Question 1

Firms face tradeoffs because

Accepted Answer

A)  managers don't know which inputs to use. 
B)  inputs are scarce. 
C)  markets set prices of goods they sell. 
D)  marginal reasoning leads to uncertainty. 
A)  managers don't know which inputs to use. 
B)  inputs are scarce. 
C)  markets set prices of goods they sell. 
D)  marginal reasoning leads to uncertainty. B

Question 2

All private firms seek to

Accepted Answer

A)  maximize revenue. 
B)  maximize profit. 
C)  minimize headcount. 
D)  maximize employee salaries. 
A)  maximize revenue. 
B)  maximize profit. 
C)  minimize headcount. 
D)  maximize employee salaries. B

Question 3

Which of the following would NOT be considered part of a firm's strategy?

Accepted Answer

A)  production levels 
B)  which inputs to use 
C)  sales strategy 
D)  None of the above - all are part of a firm's strategy. 
A)  production levels 
B)  which inputs to use 
C)  sales strategy 
D)  None of the above - all are part of a firm's strategy. D

Question 4

In a market

Accepted Answer

A)  the primary participants are consumers and firms. 
B)  government policies play a very small part. 
C)  decision makers always maximize. 
D)  the goods sold are always closely related. 
A)  the primary participants are consumers and firms. 
B)  government policies play a very small part. 
C)  decision makers always maximize. 
D)  the goods sold are always closely related.

Question 5

If a theory's predictions are incorrect

Accepted Answer

A)  then economists always reject it. 
B)  then the data used was clearly faulty. 
C)  then economists will likely reduce their confidence in the theory. 
D)  then the model must be too simple. 
A)  then economists always reject it. 
B)  then the data used was clearly faulty. 
C)  then economists will likely reduce their confidence in the theory. 
D)  then the model must be too simple.

Question 6

If actual experience supports two competing theories,then both theories are proven to be true.

Accepted Answer

A) True 
 B)False

Question 7

The purpose of making assumptions in economic model building is to

Accepted Answer

A)  force the model to yield the correct answer. 
B)  minimize the amount of work an economist must do. 
C)  simplify the model while keeping important details. 
D)  express the relationship mathematically. 
A)  force the model to yield the correct answer. 
B)  minimize the amount of work an economist must do. 
C)  simplify the model while keeping important details. 
D)  express the relationship mathematically.

Question 8

Society faces trade-offs because of

Accepted Answer

A)  government regulations. 
B)  profit motive. 
C)  price setting by firms. 
D)  scarcity. 
A)  government regulations. 
B)  profit motive. 
C)  price setting by firms. 
D)  scarcity.

Question 9

Economic models are most useful in

Accepted Answer

A)  explaining outcomes resulting from management decisions. 
B)  predicting the direction of the stock market. 
C)  explaining the future with the past. 
D)  generating untestable hypotheses. 
A)  explaining outcomes resulting from management decisions. 
B)  predicting the direction of the stock market. 
C)  explaining the future with the past. 
D)  generating untestable hypotheses.

Question 10

Behavioral economics

Accepted Answer

A)  studies why people choose not to maximize. 
B)  studies why people maximize. 
C)  studies why people sometimes don't maximize. 
D)  studies why people behave badly when buying and selling. 
A)  studies why people choose not to maximize. 
B)  studies why people maximize. 
C)  studies why people sometimes don't maximize. 
D)  studies why people behave badly when buying and selling.

Question 11

Explain why a model that delivers good enough approximations is a good model.

Accepted Answer

Models make simplifying assumptions in o

Question 12

What is the purpose of having a strategy?

Accepted Answer

A strategy defines f

Question 13

If a model fits reality but doesn't generate testable predictions,it is of little value to economists.

Accepted Answer

A) True 
 B)False

Question 14

CEOs should focus on

Accepted Answer

A)  beating their competitors. 
B)  maximizing firm profits. 
C)  getting the best pay package for the senior management team. 
D)  minimizing costs. 
A)  beating their competitors. 
B)  maximizing firm profits. 
C)  getting the best pay package for the senior management team. 
D)  minimizing costs.

