................................................................................................................39
Chapter 12 - More Complex and Realistic Pricing.................................................................................41
Multiple Choice Questions.................................................................................................................41
Multiple Choice Key..........................................................................................................................42
Short Answer Questions....................................................................................................................42
Short Answer Key..............................................................................................................................43
Chapter 13 - Direct Price Discrimination...............................................................................................44
See Chapter 14...................................................................................................................................44
Chapter 14 - Indirect Price Discrimination............................................................................................45
Multiple Choice Questions.................................................................................................................45
Multiple Choice Key..........................................................................................................................45
Short Answer Questions....................................................................................................................46
Short Answer Key..............................................................................................................................47
Chapter 15 - Strategic Games................................................................................................................49
Multiple Choice Questions.................................................................................................................49
Multiple Choice Key..........................................................................................................................50
Short Answer Questions....................................................................................................................50
Short Answer Key..............................................................................................................................51
Chapter 16 - Bargaining.........................................................................................................................54
Multiple Choice Questions.................................................................................................................54
Multiple Choice Key..........................................................................................................................55
Short Answer Questions....................................................................................................................55
Short Answer Key..............................................................................................................................56
Chapter 17 - Uncertainty........................................................................................................................58
Multiple Choice Questions.................................................................................................................58
Multiple Choice Key..........................................................................................................................59
Short Answer Questions....................................................................................................................59
Short Answer Key..............................................................................................................................60
Chapter 18 - Auctions............................................................................................................................62
Multiple Choice Questions.................................................................................................................62
Multiple Choice Key..........................................................................................................................62
Short Answer Questions....................................................................................................................63
Short Answer Key..............................................................................................................................63
Chapter 19 - The Problem of Adverse Selection....................................................................................65
Multiple Choice Questions.................................................................................................................65
Multiple Choice Key..........................................................................................................................66
Short Answer Questions....................................................................................................................66
Short Answer Key..............................................................................................................................67
Chapter 20 - The Problem of Moral Hazard...........................................................................................68
Multiple Choice Questions.................................................................................................................68
Multiple Choice Key..........................................................................................................................68
Short Answer Questions....................................................................................................................69
Short Answer Key..............................................................................................................................70
Chapter 21 - Getting Employees to Work in the Best Interests of the Firm...........................................73
Multiple Choice Questions.................................................................................................................73
Multiple Choice Key..........................................................................................................................73
Short Answer Questions....................................................................................................................74
3
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
, Short Answer Key..............................................................................................................................75
Chapter 22 - Getting Divisions to Work in the Best Interests of the Firm..............................................77
Multiple Choice Questions.................................................................................................................77
Multiple Choice Key..........................................................................................................................78
Short Answer Questions....................................................................................................................78
Short Answer Key..............................................................................................................................79
Chapter 23 - Managing Vertical Relationships......................................................................................82
Multiple Choice Questions.................................................................................................................82
Multiple Choice Key..........................................................................................................................82
Short Answer Questions....................................................................................................................83
Short Answer Key..............................................................................................................................84
4
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
A Problem-Solving Approach
2nd Edition
End-of-Chapter Questions and Answers
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
,Table of Contents
Chapters 1 and 2 - Introduction and The One Lesson of Business...............................................................5
Multiple Choice Questions..................................................................................................................5
Multiple Choice Key............................................................................................................................5
Short Answer Questions......................................................................................................................6
Short Answer Key................................................................................................................................6
Chapter 3 - Benefits, Costs, and Decisions..............................................................................................8
Multiple Choice Questions..................................................................................................................8
Multiple Choice Key............................................................................................................................8
Short Answer Questions......................................................................................................................9
Short Answer Key..............................................................................................................................10
Chapter 4 - Extent (How Much) Decisions............................................................................................11
Multiple Choice Questions.................................................................................................................11
Multiple Choice Key..........................................................................................................................12
Short Answer Questions....................................................................................................................12
Short Answer Key..............................................................................................................................13
Chapter 5 - Investment Decisions: Look Ahead and Reason Back........................................................15
Multiple Choice Questions.................................................................................................................15
Multiple Choice Key..........................................................................................................................16
Short Answer Questions....................................................................................................................16
Short Answer Key..............................................................................................................................17
Chapter 6 – Simple Pricing....................................................................................................................18
Multiple Choice Questions.................................................................................................................18
Multiple Choice Key..........................................................................................................................18
Short Answer Questions....................................................................................................................19
Short Answer Key..............................................................................................................................19
Chapter 7 - Economies of Scale and Scope............................................................................................21
Multiple Choice Questions.................................................................................................................21
Multiple Choice Key..........................................................................................................................22
Short Answer Questions....................................................................................................................22
Short Answer Key..............................................................................................................................23
Chapter 8 – Understanding Markets and Industry Changes...................................................................25
Multiple Choice Questions.................................................................................................................25
Multiple Choice Key..........................................................................................................................26
Short Answer Questions....................................................................................................................26
Short Answer Key..............................................................................................................................28
Chapter 9 – Relationships between Industries........................................................................................31
Multiple Choice Questions.................................................................................................................31
Multiple Choice Key..........................................................................................................................31
Short Answer Questions....................................................................................................................32
Short Answer Key..............................................................................................................................32
Chapter 10 – Strategy-The Quest to Keep Profit from Eroding.............................................................34
Multiple Choice Questions.................................................................................................................34
Multiple Choice Key..........................................................................................................................34
Short Answer Questions....................................................................................................................35
Short Answer Key..............................................................................................................................35
Chapter 11 – Using Supply and Demand...............................................................................................38
Multiple Choice Questions.................................................................................................................38
2
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
, Multiple Choice Key..........................................................................................................................38
Short Answer Questions....................................................................................................................39
Short Answer Key..............................................................................................................................39
Chapter 12 - More Complex and Realistic Pricing.................................................................................41
Multiple Choice Questions.................................................................................................................41
Multiple Choice Key..........................................................................................................................42
Short Answer Questions....................................................................................................................42
Short Answer Key..............................................................................................................................43
Chapter 13 - Direct Price Discrimination...............................................................................................44
See Chapter 14...................................................................................................................................44
Chapter 14 - Indirect Price Discrimination............................................................................................45
Multiple Choice Questions.................................................................................................................45
Multiple Choice Key..........................................................................................................................45
Short Answer Questions....................................................................................................................46
Short Answer Key..............................................................................................................................47
Chapter 15 - Strategic Games................................................................................................................49
Multiple Choice Questions.................................................................................................................49
Multiple Choice Key..........................................................................................................................50
Short Answer Questions....................................................................................................................50
Short Answer Key..............................................................................................................................51
Chapter 16 - Bargaining.........................................................................................................................54
Multiple Choice Questions.................................................................................................................54
Multiple Choice Key..........................................................................................................................55
Short Answer Questions....................................................................................................................55
Short Answer Key..............................................................................................................................56
Chapter 17 - Uncertainty........................................................................................................................58
Multiple Choice Questions.................................................................................................................58
Multiple Choice Key..........................................................................................................................59
Short Answer Questions....................................................................................................................59
Short Answer Key..............................................................................................................................60
Chapter 18 - Auctions............................................................................................................................62
Multiple Choice Questions.................................................................................................................62
Multiple Choice Key..........................................................................................................................62
Short Answer Questions....................................................................................................................63
Short Answer Key..............................................................................................................................63
Chapter 19 - The Problem of Adverse Selection....................................................................................65
Multiple Choice Questions.................................................................................................................65
Multiple Choice Key..........................................................................................................................66
Short Answer Questions....................................................................................................................66
Short Answer Key..............................................................................................................................67
Chapter 20 - The Problem of Moral Hazard...........................................................................................68
Multiple Choice Questions.................................................................................................................68
Multiple Choice Key..........................................................................................................................68
Short Answer Questions....................................................................................................................69
Short Answer Key..............................................................................................................................70
Chapter 21 - Getting Employees to Work in the Best Interests of the Firm...........................................73
Multiple Choice Questions.................................................................................................................73
Multiple Choice Key..........................................................................................................................73
Short Answer Questions....................................................................................................................74
3
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
, Short Answer Key..............................................................................................................................75
Chapter 22 - Getting Divisions to Work in the Best Interests of the Firm..............................................77
Multiple Choice Questions.................................................................................................................77
Multiple Choice Key..........................................................................................................................78
Short Answer Questions....................................................................................................................78
Short Answer Key..............................................................................................................................79
Chapter 23 - Managing Vertical Relationships......................................................................................82
Multiple Choice Questions.................................................................................................................82
Multiple Choice Key..........................................................................................................................82
Short Answer Questions....................................................................................................................83
Short Answer Key..............................................................................................................................84
4
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
