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Two local ready-mix cement manufacturers, Here and There, have combined demand given by Q = 105 ” P. Their total costs are given by TCHere = 5QHere + 0.5Q2 Here and TCThere = 5QThere + 0.5Q2 There. If they successfully […]

El Niño wind patterns affected the weather across the United States during the winter of 1997″1998. Suppose the demand for home heating oil in Connecticut is given by Q = 20 ” 2Phho + 0.5Png ” TEMP, where Q is […]

The average product of labor can be illustrated geometrically as the: a. slope of the total product curve with respect to labor. b. slope of the total product curve with respect to capital. c. slope of a chord from the […]

A graphical representation of the demand function is called a: a. demand schedule. b. demand curve. c. demand function. d. marginal revenue schedule. e. marginal revenue curve. Insurance companies are able to offset the adverse selection in markets for life […]

NotAlligator Briefcases estimates that its total cost of producing vinyl bags is TC = 65 + 9 / Q + 5Q2. At 3 units of output, NotAlligator’s marginal cost is: a. $113. b. $29. c. $27. d. $119. e. $9. […]

Cal’s Cab Company (CCC) has a taxi monopoly in Wen Kroy. The demand for taxi services in Wen Kroy is given by Q = 1,500 ” P. CCC’s costs are given by TC = 100 ” Q2 + 5Q3. Its […]

If total cost is given by TC = a + bQ ” cQ2 + dQ3, then average variable cost is minimized at units of output. a. Q* = a/2d b. Q* = b/2d c. Q* = c/3d d. Q* = […]

For a producer of joint products X and Y with total revenue and RY, an isorevenue curve: a. isolates RX and RY separately. b. shows points where RX = RY . c. shows points where revenue curves are tangent. d. […]

Profit-maximizing cartels choose price equal to: a. marginal cost. b. average total cost of the last unit. c. marginal revenue. d. the monopolistically competitive price. e. the monopoly price. Wagner Machine Tool produces output according to Q = 4(KL)1/2, where […]

Duopolists A and B face the following demand curves: QA = 120 ” 2PA + PB and QB = 120 ” 2PB + PA. If both firms have zero marginal cost and they form a cartel, what is the profit-maximizing […]

The demand for costume jewelry has been estimated to be Q = 100P“2E2, where E is the price of real gem jewelry. Costume jewelry and real gem jewelry are: a. substitute goods. b. complement goods. c. inferior goods. d. normal […]

Output elasticity can be defined as the: a. percentage change in output divided by the (equal) percentage change in all inputs. b. change in output divided by the change in all inputs. c. change in inputs divided by the change […]

For the Minnie Mice Company, the elasticity of demand is “6, and the profit-maximizing price is 30. If MC is marginal cost and AVC is average variable cost, then: a. MC = 25. b. AVC = 25. c. MC = […]

The marginal product of labor is defined by the: a. change in output divided by the change in labor input usage. b. change in labor input usage divided by the change in output. c. output divided by the labor input […]

Appendix Problems MULTIPLE CHOICE 1. 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. 2. The present value of […]

Chapter 1: Introduction MULTIPLE CHOICE 1. 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 2. Managerial economics draws upon all of the following […]

Chapter 10: Bundling and Intrafirm Pricing MULTIPLE CHOICE 1. When a firm requires a customer to buy additional products in order to buy one of its products, this is known as a(n): a. bundling contract. b. price differentiation. c. oligopolistic […]

Chapter 11: Oligopoly MULTIPLE CHOICE 1. A market where there are only a few sellers is known as: a. perfectly competitive. b. monopolistically competitive. c. oligopolistic. d. monopolistic. e. cartelized. 2. In the model of oligopoly, there: ANS: C DIF: […]

Chapter 12: Game Theory MULTIPLE CHOICE 1. Game theory is useful for understanding oligopoly behavior because: a. there are so many firms in an oligopoly that all are price takers. b. firms must differentiate their products if they are to […]

Chapter 13: Auctions MULTIPLE CHOICE 1. As far as we know, auctions first emerged: a. as e-commerce exploded in recent years. b. when capitalism became a popular form of economic organization. c. after the emergence of communism, because black markets […]