Question 15

Raising the price of a good by one dollar

Accepted Answer

A)  increases profits. 
B)  decreases profits. 
C)  leaves profits unchanged. 
D)  leads to an indeterminant change in profits. 
A)  increases profits. 
B)  decreases profits. 
C)  leaves profits unchanged. 
D)  leads to an indeterminant change in profits.

Question 16

Microeconomics studies the allocation of

Accepted Answer

A)  decision makers. 
B)  scarce resources. 
C)  models. 
D)  unlimited resources. 
A)  decision makers. 
B)  scarce resources. 
C)  models. 
D)  unlimited resources.

Question 17

Which of the following is an example of a normative statement?

Accepted Answer

A)  Since this food is bad for you, you should not consume it. 
B)  This food has negative health effects. 
C)  If you consume this food, you will get sick. 
D)  People usually get sick after consuming this food. 
A)  Since this food is bad for you, you should not consume it. 
B)  This food has negative health effects. 
C)  If you consume this food, you will get sick. 
D)  People usually get sick after consuming this food.

Question 18

Managerial economics

Accepted Answer

A)  describes how pay for managers is set. 
B)  ensures managers always make good decisions. 
C)  helps managers make decisions in the face of scarcity. 
D)  explains which products consumers will buy. 
A)  describes how pay for managers is set. 
B)  ensures managers always make good decisions. 
C)  helps managers make decisions in the face of scarcity. 
D)  explains which products consumers will buy.

Question 19

Economic models are only useful in analyzing government policy.

Accepted Answer

A)  True, individuals are irrational and therefore economic models are useless. 
B)  False, economic models can be used to predict individual and firm behavior. 
C)  True, economists only model those questions for which they are hired. 
D)  False, economic models are not even useful in analyzing government policy. 
A)  True, individuals are irrational and therefore economic models are useless. 
B)  False, economic models can be used to predict individual and firm behavior. 
C)  True, economists only model those questions for which they are hired. 
D)  False, economic models are not even useful in analyzing government policy.

Question 20

Which of the following is an example of a positive statement?

Accepted Answer

A)  Since this food is bad for you, you should not consume it. 
B)  If this food is bad for you, you should not consume it. 
C)  If you consume this food, you will get sick. 
D)  None of the above. 
A)  Since this food is bad for you, you should not consume it. 
B)  If this food is bad for you, you should not consume it. 
C)  If you consume this food, you will get sick. 
D)  None of the above.

Firms face tradeoffs because

All private firms seek to

Which of the following would NOT be considered part of a firm's strategy?

In a market

If a theory's predictions are incorrect

If actual experience supports two competing theories,then both theories are proven to be true.

The purpose of making assumptions in economic model building is to

Society faces trade-offs because of

Economic models are most useful in

Behavioral economics

Explain why a model that delivers good enough approximations is a good model.

What is the purpose of having a strategy?

If a model fits reality but doesn't generate testable predictions,it is of little value to economists.

CEOs should focus on

Raising the price of a good by one dollar

Microeconomics studies the allocation of

Which of the following is an example of a normative statement?

Managerial economics

Economic models are only useful in analyzing government policy.

Which of the following is an example of a positive statement?

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

Exam 1: Introduction

Firms face tradeoffs because

All private firms seek to

Which of the following would NOT be considered part of a firm's strategy?

In a market

If a theory's predictions are incorrect

If actual experience supports two competing theories,then both theories are proven to be true.

The purpose of making assumptions in economic model building is to

Society faces trade-offs because of

Economic models are most useful in

Behavioral economics

Explain why a model that delivers good enough approximations is a good model.

What is the purpose of having a strategy?

If a model fits reality but doesn't generate testable predictions,it is of little value to economists.

CEOs should focus on

Raising the price of a good by one dollar

Microeconomics studies the allocation of

Which of the following is an example of a normative statement?

Managerial economics

Economic models are only useful in analyzing government policy.

Which of the following is an example of a positive statement?

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters