Explanation: The primary goal of managerial economics is to maximise profits.
2
In managerial economics, what does the term marginal refer to?
Correct!
Wrong :(
Answer - B. Incremental
Explanation: Marginal in managerial economics refers to incremental changes or additions.
3
Which of the following is a microeconomic concept?
Correct!
Wrong :(
Answer - B. Price elasticity of demand
Explanation: Price elasticity of demand is a microeconomic concept that focuses on the responsiveness of individual consumers to price changes.
4
Opportunity cost is a fundamental concept in managerial economics. What does it represent?
Correct!
Wrong :(
Answer - B. The cost of forgoing the next best alternative
Explanation: Opportunity cost represents the value of the next best alternative that is forgone when a choice is made.
5
Which of the following is an example of a fixed cost in a manufacturing company?
Correct!
Wrong :(
Answer - C. Rent for the factory building
Explanation: Rent for the factory building is a fixed cost because it does not vary with the level of production.
6
What is the formula for calculating total revenue (TR)?
Correct!
Wrong :(
Answer - A. TR = Price × Quantity
Explanation: Total revenue (TR) is calculated by multiplying the price per unit by the quantity sold.
7
Elasticity of demand measures:
Correct!
Wrong :(
Answer - B. The responsiveness of quantity demanded to changes in price
Explanation: Elasticity of demand measures how sensitive the quantity demanded is to changes in price.
8
When marginal cost is greater than marginal revenue, a profit-maximising firm should:
Correct!
Wrong :(
Answer - B. Decrease production
Explanation: When marginal cost exceeds marginal revenue, reducing production will help maximise profit.
9
In which market structure does a single firm have substantial control over the market and can influence prices?
Correct!
Wrong :(
Answer - B. Monopoly
Explanation: In a monopoly, there is a single firm with significant control over the market, and it can set prices.
10
Which of the following is not a determinant of price elasticity of demand?
Correct!
Wrong :(
Answer - C. Income of consumers
Explanation: The income of consumers is not a determinant of price elasticity of demand; it is more related to income elasticity of demand.
11
A companys total cost (TC) is $10,000, and it produces 1,000 units of a product. What is the average cost per unit?
Correct!
Wrong :(
Answer - B. $10
Explanation: Average cost per unit is calculated as Total Cost (TC) divided by the number of units produced.
12
Which of the following is an example of a positive externality?
Correct!
Wrong :(
Answer - B. A new technology that benefits society
Explanation: A positive externality is a benefit that is enjoyed by a third party, such as when a new technology benefits society as a whole.
13
Which of the following pricing strategies involves setting a high initial price and gradually lowering it over time?
Correct!
Wrong :(
Answer - A. Skimming pricing
Explanation: Skimming pricing involves starting with a high initial price and reducing it over time.
14
In which market structure are there few sellers, and they often engage in strategic interactions?
Correct!
Wrong :(
Answer - D. Oligopoly
Explanation: Oligopoly is a market structure with a small number of sellers who can influence prices and engage in strategic interactions.
15
The formula for calculating profit is:
Correct!
Wrong :(
Answer - A. Total revenue - Total cost
Explanation: Profit is calculated as total revenue minus total cost.
16
Which of the following is an example of a sunk cost?
Correct!
Wrong :(
Answer - D. Money spent on a failed advertising campaign
Explanation: Sunk costs are costs that have already been incurred and cannot be recovered.
17
What is the formula for calculating the price elasticity of demand (PED)?
Correct!
Wrong :(
Answer - A. PED = (Change in Quantity Demanded) / (Change in Price)
Explanation: Price elasticity of demand (PED) is calculated as the percentage change in quantity demanded divided by the percentage change in price.
18
What is the primary focus of production theory in managerial economics?
Correct!
Wrong :(
Answer - B. Minimising costs
Explanation: Production theory in managerial economics focuses on minimising costs while producing a given level of output.
19
Which of the following is a characteristic of a perfectly competitive market?
Correct!