Chapter 14: Risk Analysis MULTIPLE CHOICE 1. A subjective definition of probability is: a. a weighted average of different peoples’ degrees of certainty of an event’s occurring. b. a theoretical probability distribution. c. a person’s degree of certainty of an […]

Chapter 15: Principal–Agent Issues and Managerial Compensation MULTIPLE CHOICE 1. The principal–agent problem occurs as a result of: a. the absence of a contract between managers and owners. b. the separation of ownership from management. c. the difficulty of identifying […]

Chapter 16: Adverse Selection MULTIPLE CHOICE 1. 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 […]

Chapter 17: Government and Business MULTIPLE CHOICE 1. When economies of scale persist to such high levels of output that it is efficient to have only one firm produce, the resulting firm is known as a(n): a. patent holder. b. […]

Chapter 18: Optimization Techniques MULTIPLE CHOICE 1. The first derivative of total profit with respect to quantity is: a. average revenue. b. marginal revenue. c. marginal profit. d. average profit. e. total profit. 2. Marginal profit is maximized when: ANS: […]

Chapter 2: Demand Theory MULTIPLE CHOICE 1. The market demand schedule shows the quantities that would be purchased, holding all other factors constant, from a group of firms during a given time period: a. at varying prices. b. at varying […]

Chapter 3: Consumer Behavior and Rational Choice MULTIPLE CHOICE 1. Points along an indifference curve represent bundles of goods that: a. cost the same amount to buy. b. consumers don’t like very much. c. decline in marginal utility. d. deliver […]

Chapter 4: Estimating Demand Functions MULTIPLE CHOICE 1. The inability to isolate a demand curve from observed prices and quantities alone is known as the: a. economist’s problem. b. inference problem. c. regression problem. d. identification problem. e. timing problem. […]

Chapter 5: Production Theory MULTIPLE CHOICE 1. A production function is a table, a graph, or an equation showing the: a. least-cost method of producing output. b. optimal combination of inputs. c. maximum output that can be achieved from specified […]

Chapter 6: The Analysis of Costs MULTIPLE CHOICE 1. An example of implicit costs is the: a. bad-debt liabilities arising out of excessive sales on credit. b. wages paid to the owners’ children. c. opportunity cost of owner-supplied capital and […]

Chapter 7: Perfect Competition MULTIPLE CHOICE 1. In the model of perfect competition, 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. […]

Chapter 8: Monopoly and Monopolistic Competition MULTIPLE CHOICE 1. If a monopolist faces a constant-elasticity demand curve given by Q = 202,500P –3 and has total costs given by TC = 10Q, its profit-maximizing level of output is: a. 50. […]

Chapter 9: Managerial Use of Price Discrimination MULTIPLE CHOICE 1. The optimal level of output and price for the profit-maximizing monopolist in the following figure would be: a. Q = 30 and P = $35. b. Q = 60 and […]

If there are two large firms, each with one-quarter of the market, and 10 firms, each with one-twentieth of the market, in an industry, the market four-firm concentration ratio will be: a. 40 b. 50 c. 60 d. 10 e. […]

If a representative firm with long-run total cost given by TC = 2,000 + 20q + 5q2 operates in a competitive industry where the market demand is given by QD = 10,000 ” 40P, the long-run equilibrium output of the […]

When average variable cost is at its minimum: a. average total cost is increasing with increases in output. b. average variable cost plus average fixed cost is increasing with increases in output. c. average total cost is equal to average […]

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 = K2 + L2 ” KL. The cost-minimizing combination […]

A production function is a table, a graph, or an equation showing the: a. least-cost method of producing output. b. optimal combination of inputs. c. maximum output that can be achieved from specified levels of inputs. d. combinations of inputs […]

A firm has a division that produces X, whose total costs are TC = 10 + Q2 (where Q is the quantity of X). The marketing division adds its own total costs of 5 + 3Q. In the competitive external […]

The slope of a straight line is: a. positive. b. negative. c. zero. d. constant. e. nonconstant. The best possible pricing scheme in this figure would: a. encourage high-risk individuals to obtain full coverage. b. encourage all individuals to obtain […]