Business Administration
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Course Introduction
Business Administration is a multidisciplinary field that encompasses the planning, organization, direction, and control of business operations. This course introduces students to key concepts and practices in areas such as management, marketing, finance, human resources, operations, and strategic planning. Students will learn how to analyze business problems, make effective decisions, communicate within and across organizational levels, and adapt to dynamic business environments. The course emphasizes practical skills and real-world case studies, preparing graduates for various roles in corporate, entrepreneurial, and non-profit settings.
Recommended Textbook
Managerial Economics Theory Applications and Cases 8th Edition by W. Bruce Allen
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19 Chapters
693 Verified Questions
693 Flashcards
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Page 2
Chapter 1: Introduction
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Sample Questions
Q1) The economic theory of the firm assumes that the primary objective of a firm's owner or owners is to:
A) behave in a socially conscientious manner.
B) maximize the firm's profit.
C) maximize the firm's total sales.
D) maximize the value of the firm.
E) All of these are primary objectives.
Answer: D
Q2) Managerial economics uses to help managers solve problems.
A) formal models
B) prescribed behavior
C) quantitative methods
D) microeconomic theory
E) all of the above
Answer: E
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Page 3
Chapter 2: Demand Theory
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Sample Questions
Q1) The demand for fashion watches is Q = 9 - 0.7P + 2I.Assume that per capita income I is $13.When the price of fashion watches is P = $30,the price elasticity of demand is:
A) -0.66.
B) -1.0.
C) -2.0.
D) -0.5.
E) -1.5.
Answer: E
Q2) The cross-price elasticity of demand is defined as the:
A) percentage change in the quantity demanded of a good divided by the percentage change in the good's price.
B) percentage change in the quantity demanded of a good divided by the percentage change in a different good's price.
C) percentage change in a good's price divided by the percentage change in a different good's price.
D) change in the quantity demanded of a good divided by the change in its price.
E) change in the quantity demanded of a good divided by the change in income.
Answer: B
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Chapter 3: Consumer Behavior and Rational Choice
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52 Flashcards
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Sample Questions
Q1) A corner solution to a consumer choice problem suggests that:
A) the consumer is not rational.
B) one product is not purchased at all.
C) both products are preferred, but one at a lower rate than the other.
D) neither product is a normal good.
E) all of the above
Answer: B
Q2) Which of the following does not affect the shape of a consumer's indifference curves?
A) Age.
B) Education.
C) Tastes.
D) Prices.
E) Advertising.
Answer: D
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Chapter 4: Estimating Demand Functions
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Sample Questions
Q1) A cost of estimating demand functions particular to the use of market experiments is:
A) the possibility that customers may be lost and profits cut as a result of the experiment.
B) the shipping costs to markets across the country.
C) the need to determine the profit-maximizing discount.
D) the cost of collecting data.
E) none of the above.
Q2) Regression analysis is:
A) a psychoanalytical tool, often called "regression toward the mean," used by economists to estimate consumer reactions.
B) always preferable to consumer interviews or market experiments.
C) usually done with a pencil and paper.
D) a statistical technique that describes how one variable is related to another.
E) almost never used in practice because of concerns about alienating a firm's customers.
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6
Chapter 5: Production Theory
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Sample Questions
Q1) The marginal rate of technical substitution between two inputs:
A) shows the rate at which one input can be traded for another, holding output constant.
B) shows the efficient combination of inputs.
C) increases as we move down an isoquant.
D) shows the rate at which output can be increased by using more of both inputs.
E) shows the rate at which output decreases when using less of one of the inputs.
Q2) Happiness can be produced with wine and roses according to Q = W<sup>1/2</sup>R<sup>1/4</sup>,where W is bottles of wine and R is bouquets of roses obtained per month.If wine costs $20 per bottle and roses cost $60 per dozen,the happiness-maximizing combination of wine and roses costing $360 in total is:
A) W = 18 bottles, R = 0 bouquets.
B) W = 15 bottles, R = 1 bouquets.
C) W = 12 bottles, R = 2 bouquets.
D) W = 9 bottles, R = 3 bouquets.
E) W = 6 bottles, R = 4 bouquets.
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Chapter 6: The Analysis of Costs
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Sample Questions
Q1) If total cost is given by TC = a + bQ - cQ<sup>2</sup> + dQ<sup>3</sup>,then average variable cost is minimized at ________units of output.
A) Q<sup>*</sup> = a/2d
B) Q<sup>*</sup> = b/2d
C) Q<sup>*</sup> = c/3d
D) Q<sup>*</sup> = c/2d
E) Q<sup>*</sup> = d/2c
Q2) If Hilltop Turf Farm's total cost of producing acres of sod is TC = 0.2Q<sup>2</sup> + 120Q + 5,000,the marginal cost of producing the 50th acre of sod is:
A) $110.
B) $120.
C) $130.
D) $140.
E) $150.
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Chapter 7: Perfect Competition
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Sample Questions
Q1) In the model of perfect competition,firms maximize profits by producing where:
A) the difference between marginal revenue and marginal cost is maximized.