Wrong :(
Answer - D. Firms are price takers
Explanation: In a perfectly competitive market, firms are price takers, meaning they accept the market price as given.
20
Which of the following is an example of a long-run decision for a firm?
Correct!
Wrong :(
Answer - C. Deciding to build a new factory
Explanation: Building a new factory is a long-run decision because it involves significant investments and a longer time horizon.
21
The concept of utility in economics refers to:
Correct!
Wrong :(
Answer - B. The satisfaction or benefit a consumer derives from a good or service
Explanation: Utility in economics refers to the satisfaction or benefit that consumers derive from consuming goods and services.
22
Which of the following is a characteristic of a monopolistic competition market structure?
Correct!
Wrong :(
Answer - C. Product differentiation
Explanation: Monopolistic competition is characterised by product differentiation, where firms sell similar but not identical products.
23
Which of the following is a normative statement in economics?
Correct!
Wrong :(
Answer - B. The minimum wage should be increased to reduce poverty.
Explanation: Normative statements express value judgments and opinions about what should be done, as opposed to positive statements that describe facts.
24
A firm with a decreasing marginal cost (MC) curve will typically experience:
Correct!
Wrong :(
Answer - A. Economies of scale
Explanation: When marginal cost decreases as production increases, the firm experiences economies of scale
25
The concept of diminishing marginal utility means that:
Correct!
Wrong :(
Answer - C. As consumption of a good increases, the marginal utility decreases.
Explanation: Diminishing marginal utility states that as a consumer consumes more of a good, the additional satisfaction (marginal utility) from each additional unit decreases.
26
What does the law of demand state?
Correct!
Wrong :(
Answer - B. There is an inverse relationship between price and quantity demanded.
Explanation: The law of demand states that as the price of a good increases, the quantity demanded decreases, and vice versa.
27
Which of the following is a characteristic of a perfectly elastic demand curve?
Correct!
Wrong :(
Answer - A. It is horizontal.
Explanation: A perfectly elastic demand curve is horizontal, indicating that consumers are willing to buy an infinite quantity at a specific price.
28
What does the term ceteris paribus mean in economics?
Correct!
Wrong :(
Answer - A. All else being equal or holding other factors constant
Explanation: Ceteris paribus is used in economics to isolate the impact of a specific variable while holding all other relevant factors constant
29
Which of the following is a characteristic of a natural monopoly?
Correct!
Wrong :(
Answer - C. High fixed costs and decreasing average costs
Explanation: A natural monopoly typically has high fixed costs and decreasing average costs, making it more efficient for a single firm to provide the product.
30
What is the primary purpose of a production function in managerial economics?
Correct!
Wrong :(
Answer - C. To show the relationship between inputs and outputs
Explanation: A production function shows how inputs (such as labour and capital) are transformed into outputs.
31
Which of the following is a characteristic of perfect competition?
Correct!
Wrong :(
Answer - B. There are many buyers and sellers.
Explanation: Perfect competition is characterised by a large number of buyers and sellers.
32
When a firm produces at the level where marginal cost equals marginal revenue, it is operating at:
Correct!
Wrong :(
Answer - A. The point of maximum profit
Explanation: Maximising profit occurs when marginal cost equals marginal revenue.
33
What is the primary function of a production possibility curve (PPC)?
Correct!
Wrong :(
Answer - D. To display the production capabilities of a country
Explanation: A production possibility curve (PPC) shows the various combinations of two goods that a country can produce given its resources and technology.
34
Which of the following is an example of a fixed input in the short run for a bakery?
Correct!
Wrong :(
Answer - B. Baking ovens
Explanation: In the short run, baking ovens would be considered a fixed input, as they cannot be easily changed in the short term.
35
What is the purpose of a cost-benefit analysis in managerial economics?
Correct!
Wrong :(
Answer - C. To assess whether a project or decision is worthwhile
Explanation: A cost-benefit analysis is used to evaluate the benefits and costs of a project or decision to determine its overall desirability.
