Economics for Business Practice Questions
Course Introduction
Economics for Business introduces students to the fundamental concepts of microeconomics and macroeconomics as they apply to the business environment. The course explores topics such as market structures, supply and demand, pricing strategies, production and cost analysis, and the impacts of government policy on business decision-making. Students will also examine how global economic trends and economic indicators influence organizational strategies. By bridging economic theory with real-world business applications, the course equips students with analytical tools to better understand and address the challenges faced by modern businesses.
Recommended Textbook
Microeconomics 4th Australian Edition by Glenn Hubbard
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16 Chapters
3337 Verified Questions
3337 Flashcards
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Page 2
Chapter 1: Economics: Foundations and Models
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159 Verified Questions
159 Flashcards
Source URL: https://quizplus.com/quiz/52473
Sample Questions
Q1) Arlene quits her $125 000-a-year job to take care of her ailing parents.What is the opportunity cost of her decision?
A)Zero, since she will no longer be earning a salary.
B)It depends on the 'going rate' for home-care providers.
C)At least $125 000
D)The value she attributes to the satisfaction she receives from taking care of her parents
Answer: C
Q2) Trina's Tropical Fish Store sells goldfish for $2 each and angelfish for $10 each.The opportunity cost of buying a goldfish is:
A)5 angelfish
B)1/5 of an angelfish
C)$10
D)$2
Answer: A
Q3) Optimal decisions are made at the point where marginal cost equals zero.
A)True
B)False
Answer: False
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Page 3
Chapter 2: Choices and Trade-Offs in the Market
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192 Verified Questions
192 Flashcards
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Sample Questions
Q1) Consider the following items:
a.the album '21' by Adele
b.a Dutch horticulturalist's new method for cultivating hybrid tulips
c.Rolls Royce's 'Spirit of Ecstasy' hood ornament design
d.the sale of Tumi luggage at a Macy's department store
Which of the items listed is an example of intellectual property?
A)a and b only
B)a, b, and c
C)a and d only
D)all of the items listed
Answer: B
Q2) If the production possibility frontier is ________, then opportunity costs are constant as more of one good is produced.
A)bowed out
B)bowed in
C)non-linear
D)linear
Answer: D
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Page 4
Chapter 3: Where Prices Come From: The Interaction of
Demand and Supply
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202 Verified Questions
202 Flashcards
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Sample Questions
Q1) A movement along the demand curve for toothpaste would be caused by:
A)a change in the price of toothbrushes.
B)a change in consumer income.
C)a change in the price of toothpaste.
D)a change in population.
Answer: C
Q2) Suppose that when the price of blueberries increases, Lonnie increases his purchases of bananas.To Lonnie,
A)blueberries and bananas are complements.
B)blueberries and bananas are inferior goods.
C)blueberries and bananas are normal goods.
D)blueberries and bananas are substitutes.
Answer: D
Q3) All else equal, as the price of a product falls, the quantity supplied increases.
A)True
B)False
Answer: False
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Page 5
Chapter 4: Elasticity: The Responsiveness of Demand and Supply
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224 Verified Questions
224 Flashcards
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Sample Questions
Q1) Bringing oil to the market is a relatively long and costly process.The whole process from exploration to pumping significant amounts of oil can take years.What does this indicate about the price elasticity of supply for oil?
A)The elasticity coefficient is likely to be very high, and supply is inelastic.
B)The elasticity coefficient is likely to be close to zero, and supply is perfectly elastic.
C)The elasticity coefficient is likely to be low, and supply is highly inelastic.
D)The elasticity coefficient is likely to be low, and supply is highly elastic.
Q2) What would be the cross-price elasticity of demand between an unlimited texting option and an unlimited call minutes option offered from a mobile phone provider?
A)Positive if subscribers consider the services substitutes for each other.
B)Positive if subscribers consider the services complements to each other.
C)Negative if subscribers consider the services substitutes for each other.
D)Negative no matter if subscribers consider the services substitutes or complements for each other.
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Chapter 5: Economic Efficiency, Government Price Setting and Taxes
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187 Verified Questions
187 Flashcards
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Sample Questions
Q1) Producer surplus is the difference between the lowest price a firm is willing to accept for a product and the price it actually receives for the product.
A)True
B)False
Q2) Refer to Figure 5.7.For each unit sold, the price sellers receive after the tax (net of tax)is
A)$20.
B)$22.
C)$27.
D)$32.
Q3) What curve shows the marginal cost of producing one more unit of a good or service?
A)Demand.
B)Supply.
C)Production possibilities.
D)Marginal benefit.
Q4) Shortage means the same thing as scarcity.