B) marginal revenue equals price.
C) the difference between price and marginal cost is maximized.
D) price equals marginal cost.
E) the difference between price and marginal revenue is maximized.
Q2) If the demand increases for the product of an increasing-cost industry:
A) short-run price goes up, but long-run price falls.
B) long-run output goes up, but long-run price may go up or down.
C) short-run output goes up, but long-run output may go up or down.
D) long-run output goes up, but short-run price remains constant.
E) short-run price goes up, and long-run price goes up.
Q3) If the demand increases for the product of a decreasing-cost industry:
A) short-run price goes up, but long-run price falls.
B) long-run output goes up, but long-run price may go up or down.
C) short-run output goes up, but long-run output may go up or down.
D) long-run output goes up, but short-run price remains constant.
E) long-run price goes up, but short-run price may go up or down.
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Chapter 8: Monopoly and Monopolistic Competition
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Sample Questions
Q1) The Frank Failing Company has an average variable cost of $8,average fixed cost of $16,marginal cost of $12,and elasticity of demand -3.Frank should:
A) shut down.
B) charge $8.
C) charge $16.
D) charge $18.
E) charge $36.
Q2) If ç is the elasticity of demand,a profit maximizer sets a markup price of:
A) MC[1/(1 + 1/\(\eta\))].
B) MC[1/(1 - 1/\(\eta\))].
C) AC[1/(1 - \(\eta\))].
D) AC[1/(1 - 1/\(\eta\))].
E) 1/(1 - \(\eta\)).
Q3) In the model of monopoly,firms produce a:
A) standardized product with considerable control over price.
B) differentiated product with considerable control over price.
C) standardized product with no control over price.
D) differentiated product with no control over price.
E) standardized or differentiated product with some control over price.
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Page 10
Chapter 9: Managerial Use of Price Discrimination
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Sample Questions
Q1) Cereal manufacturers' use of coupons can be partially explained by:
A) first-degree price discrimination.
B) second-degree price discrimination.
C) third-degree price discrimination.
D) markup pricing.
E) tying.
Q2) When an electrical utility charges higher prices during the day than at night,it is practicing:
A) peak load pricing.
B) first-degree price discrimination.
C) second-degree price discrimination.
D) third-degree price discrimination.
E) fourth-degree price discrimination.
Q3) When a movie theater charges a higher price during the evening than during the day,it is practicing:
A) peak load pricing.
B) first-degree price discrimination.
C) second-degree price discrimination.
D) third-degree price discrimination
E) fourth-degree price discrimination.
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Chapter 10: Bundling and Intrafirm Pricing
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Sample Questions
Q1) When the NCAA basketball tournament will only sell tickets to all three games held at a given site as a package,it is practicing:
A) first-degree price discrimination.
B) second-degree price discrimination.
C) third-degree price discrimination.
D) markup pricing.
E) tying.
Q2) Tying can sometimes be justified as helping consumers by:
A) brand-name quality protection.
B) different consumer evaluations of the main good.
C) transportation costs.
D) standard industry practice.
E) offsetting price reductions in the main good.
Q3) When consumers can purchase a set of goods as a bundle or separately,then the seller is engaging in:
A) simple bundling.
B) complex bundling.
C) performance bundling.
D) mixed bundling.
E) engaged bundling.
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Chapter 11: Oligopoly
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Sample Questions
Q1) If a cartel is working properly,its firms will likely be producing where (MC<sub>i</sub> is each firm i's marginal cost,MR is market marginal revenue,and P is price):
A) MC<sub>i</sub> = MR.
B) MC<sub>i</sub> > MR.
C) MC<sub>i</sub> < MR.
D) P = MR.
E) P < MR.
Q2) Two local ready-mix cement manufacturers,Here and There,have combined demand given by Q = 105 - P.Their total costs are given by TC<sub>Here</sub> = 5Q<sub>Here</sub> + 0.5Q<sup>2</sup><sub>Here</sub> and TC<sub>There</sub> = 5Q<sub>There</sub> + 0.5Q<sup>2</sup><sub>There</sub>.If they successfully collude,their maximum joint profits will be:
A) $500.
B) $1,000.
C) $1,600.
D) $2,000.
E) $2,500.
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Chapter 12: Game Theory
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Sample Questions
Q1) The difference between game trees and decision trees is:
A) that game trees are not useful in strategic situations.
B) that decision trees describe actions that depend on the behavior of rivals.
C) that game trees have interactive payoffs.
D) that decision trees are a function of many individuals and the state of nature.
E) none of the above.
Q2) Radio City promises if you can find a lower advertised price for anything you bought at Radio City,anywhere in town within 30 days,it will return the difference plus 20%.A sophisticated game theoretic analysis suggests Radio City may be:
A) losing money in the long run.
B) colluding with other stores.
C) using a commitment to threaten competitors.
D) preempting competitors.
E) using price leadership.
