Economics for Managers
Test Preparation
Course Introduction
Economics for Managers provides an essential framework for understanding the economic principles and analytical tools used in managerial decision-making. This course examines microeconomic and macroeconomic concepts, including supply and demand, market structures, pricing strategies, production costs, and the impact of government policies on business operations. Through real-world case studies and practical applications, students learn to analyze market trends, forecast economic conditions, and make informed decisions that enhance organizational performance and competitiveness. The course equips future managers with the skills to assess economic environments, interpret data, and allocate resources efficiently within their organizations.
Recommended Textbook
Essentials of Economics 9th Edition by Bradley R
Schiller
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17 Chapters
2470 Verified Questions
2470 Flashcards
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Chapter 1: The Challenge of Economics
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135 Verified Questions
135 Flashcards
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Sample Questions
Q1) Based on Figure 1.2,if a student wants to achieve a grade-point average of 3.0,he or she should study:
A) An average of 40 hours per week.
B) An average of 30 hours per week.
C) An average of 20 hours per week.
D) An average of 10 hours per week.
Answer: B
Q2) Ceteris paribus,which of the following is least likely to contribute to economic growth?
A) A greater quantity of labor.
B) A greater quantity of capital.
C) An increase in prices.
D) Improved production technology.
Answer: C
Q3) The market mechanism:
A) Is an inefficient means of communicating consumer wants to producers.
B) Relies on government control and planning.
C) Eliminates the market failures caused by government.
D) Relies on prices and sales to communicate consumer wants to producers.
Answer: D
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Chapter 2: The US Economy
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131 Verified Questions
131 Flashcards
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Sample Questions
Q1) In the United States,all of the state and local governments combined use more of our scarce resources than does the federal government.
A)True
B)False
Answer: True
Q2) Which of the following expenditures is the most important in expanding a country's production possibilities?
A) Consumer goods.
B) Investment goods.
C) Government services.
D) Net exports.
Answer: B
Q3) Why is using real GDP a better measurement of GDP than using nominal GDP?
Answer: GDP is based on both physical output and prices.From one year to the next either rising prices or an increase in physical output could cause nominal GDP to increase.GDP numbers must be adjusted for inflation.These inflation adjustments delete the effects of rising prices by valuing output in constant prices.This is result of real GDP.
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Chapter 3: Supply and Demand
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148 Verified Questions
148 Flashcards
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Sample Questions
Q1) Economic interactions with others are necessary because:
A) Resources are limited.
B) People are lazy.
C) Advertising makes us want additional goods and services.
D) Some people are rich and others are poor.
Answer: A
Q2) In Table 3.2,if the worldwide price of trucks is $40,000,the truck market: A) Is in equilibrium.
B) Experiences a shortage of 170 million trucks per year.
C) Experiences a surplus of 100 million trucks per year.
D) Experiences a surplus of 160 million trucks per year.
Answer: C
Q3) The equilibrium price and quantity are determined by the: A) Market mechanism.
B) Magical hand.
C) Invisible mind.
D) Government.
Answer: A
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5
Chapter 4: Consumer Demand
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137 Verified Questions
137 Flashcards
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Sample Questions
Q1) According to the law of diminishing marginal utility,with the consumption of each additional candy bar,for example,the total satisfaction decreases.
A)True
B)False
Q2) Demand is defined as the:
A) Desire for goods and services.
B) Ability and willingness to sell goods at various prices.
C) Ability and willingness to buy specific quantities of a good or service at various prices in a given time period,ceteris paribus.
D) Sensitivity of buyers to a change in price.
Q3) If the price of battery-powered flashlights falls and the demand for flashlight batteries rises,then flashlights and batteries are:
A) Substitutes.
B) Complements.
C) Price inelastic goods.
D) Price elastic goods.
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6
Chapter 5: Supply Decisions
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151 Verified Questions
151 Flashcards
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Sample Questions
Q1) The main difference to an economist between "short-run" and "long-run" is that:
A) Variable costs are short-run investment decisions where as fixed costs are long-run production decisions.
B) In the short-run all resources are fixed where as in the long-run all resources are variable.
C) In the long-run all resources are variable where as in the short-run at least one resource is fixed.
D) Fixed costs are more important then variable costs in the short-run.
Q2) Based on the law of diminishing returns,if the number of workers increases and capital investments do not keep pace then,ceteris paribus:
A) Marginal physical product of labor will increase.
B) Marginal physical product of labor will decrease.
C) The production function will definitely shift upward.
D) The average total cost curve will definitely decrease.
Q3) In the short run,if marginal cost is less than price for the last unit produced,the firm should expand output.
A)True
B)False
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Chapter 6: Competition
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146 Flashcards
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Sample Questions
Q1) Marginal cost is:
A) The change in total costs because of a one-unit increase in output.