A)True
B)False
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Chapter 6: Consumer Choice and Behavioural Economics
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254 Verified Questions
254 Flashcards
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Sample Questions
Q1) Economists assume people's tastes are identical.
A)True
B)False
Q2) We can derive the market demand curve for gold earrings
A)only if the tastes of all gold earring consumers are similar.
B)by adding horizontally the individual demand curves of each gold earring consumer.
C)by adding vertically the quantity demanded of each gold earring consumed at each price.
D)by adding the prices each gold earring consumer is willing to pay for each quantity.
Q3) To what does the income effect of a price change refer?
A)The change in demand that occurs when consumer income changes.
B)The change in the quantity demanded that results from a change in price, making the good more or less expensive relative to other goods, holding everything else constant.
C)The change in demand that occurs when both income and price change.
D)The change in the quantity demanded of a good that results from the effect of a change in price on consumer purchasing power, holding everything else constant.
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Chapter 7: Technology Production and Costs
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301 Verified Questions
301 Flashcards
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Sample Questions
Q1) An isocost line shows
A)all the possible combinations of two inputs that a firm can use to produce its output.
B)all the possible combinations of two inputs a firm can use that have the same total cost.
C)all the possible combinations of two inputs a firm can use that have the same marginal cost.
D)all the possible combinations of two inputs with constant returns to scale.
Q2) Which of the following is an example of positive technological change?
A)A firm offers workers a higher wage to work on weekends and at night.As a result, the firm is able to increase its weekly production of surfboards.
B)A firm buys an additional machine that it uses to make surfboards.As a result, the firm is able to increase its weekly production of surfboards.
C)A firm conducts a new advertising campaign.As a result, the demand for the firm's surf boards increases.
D)A firm's workers participate in a training program designed to increase the number of surfboards they can produce per day.
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Chapter 8: Firms in Perfectly Competitive Markets
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269 Verified Questions
269 Flashcards
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Sample Questions
Q1) Refer to Figure 8.8.What does the firm earn at the profit-maximising output level?
A)Zero economic profit.
B)A profit of $600.
C)A profit of $1200.
D)A profit of $2700.
Q2) Refer to Figure 8.5.The minimum price the firm requires to produce output is
A)$20
B)$14
C)$5
D)It cannot be determined.
Q3) Refer to Figure 8.5.If the market price is $20, the firm's profit-maximising output is
A)750 units
B)1100 units
C)1350 units
D)1800 units
Q4) In an increasing-cost industry, the long-run supply curve is upward sloping.
A)True
B)False
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Chapter 9: Monopoly Markets
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281 Verified Questions
281 Flashcards
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Sample Questions
Q1) Early adopters are consumers who will pay a high price to be among the first to own new products.
A)True
B)False
Q2) Why is airline yield management an effective method to increase revenue?
A)Because airlines have invested heavily in developing computer models that identify optimal pricing strategies in the various market segments
B)Because airlines have successfully induced customers to reveal their resources and preferences by offering them different versions of the product such as business class and coach plane tickets
C)Because a ticket is a contract to transport a specific person, and is not transferable
D)Because airlines have a monopoly in long-distance carriage
Q3) Refer to Figure 9.6.What is the monopolist's total cost?
A)$1116.
B)$1240.
C)$1660.
D)$1726.40.
Q4) If you own the only bookstore in a small town, do you have a monopoly?
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Chapter 10: Monopolistic Competition: The Competitive
Model in a More Realistic
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255 Verified Questions
255 Flashcards
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Sample Questions
Q1) Unlike a perfectly competitive firm, a monopolistic competitor does not have a short-run shut-down point.
A)True
B)False
Q2) The profit-maximising rule for a monopolistically competitive firm is
A)to produce a quantity that maximises market share
B)to produce a quantity that maximises total revenue
C)to produce a quantity such that marginal revenue equals marginal cost
D)to produce a quantity such that price equals marginal cost
Q3) What one bad thing happens when a monopolistically competitive firm lowers its price?
A)The output effect
B)The income effect
C)The substitution effect
D)The price effect
Q4) Is a monopolistically competitive firm productively efficient?
A)No, because it does not produce at minimum average total cost.
B)Yes, because it produces where marginal cost equals marginal revenue.
C)No, because price is greater than marginal cost.
D)Yes, because price equals average total cost.
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Chapter 11: Oligopoly: Markets With Few Competitors
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186 Verified Questions
186 Flashcards
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Sample Questions
Q1) Why does a prisoner's dilemma lead to a non-cooperative equilibrium?