36
A firms short-run average total cost (ATC) curve typically exhibits what shape?
Correct!
Wrong :(
Answer - A. U-shaped
Explanation: The short-run average total cost (ATC) curve is typically U-shaped, reflecting economies of scale at low levels of output and diseconomies of scale at high levels of output.
37
In the long run, firms can adjust all of the following except:
Correct!
Wrong :(
Answer - D. The products selling price
Explanation: In the long run, firms can adjust their production factors (such as employees, facilities, and equipment) but cannot directly control the market price.
38
Which of the following is an example of a variable cost for a car manufacturing company?
Correct!
Wrong :(
Answer - C. The cost of raw materials
Explanation: The cost of raw materials is typically a variable cost because it varies with the level of production.
39
Which of the following is an example of an implicit cost for a business?
Correct!
Wrong :(
Answer - D. The owners foregone salary
Explanation: An implicit cost is an opportunity cost that involves the owners foregone salary or any other resource the owner contributes without a direct payment.
40
In economics, the short run is typically defined as a period in which:
Correct!
Wrong :(
Answer - B. Some inputs are fixed, while others are variable
Explanation: In the short run, a firm has some inputs that are fixed (e.g., capital) and others that are variable (e.g., labour).
41
Which of the following is an example of an external cost?
Correct!
Wrong :(
Answer - B. Pollution from a factory affecting nearby residents
Explanation: Pollution affecting nearby residents is an external cost because it negatively impacts individuals who are not involved in the transaction.
42
Which of the following is a characteristic of a monopoly market structure?
Correct!
Wrong :(
Answer - C. A single firm dominates the market
Explanation: In a monopoly, there is a single firm that dominates the market and has significant control over prices.
43
What is the primary purpose of a demand curve in economics?
Correct!
Wrong :(
Answer - C. To represent the relationship between price and quantity demanded
Explanation: A demand curve illustrates the relationship between the price of a good and the quantity demanded by consumers.
44
What is the primary goal of cost-plus pricing?
Correct!
Wrong :(
Answer - C. To cover production costs and provide a desired profit margin
Explanation: Cost-plus pricing aims to set prices that cover production costs and provide a desired profit margin.
45
When a firm experiences increasing returns to scale, this means that:
Correct!
Wrong :(
Answer - B. The firms long-run average cost is decreasing as production increases
Explanation: Increasing returns to scale mean that as production increases, the firms long-run average cost is decreasing.
46
Which of the following is a characteristic of an inelastic demand curve?
Correct!
Wrong :(
Answer - D. Vertical slope
Explanation: An inelastic demand curve is vertical, indicating that quantity demanded is insensitive to price changes.
47
Which of the following is a characteristic of a profit-maximising firm in a perfectly competitive market?
Correct!
Wrong :(
Answer - B. The firm produces at the point where marginal cost equals marginal revenue.
Explanation: In a perfectly competitive market, a profit-maximising firm produces at the point where marginal cost equals marginal revenue.
48
What is the primary focus of the supply side in economics?
Correct!
Wrong :(
Answer - C. Determining the quantity of goods and services firms are willing to produce and sell
Explanation: The supply side in economics focuses on the quantity of goods and services that firms are willing to produce and sell.
49
In a perfectly competitive market, what happens when a firm increases its price above the market price?
Correct!
Wrong :(
Answer - C. It will sell fewer units.
Explanation: In a perfectly competitive market, firms are price takers, so increasing the price above the market price will result in fewer sales.
50
What does the term marginal utility refer to in consumer theory?
Correct!
Wrong :(
Answer - C. The additional satisfaction from consuming one more unit of a good
Explanation: Marginal utility represents the additional satisfaction or benefit a consumer derives from consuming one more unit of a good.
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Question. What is/Introduction of Managerial Economics
Answer. Managerial economics is a stream of management studies which emphasises solving business problems and decision-making by applying the theories and principles of microeconomics and macroeconomics. It is a specialised stream dealing with the organisation's internal issues by using various economic theories.