ECON 528 || QUESTIONS AND ANSWERS 100%
CORRECT!!
Manager correct answers a decision maker: Labor and capital (inputs of production),
Inventory (Supply)
Economics correct answers a social science that examines conditions of scarcity and how
individuals respond to scarcity. (Shortages; time and other resources)
Managerial economics correct answers the study of how managers make decisions based off
preferences shaped by scarce resources.
The goal of managerial economics is to correct answers maximize profit
Accounting profits correct answers Profit = Revenue - cost
Economic profits correct answers Profit - Opportunity cost
Accounting costs correct answers labor, inventory, capital/assets, research and development,
patents
Opportunity cost correct answers foregone benefits from alternatives. What is the value of the
best alternative?
Consumer - producer rivalry correct answers compete over price and value
consumer - consumer rivalry correct answers compete over quantity
Producer - producer rivalry correct answers compete over market share
the role of government correct answers regulations and arbitration
Market demand curve correct answers shows the amount of a good that will be purchased at
alternative prices, holding other factors constant
The law of demand correct answers the demand curve is downward sloping
Normal good correct answers buy more if you have more money
Inferior good correct answers buy less if you have more money
Price as a function of quantity demanded correct answers price = demand * quantity
When the slope goes downward correct answers there is an increase in quantity demanded
Consumer surplus correct answers the difference between the actual price and the price
people are willing to pay (feeling like you got a good deal means that the consumer surplus
was high)
, Market supply curve correct answers shows the amount of a good that will be produced at
alternative prices
law of supply correct answers the supply curve is upward sloping (measures the costs of
production)
Determinants of supply correct answers input prices, number of firms entering and exiting,
taxes, substitutions
Market equilibrium correct answers the point where quantity demanded = quantity supplier
"Steady state" correct answers once we reach this equilibrium, the market should stop
changing
Economic surplus correct answers ES= consumer surplus + producer surplus
If price is too low correct answers there will be a shortage
If price is too high correct answers there will be a surplus
Price ceilings correct answers the maximum legal price that can be charged (gasoline prices
in the 1970's)
Price floors correct answers the minimum legal price that can be charged (minimum wage)
Use supply and demand analysis to correct answers clarify the big picture (the general impact
of a current event on equilibrium prices and quantities) ; organize an action plan (needed
changes in production, inventories, raw materials, human resources, marketing plans)
Elasticity correct answers tools you can use to quantify the impact of changes in prices,
income, and advertising on sales and revenues
What is elasticity used for? correct answers they are measures of the responsiveness of
quantity to a given market change
Elasticity equation correct answers change in quantity/Quantity divided by change in
supply/supply OR
supply/quantity * change in quantity/ change in supply
Elastic E>1 correct answers quantity is very responsive to price. I will buy more if the price is
low
Inelastic E<1 correct answers Quantity is not very responsive to price. I will buy it whether or
not the price is low (GAS)
Available substitues correct answers the more substitutes available for the good, the more
elastic the demand
Which is more elastic...peas or vegetables? correct answers Peas because vegetables are a
very broad topic
CORRECT!!
Manager correct answers a decision maker: Labor and capital (inputs of production),
Inventory (Supply)
Economics correct answers a social science that examines conditions of scarcity and how
individuals respond to scarcity. (Shortages; time and other resources)
Managerial economics correct answers the study of how managers make decisions based off
preferences shaped by scarce resources.
The goal of managerial economics is to correct answers maximize profit
Accounting profits correct answers Profit = Revenue - cost
Economic profits correct answers Profit - Opportunity cost
Accounting costs correct answers labor, inventory, capital/assets, research and development,
patents
Opportunity cost correct answers foregone benefits from alternatives. What is the value of the
best alternative?
Consumer - producer rivalry correct answers compete over price and value
consumer - consumer rivalry correct answers compete over quantity
Producer - producer rivalry correct answers compete over market share
the role of government correct answers regulations and arbitration
Market demand curve correct answers shows the amount of a good that will be purchased at
alternative prices, holding other factors constant
The law of demand correct answers the demand curve is downward sloping
Normal good correct answers buy more if you have more money
Inferior good correct answers buy less if you have more money
Price as a function of quantity demanded correct answers price = demand * quantity
When the slope goes downward correct answers there is an increase in quantity demanded
Consumer surplus correct answers the difference between the actual price and the price
people are willing to pay (feeling like you got a good deal means that the consumer surplus
was high)
, Market supply curve correct answers shows the amount of a good that will be produced at
alternative prices
law of supply correct answers the supply curve is upward sloping (measures the costs of
production)
Determinants of supply correct answers input prices, number of firms entering and exiting,
taxes, substitutions
Market equilibrium correct answers the point where quantity demanded = quantity supplier
"Steady state" correct answers once we reach this equilibrium, the market should stop
changing
Economic surplus correct answers ES= consumer surplus + producer surplus
If price is too low correct answers there will be a shortage
If price is too high correct answers there will be a surplus
Price ceilings correct answers the maximum legal price that can be charged (gasoline prices
in the 1970's)
Price floors correct answers the minimum legal price that can be charged (minimum wage)
Use supply and demand analysis to correct answers clarify the big picture (the general impact
of a current event on equilibrium prices and quantities) ; organize an action plan (needed
changes in production, inventories, raw materials, human resources, marketing plans)
Elasticity correct answers tools you can use to quantify the impact of changes in prices,
income, and advertising on sales and revenues
What is elasticity used for? correct answers they are measures of the responsiveness of
quantity to a given market change
Elasticity equation correct answers change in quantity/Quantity divided by change in
supply/supply OR
supply/quantity * change in quantity/ change in supply
Elastic E>1 correct answers quantity is very responsive to price. I will buy more if the price is
low
Inelastic E<1 correct answers Quantity is not very responsive to price. I will buy it whether or
not the price is low (GAS)
Available substitues correct answers the more substitutes available for the good, the more
elastic the demand
Which is more elastic...peas or vegetables? correct answers Peas because vegetables are a
very broad topic