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Chapter 13: Auctions
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Sample Questions
Q1) In recent years,auction sites,such as ebay,have flooded the Internet.Sellers expect to gain by using the Internet for conducting auctions because:
A) more bidders means that price discrimination is an option.
B) with more bidders, each submits a bid closer to his or her reservation price to increase the probability of a win.
C) with more bidders, sellers expect to realize greater profits.
D) consumer surplus will increase.
E) b and c
Q2) If bidders are likely to be risk-averse:
A) sellers should use a first-price auction.
B) sellers should use a second-price auction.
C) auctions will not provide surplus for sellers.
D) sellers should use a posted-price strategy.
E) Dutch auction rules will yield the greatest profit to sellers.
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15
Chapter 14: Risk Analysis
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Sample Questions
Q1) You pay $3.75 to roll a normal die one time.You get $1 for each dot that turns up.Your expected profit from this venture is:
A) -$0.75.
B) -$0.25.
C) $0.25.
D) $3.00.
E) $3.50.
Q2) For constants a and b,0 < b,b \(\neq\) 1,and expected profit E(\(\pi\)),the expected utility function of a person who is risk-neutral can be written as E(U)= :
A) a + bE(\(\pi\)).
B) a - bE(\(\pi\)).
C) a + b<sup>\(\pi\)</sup>.
D) a + [E(\(\pi\))]<sup>b</sup>.
E) a + [E(\(\pi\))]<sup> -</sup><sup>b</sup>.
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Chapter 15: Principalagent Issues and Managerial Compensation
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Sample Questions
Q1) A technique for dealing with the principal-agent problem is to:
A) require managers to purchase shares of stock in the firm.
B) establish a profit-sharing plan for managers.
C) establish year-end bonuses based on the profits of the firm.
D) all the above.
E) none of the above.
Q2) Use the following profit function (per worker)for the Blue Delta Faucet Company to answer this question. P(e)= 40e - (2e<sup>2</sup> + 100)
Note that P = firm profits and e = worker-hours per day.Assume that effort is observed perfectly.At the profit-maximizing level of effort for the firm,daily per-worker compensation will be:
A) $100.
B) $200.
C) $300.
D) $340.
E) none of the above.
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17
Chapter 16: Adverse Selection
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Sample Questions
Q1) Suppose the Ajax Insurance Company provides insurance for skydivers whose wealth before diving is $400.An accident will leave divers with a wealth of $100.The company divides the divers into two classes: safe (probability of an accident = 0.2)and unsafe (probability of an accident = 0.5).The utility of wealth for all divers is given by the function: U(w)= w<sup>0.5</sup>.The utility of no insurance for the safe diver is:
A) 15.
B) 17.3.
C) 18.
D) 18.3.
E) none of the above.
Q2) Adverse selection implies that:
A) the market for used cars is perfectly competitive.
B) the market for used cars will contain more cars of higher than average quality.
C) the market for used cars will contain more cars of lower than average quality.
D) all used cars will be of equal quality.
E) the government overinsures the market for used cars.
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18
Chapter 17: Government and Business
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Sample Questions
Q1) Teal Taxi Company has a regulated taxi monopoly in Colortown.It faces a demand for rides given by P = 3 - 0.02Q. It has total costs (exclusive of the required rate of return on its invested capital)of TC = -110 + 0.1Q + 0.01Q<sup>2</sup>.If the commission that regulates Teal Taxi determines that $100 is sufficient to compensate equity holders for their invested capital,what are the regulated price and output?
A) P = 0, Q = 150.
B) P = .5, Q = 125.
C) P = 1, Q = 100.
D) P = 1.5, Q = 75.
E) P = 2, Q = 50.
Q2) The rule of reason,which states that only unreasonable combinations in restraint of trade are illegal,was enunciated in the:
A) Alcoa case.
B) Standard Oil case.
C) Von's Grocery case.
D) Brown Shoe case.
E) IBM case.
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Page 19
Chapter 18: Optimization Techniques
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Sample Questions
Q1) Wilma's Car Repair can repair cars using kryptonite bolts,K,or lithium bolts,L,as long as it uses 10 bolts in toto.The cost of repairing a car is TC = K<sup>2</sup> + L<sup>2</sup> - KL.The cost-minimizing combination of kryptonite and lithium bolts is:
A) K = 6 and L = 4.
B) K = 4 and L = 6.
C) K = 7 and L = 3.
D) K = 3 and L = 7.
E) K = 5 and L = 5.
Q2) A function of one argument is minimized when the first derivative is:
A) zero and the second derivative is positive.
B) positive and the second derivative is negative.
C) zero and the second derivative is negative.
D) negative and the second derivative is positive.
E) zero and the second derivative is zero.
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Chapter 19: Appendix Problems
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Sample Questions
Q1) The present value of expected future profits will if the discount rate increases and will if expected future profits increase.
A) increase; not change
B) increase; increase
C) not change; decrease
D) decrease; increase
E) decrease; decrease
Q2) If the annual interest rate is 25%,the present discounted value of $100 to be received in one year is:
A) $75.
B) $80.
C) $100.
D) $120.
E) $125.
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