MBA Economics Test Preparation
Course Introduction
MBA Economics focuses on equipping students with a comprehensive understanding of economic theories and principles as they apply to business decision-making and strategy. The course explores microeconomics and macroeconomics in the context of global markets, analyzing how factors such as supply and demand, market competition, government policy, and international trade shape business environments. Students will develop analytical skills to interpret economic data, forecast business trends, and evaluate the impact of economic changes on organizational performance, enabling them to make informed, strategic decisions in complex business settings.
Recommended Textbook
Economics for Managers Global Edition 3rd Edition by Paul G. Farnham
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16 Chapters
1464 Verified Questions
1464 Flashcards
Source URL: https://quizplus.com/study-set/1418
Page 2
Chapter 1: Managers and Economics
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68 Verified Questions
68 Flashcards
Source URL: https://quizplus.com/quiz/28136
Sample Questions
Q1) "Gross Investment spending" refers exclusively to purchases of plant and equipment by businesses and net changes in business inventories.
A)True
B)False
Answer: False
Q2) According to the circular flow model,all else constant,an increase in government spending should cause an increase in spending,income,and production in the economy.
A)True
B)False
Answer: True
Q3) Because most gas stations are small relative to the market in which they operate and gasoline is fairly homogeneous,the market for gasoline is considered to be perfectly competitive.
A)True
B)False
Answer: False
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Chapter 2: Demand, supply, and Equilibrium Prices
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94 Verified Questions
94 Flashcards
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Sample Questions
Q1) Which of the following is not considered a factor that influences supply?
A)Technology.
B)Production taxes and subsidies.
C)The number of buyers.
D)Resource prices.
Answer: C
Q2) Rent controls have the effect of keeping prices under control and maintaining an adequate supply of affordable housing for lower income people.
A)True
B)False
Answer: False
Q3) If movies on DVD for home rental and movies seen at a theater are substitutes,and the price of movies seen at a theater increases,the demand for movies on DVD will: A)increase.
B)stay the same.
C)decrease.
D)cannot be determined.
Answer: A
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4
Chapter 3: Demand Elasticities
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112 Verified Questions
112 Flashcards
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Sample Questions
Q1) As the percentage of the consumer's income accounted for by a particular good decreases,demand for the good will:
A)tend to become more price elastic.
B)tend to become more price inelastic.
C)tend to become closer to unit elastic.
D)tend toward being perfectly elastic.
Answer: B
Q2) A car dealer wants to get rid of the stock of last year's model.Assume that the dealer knows from past experience that the price elasticity of demand for cars is unitary (= 1).If the price of the cars is currently $20,000 and the dealer wants to increase the quantity demanded from 30 units to 50 units,what must the new price be if the dealer is to sell the 20 additional cars?
A)$10,000
B)$12,000
C)$16,000
D)$18,000
Answer: B
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5
Chapter 4: Techniques for Understanding Consumer Demand and Behavior
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67 Verified Questions
67 Flashcards
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Sample Questions
Q1) Which of the following approaches to understanding and predicting consumer behavior does not actually solicit any information from any potential customers?
A)Test marketing.
B)Conjoint analysis.
C)Analysis of historical data.
D)Expert opinion.
Q2) Refer to Scenario 2.What are the units of measurement for the standard error of the estimate?
Q3) The t-test is used to test hypotheses concerning the individual regression coefficients.
A)True
B)False
Q4) When using expert opinion,consumer surveys,test marketing,and price experiments to analyze consumer behavior,managers must consider whether the participating groups are representative of the larger population.
A)True
B)False
Q5) Why are estimated models of demand and consumer behavior useful to managers?
Page 6
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Chapter 5: Production and Cost Analysis in the Short Run
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101 Verified Questions
101 Flashcards
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Sample Questions
Q1) The amount of output produced with an additional unit of variable input is referred to as:
A)total product.
B)average variable product.
C)marginal product.
D)average fixed product.
Q2) Much of the empirical evidence on the behavior of costs for real-world firms suggests that:
A)average costs functions are U-shaped as suggested by economic theory.
B)for most firms, marginal costs are declining in the range in which the firms operate.
C)for many firms, marginal and average variable costs are constant over wide ranges of output.
D)there is no relationship between the marginal and average variable costs of production.
Q3) Refer to Scenario 1.What is the total output when 2 hours of labor are employed?
A)80
B)100
C)180
D)200
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Page 7
Chapter 6: Production and Cost Analysis in the Long Run
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) Economies of scale are illustrated by:
A)a downward sloping long-run average cost curve.