B) Total cost divided by the rate of output.
C) Total revenue minus total cost.
D) The average profit divided by the quantity sold.
Q2) Refer to Figure 6.2 for a perfectly competitive firm.If price is $4,the firm is:
A) In long run equilibrium.
B) Earning an economic loss.
C) Maximizing efficiency.
D) Earning an economic profit.
Q3) Which of the following is an example of perfect competition?
A) One large firm supplies the entire product to the market
B) Two firms supply the entire market and compete with each other for customers
C) Many small firms all produce the same good
D) Many firms supply the same product essentially,but each has significant brand loyalty
Q4) If price is less than marginal cost,increases in the rate of output will increase profit.
A)True
B)False
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Chapter 7: Monopoly
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149 Verified Questions
149 Flashcards
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Sample Questions
Q1) In Figure 7.1,the price charged by a profit-maximizing monopolist is:
A) $5.00.
B) $7.00.
C) $9.00.
D) Between $6.00 and $7.00.
Q2) As noted in the text,which of the following was used by Nintendo to control the video game market?
A) A natural monopoly.
B) Economies of scale.
C) A government franchise.
D) Exclusive licensing.
Q3) The demand curve for an individual monopolist:
A) Does not exist.
B) Slopes upward to the right.
C) Is the same as the market demand curve.
D) Is the same as the marginal revenue curve.
Q4) For both perfectly competitive and monopoly firms,price will exceed marginal cost at the profit-maximizing output.
A)True
B)False
Page 9
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Chapter 8: The Labor Market
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149 Flashcards
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Sample Questions
Q1) Ceteris paribus,for an upward-sloping labor supply curve,there is an increase in the quantity of labor supplied when the:
A) Demand for labor increases.
B) Amount of leisure time increases.
C) Tax rate increases.
D) Wage rate increases.
Q2) Ceteris paribus,the willingness and ability to work specific amounts of time at alternative wage rates in a given period of time is:
A) Product supply.
B) Product demand.
C) Labor supply.
D) Labor demand.
Q3) The quantity demanded of labor depends on the:
A) Supply of labor.
B) Marginal cost of output.
C) Prevailing rate of interest.
D) Wage rate.
Q4) What would we expect to occur to the wage rate and number of persons hired if they workers formed a union?
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Chapter 9: Government Intervention
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150 Verified Questions
150 Flashcards
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Sample
Questions
Q1) Government antitrust activity led to the breakup of AT&T in the 1980s because,among other things,it felt that AT&T had too much control over the telecommunications market.What type of market failure was most likely involved?
A) Inequity
B) Public goods
C) Externalities
D) Market power
Q2) Market failure occurs when:
A) Market prices signal producers to produce the optimal mix of output.
B) The economy produces at a point on the production possibilities curve.
C) Producers supply the goods that earn the greatest profit.
D) An imperfection in the market mechanism prevents an optimal outcome.
Q3) Which of the following is not an income transfer?
A) Unemployment benefits
B) Social Security payments
C) Food stamps
D) Welfare
Q4) Externalities are always harmful to third parties.
A)True
B)False
Page 11
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Chapter 10: The Business Cycle
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149 Flashcards
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Sample Questions
Q1) People are unemployed if they are over 16 and not working due to:
A) The inability to find a job even though they are looking.
B) A two-week summer vacation.
C) A strike.
D) The lack of motivation to look for work.
Q2) After quitting one job,some people with marketable skills find that it takes several months to find a new job.This is an example of which type of unemployment?
A) Structural unemployment
B) Frictional unemployment
C) Cyclical unemployment
D) Seasonal unemployment
Q3) In Table 10.1,what is the unemployment rate in Year 10?
A) .05 percent
B) 10 percent
C) 45 percent
D) 50 percent
Q4) If relative prices change,then the inflation rate must change.
A)True
B)False
Q5) Define a recession and the effects of recession on rate of growth.
Page 12
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Chapter 11: Aggregate Supply and Demand
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149 Flashcards
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Sample Questions
Q1) Which of the following is not a reason for the downward slope of the aggregate demand curve?
A) The real balances effect
B) The foreign trade effect
C) The cost effect
D) The interest rate effect
Q2) The inability of labor-force participants to find jobs is known as:
A) Full employment.
B) Unemployment.
C) Cyclical employment.
D) Underemployment.
Q3) According to the text,which of the following is not a determinant of macroeconomic outcomes?
A) Technological change
B) A major earthquake
C) Economic growth
D) An increase in the money supply
Q4) Macro equilibrium always occurs at an optimal level of output.
A)True
B)False
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Chapter 12: Fiscal Policy
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150 Flashcards
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Sample Questions
Q1) A tax hike will increase the level of aggregate demand since the government will have more money to spend.