A)Because each player had agreed before the game started to minimise the harm that he can inflict on the other players
B)Because each player is uncertain how other players will play the game
C)Because players must choose from a limited number of non-dominant strategies
D)Because each rational player has a dominant strategy to play a certain way regardless of what other players do
Q2) The best example of an oligopolistic industry is
A)the beef market
B)the pharmaceutical industry
C)public education
D)the beauty products industry
Q3) The most important barrier to entry is economies of scale.
A)True
B)False
Q4) An oligopolistic industry is characterised by a few large firms acting independently. A)True
B)False
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Chapter 12: The Markets for Labour and Other Factors of Production
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250 Verified Questions
250 Flashcards
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Sample Questions
Q1) Marginal revenue product can be calculated using the formula marginal product × output price
A)only if output price is constant.
B)only if the marginal product of labour is constant.
C)only if the both marginal product of labour and the output price are constant.
D)only if the firm has market power in the labour market.
Q2) What is the difference between 'straight-time pay,' 'commission pay,' and 'piece-rate pay'?
Q3) If you were to ask your employer for a raise, which of the following would be your most effective argument?
A)'I have a job offer at another firm that will pay me more than my current wage.'
B)'I am willing to work more hours each week.'
C)'Increases in my productivity have resulted in greater revenue and profits for your business.'
D)'My marginal product is greater than my current wage.'
Page 14
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Chapter 13: Comparative Advantage and the Gains From International Trade
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131 Verified Questions
131 Flashcards
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Sample Questions
Q1) Protectionism
A)is the use of cheap labour to protect firms from paying high wages.
B)is the use of trade barriers to protect domestic firms from foreign competition.
C)refers to reductions in tariffs and other barriers that protect consumers from paying high prices.
D)refers to the use of copyright and trademark laws to protect inventors and artists from losing the rights to their creative efforts.
Q2) China has developed a comparative advantage in the production of clothing.The source of this comparative advantage is
A)a large supply of natural resources.
B)a large supply of unskilled workers and relatively little capital.
C)investment in capital used to produce clothing.
D)superior process technology.
Q3) The process of countries becoming more open to foreign trade and investment is known as outsourcing.
A)True
B)False
Q4) What is a tariff?
15
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Chapter 14: Government Intervention in the Market
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113 Verified Questions
113 Flashcards
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Sample Questions
Q1) What is the relationship between market failure and government failure?
Q2) Why are many companies concerned about brand management?
Q3) What is the principle-agent problem?
Q4) Research has shown that most economic profits from selling a prescription drug are eliminated 20 years after the drug is first offered for sale.The main reason for the elimination of profits is
A)after 20 years most people who have taken the drug have passed away or are cured of the illness the drug was intended to treat.
B)firms sell their patent rights to other firms so that they can concentrate on finding drugs to treat new illnesses.
C)the quantity demanded of the drug has increased enough that the demand becomes inelastic and revenue falls.
D)after 20 years patent protection is ended and other firms can produce less expensive generic versions of the drug.
Q5) What is adverse selection?
Q6) A public good that is a good that is both rival and excludable.
A)True
B)False
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Chapter 15: Externalities, Environmental Policy and Public Goods
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212 Verified Questions
212 Flashcards
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Sample Questions
Q1) If the social cost of producing a good or service exceeds the private cost,
A)a positive externality exists.
B)the sum of consumer surplus and producer surplus is maximised.
C)the market achieves economic efficiency.
D)a negative externality exists.
Q2) Parents who do not have their children immunised and attempt to benefit from other parents who did have their own children immunised are exhibiting an economic behaviour known as
A)excludability.
B)public rivalry.
C)free riding.
D)internalising an external cost.
Q3) A public good is
A)a good that is rival and excludable.
B)good that is non-rival and non-excludable.
C)a good that is non-rival and excludable.
D)a good that is rival and non-excludable.
Q4) How does a public good differ from a quasi-public good? In your answer give an example of each type of good.
Q5) How does a negative externality in production reduce economic efficiency?
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Chapter 16: The Distribution of Income and Social Policy
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121 Flashcards
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Sample Questions
Q1) All of the following occur whenever a government taxes a product except
A)the quantity consumed of that product falls.
B)the price of that product rises.
C)the marginal benefit of the last unit sold exceeds the marginal cost of producing it.
D)there will be no excess burden if the government's tax revenue is sufficiently large to offset the deadweight loss.
Q2) According to the benefits-received principle, those who receive the benefits from a government program should pay the taxes that support the program.
A)True
B)False
Q3) Horizontal equity is achieved when taxes are collected from those who benefit from the government expenditure of the tax revenue.
A)True
B)False
Q4) If the government is most interested in minimising excess burden of an excise tax, should it impose the tax on goods that are elastic or on goods that are inelastic?
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