B)a flat long-run average cost curve.
C)an upward-sloping long-run average cost curve.
D)a downward-sloping short-run average total cost curve.
Q2) If the inputs to a production process are perfect complements,the firm can choose from a virtually infinite array of combinations of the two inputs to minimize the costs of producing a given level of output.
A)True
B)False
Q3) Much of the research on the minimum efficient scale suggests that for many firms the LRAC curve is:
A)downward sloping over the relevant range of output.
B)upward sloping over the relevant range of output.
C)U-shaped.
D)flat over a relatively large range of output levels.
Q4) Explain why X-inefficiency is likely to be more prevalent in an industry in which firms have market power.
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Page 8
Chapter 7: Market Structure: Perfect Competition
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106 Verified Questions
106 Flashcards
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Sample Questions
Q1) Which of the following statements regarding the trucking industry is correct?
A)The recession of 2007 -2009 caused many trucking firms to exit with many firms filing for bankruptcy.
B)The trucking industry most closely resembles an oligopoly.
C)Even though there is a high degree of competition, firms in the trucking industry are able to sustain positive economic profits as a result of a substantial degree of product differentiation.
D)The trucking industry was largely unaffected by the recession of 2007-2009 mainly because the industry is comprised by large firms with significant market power.
Q2) Assume that at the current level of output,price equals marginal revenue,but is less than average total cost.So long as price is greater than average variable cost,the firm should continue to operate in the short run to minimize its losses.
A)True
B)False
Q3) Explain why a firm maximizes its profits by producing the level of output at which marginal revenue equals marginal costs.
Q4) Summarize the characteristics of a perfectly competitive market.
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9
Chapter 8: Market Structure: Monopoly and Monopolistic Competition
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107 Verified Questions
107 Flashcards
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Sample Questions
Q1) Which of the following is characteristics is common to both monopoly and monopolistic competition?
A)Ease of entry into the industry.
B)Firms are price setters.
C)A relatively large number of sellers.
D)Long-run economic profit equals 0.
Q2) The Justice Department is most likely to oppose a proposed merger on the basis of the Herfindahl-Hirschman Index when the post-merger HHI is:
A)less than 100.
B)less than 1000.
C)between 1000 and 1800.
D)greater than 1800.
Q3) The situation in which the long-run average cost curve exhibits economies of scale over the entire range of output is called a "natural monopoly." Explain why,in the case of a natural monopoly,it would be cost efficient to have a single firm serve the entire market.
Q4) Compare and contrast the outcomes with respect to price and output in a monopolistically competitive market and a perfectly competitive market.In which situation are consumers better off? Why?
Page 10
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Chapter 9: Market Structure: Oligopoly
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96 Verified Questions
96 Flashcards
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Sample Questions
Q1) In which of the following scenarios would a predatory pricing scheme have the greatest chance of success,all else constant?
A)The predatory price is set well below cost, many rivals are likely to enter after the strategy ends, and profits can be recouped only over a relatively long period of time.
B)The predatory price is set well below cost, relatively few rivals are likely to enter after the strategy ends, and profits can be recouped in a relatively long period of time.
C)The predatory price is set just below cost, many rivals are likely to enter after the strategy ends, and profits can be recouped in a moderate period of time.
D)The predatory price is set just below cost, relatively few rivals are likely to enter after the strategy ends, and profits can be recouped in a very short period of time.
Q2) The airline industry is best classified as:
A)an oligopoly.
B)a monopoly.
C)perfectly competitive.
D)monopolistically competitive
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11
Chapter 10: Pricing Strategies for the Firm
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67 Verified Questions
67 Flashcards
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Sample Questions
Q1) It is frequently observed that when a city is located next to a major highway,gas stations located close to the highway charge higher prices than gas stations located farther away.This is an example of:
A)first-degree price discrimination.
B)second-degree price discrimination.
C)third-degree price discrimination.
D)illegal price discrimination.
Q2) The text describes three different "degrees" of price discrimination.Of these,which one is theoretically capable of generating the greatest amount of economic profit for the firm? Why? In contrast,which one do you think has the greatest applicability to the range of goods and services consumers typically purchase?
Q3) Applying a uniform markup to each of a firm's products is less profitable than varying the markup based on the elasticity of demand because the latter is able to exploit the sensitivity of quantity demanded to a change price.
A)True
B)False
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Chapter 11: Measuring Macroeconomic Activity
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102 Verified Questions
102 Flashcards
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Sample Questions
Q1) Refer to Table 11.1.What is the value of net exports or the trade balance?