A)True
B)False
Q2) Government spending on goods and services plus income transfers are counted as part of aggregate demand.
A)True
B)False
Q3) Fiscal restraint will definitely occur if the government:
A) Reduces its spending and reduces tax rates.
B) Reduces its spending and increases tax rates.
C) Increases its spending and reduces tax rates.
D) Increases its spending and increases tax rates.
Q4) The four components of aggregate demand are consumption,investment,government expenditures,and net exports.
A)True
B)False
Q5) For consumers,every dollar of income is either consumed or saved.
A)True
B)False
Page 14
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Chapter 13: Money and Banks
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149 Verified Questions
149 Flashcards
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Sample Questions
Q1) When money is used to pay for goods and services it is functioning as a:
A) Store of value.
B) Standard of value.
C) Medium of exchange.
D) Mechanism for accounting.
Q2) When you purchase jeans at the mall,money is serving as a medium of exchange.
A)True
B)False
Q3) Constraints on deposit creation include all of the following except:
A) An increase in the money multiplier.
B) The lack of interest in borrowing money on the part of individuals.
C) The decision by individuals to stop depositing money in transaction accounts.
D) An increase in the reserve requirement.
Q4) Initially a bank has a minimum reserve requirement of 15 percent and no excess reserves.If $200,000 is deposited in the bank,then ceteris paribus:
A) The bank can increase its loans by $30,000.
B) The bank can increase its loans by $230,000.
C) Excess reserves will increase by $170,000.
D) Required reserves will increase by $200,000.
Q5) How do banks create money?
Page 15
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Chapter 14: Monetary Policy
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148 Verified Questions
148 Flashcards
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Sample Questions
Q1) In Table 14.1,the level of total reserves is equal to:
A) $1 trillion.
B) $920 billion.
C) $880 billion.
D) $80 billion.
Q2) One News Wire article in the text has the title "Fed Cuts Key Interest Rate Half-Point to 1 Percent." The Fed has most likely reduced the:
A) Discount rate.
B) Rate for purchasing bonds in the open market.
C) Prime lending rate.
D) Rate for foreign exchange.
Q3) Considering only the information in Table 14.2,the basic money supply is:
A) $260 billion.
B) $600 billion.
C) $660 billion.
D) $900 billion.
Q4) Congress and the president are the key decision makers for U.S.monetary policy.
A)True
B)False
Q5) What is monetary policy and why is the monetary policy lever important?
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Chapter 15: Economic Growth
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Sample Questions
Q1) One News Wire article,titled "House Poised to Pass STEM Immigration Bill" explains the Senate immigration bill that favors those with certain job skills and education.This type of immigration policy contributes to:
A) Unemployment of labor.
B) An inward shift in the production possibilities curve.
C) Population growth.
D) Long-run economic growth.
Q2) Which of the following is definitely true if the production possibilities curve shifts outward?
A) Aggregate supply has increased.
B) Population has increased.
C) GDP per capita has increased.
D) Inflation has increaseD.
Q3) If GDP per capita grows at a constant rate of 6 percent per year,using the "rule of 72" it will take approximately ___ years for GDP per capita to double.
A) 6
B) 10
C) 12
D) 72
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Page 17
Chapter 16: Theory and Reality
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Sample Questions
Q1) Supply-side policy is determined by:
A) The Federal Reserve system.
B) Businesses through investment.
C) The labor force by deciding to work.
D) Congress through spending and regulation.
Q2) The House and the Senate have proposed two different versions of a bill to cut taxes,so it takes a long time to pass the bill.(Choose from Table 16.1)
A) A
B) B
C) C
D) D
Q3) A decrease in government expenditure shifts the aggregate:
A) Supply curve to the left.
B) Supply curve to the right.
C) Demand curve to the left.
D) Demand curve to the right.
Q4) Stagflation is caused by a leftward shift of the aggregate supply curve.
A)True
B)False
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Chapter 17: International Trade
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Sample Questions
Q1) Which of the following best describes the comparative advantage of the two countries illustrated in Figure 17.1?
A) Japan has a comparative advantage in both goods.
B) Japan has the comparative advantage in DVD players;the United States in motorcycles.
C) Japan has the comparative advantage in motorcycles;the United States in DVD players.
D) The United States has a comparative advantage in both goods.
Q2) How expensive an imported good is depends on the foreign price of the good and:
A) Comparative advantage.
B) Absolute advantage.
C) The price of gold.
D) The exchange rate.
Q3) Based on the information in Table 17.1,the opportunity cost of producing 1 automobile in the United States is:
A) 1/2 of a tank.
B) 1 tank.
C) 2 tanks.
D) 4 tanks.
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Page 19