A)$300.
B)-$300.
C)$1,700.
D)-$1,700.
Q2) The value of currently produced final goods and services measured in constant prices is called:
A)real GDP.
B)nominal GDP.
C)imputed values.
D)inflation.
Q3) The falling phase of a business cycle measured by a decrease in real GDP is called: A)hyperinflation.
B)expansion.
C)recession.
D)peak.
Q4) The largest expenditure component in the U.S.is investment expenditures.
A)True
B)False
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Chapter
12:
Spending by Individuals, firms, and
Governments on Real Goods and Services
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103 Verified Questions
103 Flashcards
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Sample Questions
Q1) A firm's investment expenditures are positively related to market interest rates.
A)True
B)False
Q2) Taxes levied on a firm's earnings ________ the effective cost of funds.
A)lower
B)raise
C)have no effect
D)none of the above
Q3) Stabilization of business cycle fluctuations focuses on the long run.
A)True
B)False
Q4) ________ investment is more volatile than other forms of investment spending because this type of investment can be changed relatively quickly.
A)Business fixed
B)Inventory
C)Residential
D)Capital
Q5) What are the determinants of investment spending?
Q6) Briefly explain how capacity utilization rates are used by forecasters.
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Chapter 13: The Role of Money in the Macro Economy
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90 Verified Questions
90 Flashcards
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Sample Questions
Q1) Real money supply expresses the money supply in terms of real goods and services.
A)True
B)False
Q2) The money multiplier is computed as follows:
A)(c + 1)/(c + rr + e).
B)(c + 1)/(c + rr).
C)1/rr.
D)(c + 1)/(c + e).
Q3) The currency deposit ratio,c,is 0.10.The reserve requirement,rr,is 0.07.The excess reserve ratio,e,is 0.10.What is the size of the money multiplier?
A)4.70
B)4.07
C)4.75
D)4.00
Q4) How many Federal Reserve District Banks are there?
A)5
B)7
C)12
D)1
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Chapter 14: The Aggregate Model of the Macro Economy
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98 Verified Questions
98 Flashcards
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Sample Questions
Q1) Higher prices and price increases combined with lower real output and income,resulting from a major increase in input prices in the economy is called:
A)deflation.
B)inflation.
C)stagflation.
D)none of the above.
Q2) The full-employment level of output is called:
A)aggregate demand.
B)aggregate supply.
C)potential output.
D)none of the above.
Q3) At a given price level,an increase in stock market wealth will shift the aggregate demand curve:
A)rightward.
B)leftward.
C)both.
D)none of the above.
Q4) Explain how the aggregate demand curve is derived.
Q5) Why did the Fed shift its policy target towards the federal funds rate.
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Chapter 15: International and Balance of Payments Issues in the Macro Economy
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109 Verified Questions
109 Flashcards
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Sample Questions
Q1) Under a gold standard,a continual balance of surplus in any country can be sustained only as long as the country's gold reserves hold out.
A)True
B)False
Q2) Domestic currency appreciation will:
A)help domestic firms that export and hurt domestic firms that import.
B)hurt domestic firms that import.
C)hurt domestic firms that export and help domestic firms that import.
D)help domestic firms that export.
Q3) Borrowing from abroad represents:
A)a capital outflow.
B)a capital inflow.
C)positive net savings.
D)none of the above.
Q4) Changes in domestic and foreign income result in:
A)movements along the demand and supply curves of the foreign exchange market.
B)shifts in the demand and supply curves of the foreign exchange market.
C)all of the above.
D)none of the above.
17
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Chapter 16: Combining Micro and Macro Analysis for Managerial Decision Making
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44 Verified Questions
44 Flashcards
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Sample Questions
Q1) In terms of location decisions,firms evaluate the infrastructure of the area in terms of access to transportation as well as the quality of life.
A)True
B)False
Q2) Give some examples of oligopolistic behavior among the major fast food companies.
Q3) Managers can increase firm profits by:
A)increasing revenue only.
B)decreasing costs only.
C)increasing revenue and decreasing costs.
D)none of the above.
Q4) If a good is price elastic,a decrease in price will:
A)decrease total revenue.
B)increase total revenue.
C)not affect revenue.
D)none of the above.
Q5) How did McDonalds address the obesity issue in China?
Q6) How did McDonalds address the drive-through innovation in China?
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Q7) Briefly state several reasons for the decline in sales for McDonald's in 2001-2002.