Managerial Economics MCQs
Managerial Economics MCQs
Answer these 70 Managerial Economics MCQs and assess your grip on the subject of Managerial Economics. Scroll below and get started!
1: The term _____________ is used to describe the additional cost of producing one more unit.
A. Average cost.
B. Fixed cost.
C. Variable cost.
D. Marginal
2: When opportunity cost is positive, economic profit ______ accounting profit.
A. -eliminates
B. -equals
C. -is less than
D. -is greater than
3: The monopolistically competitive firm sells _________ product and faces _________ demand curve.
A. A differentiated; a horizontal
B. A homogeneous; a downward-sloping
C. A differentiated; a downward-sloping
D. A homogeneous; a horizontal
4: The income elasticity of demand for a normal good is _____ and for an inferior good is ______.
A. negative; positive
B. positive; negative
C. negative; negative
D. positive; positive
5: Marginal cost is ________ average variable cost when ________.
A. A market demand curve is / demand curve
B. As output increases, in the short run,
C. Diminishing returns at the output
D. Equal to; average variable cost is minimized
6: On a break-even chart, the break-even volume is located __________.
A. At the intersection of total revenue and variable costs
B. At the intersection of target profit and total costs
C. At the intersection of total revenue and total costs
D. At the intersection of total revenue and target profit
E. At the intersection of total revenue and fixed costs
7: Along a linear demand curve, the slope __________ while the price elasticity of demand __________.
A. Is constant; is constant
B. Changes from one point to another; is constant
C. Is constant; changes from one point to another
D. None of the above
8: When deciding whether to discontinue a segment of a business, relevant costs include ________.
A. Fixed supervision costs that can be eliminated
B. Variable marketing costs per unit of product sold
C. Cost of goods sold
D. All of these
9: As a manufacturer increases price, the ________ drops.
A. Target
B. Break-even volume
C. Cost-plus pricing
D. Total cost
E. Profit margin
10: Economists usually assume that ________ is a fixed input in the ________ run.
A. Capital, short
B. Short, capital
C. Labor, short
D. Capital, capital
11: The predetermined overhead allocation rate for a given production year is calculated ________.
A. At the end of the production year
B. Before the production year begins
C. After completion of each job
D. After the preparation of financial statements for the year
12: The output at which average product is a maximum is the same output at which ______ is a minimum.
A. Average fixed cost
B. Average variable cost
C. Average total cost
D. Marginal cost
13: Two forms of demand-based pricing are ________.
A. Testimonial
B. Target costing and yield management pricing
C. Fixed costs
D. Target costing
E. Percentage-of-sales
14: The balanced scorecard approach to control ____.
A. Places greatest priority on the most important aspect of control, the financial perspective
B. Maximizes the chances of suboptimization
C. Only looks at factors within a company’s controllable environment such as innovation and learningminimizes the chances of optimization
D. Forces managers at each level of the company to set specific goals and measure performance in each of four areas
15: In the short run, firms in the market _______. in the long run, some firms _______ the market.
A. Experience economic loss;exiting
B. Exiting;experience economic loss
C. Experience economic gain; entering
D. Entering;Experience economic gain
16: Perfect competition achieves efficiency if the market produces the quantity at which _______.
A. Producer surplus equals zero
B. Consumer surplus is greater than producer surplus
C. Marginal benefit is greater than marginal cost
D. The consumers' marginal benefit from the good equals the marginal cost of producing it
17: The demand curve faced by a nondiscriminating pure monopoly is _____.
A. Derived by vertically summing the buyers' individual demand curves
B. The same as the industry's demand curve
C. Horizontal
D. More elastic than the demand
18: When demand increases, equilibrium price will rise ____________ when supply is _________ elastic.
A. More, less
B. Less, more
C. Less, less
D. More, more
19: When the long run average cost (lrac) curve is horizontal, it implies there are ________.
A. Diseconomies of scale
B. Constant returns to scale
C. Increasing returns to scale
D. Decreasing returns to scale
20: In figure 6.3 above the minimum of the atc and the avc curves are at the intercept with _________.
A. Fixed Cost(FC)
B. Average Cost(AC)
C. Marginal Cost(MC)
D. None of the above
21: Marginal product becomes negative with the hiring of the __________ unit of labor.
A. One
B. Third
C. Seventh
D. Second
22: Profits equal _______.
A. Total revenue minus marginal cost
B. Total revenue minus total cost
C. Marginal revenue minus marginal cost
D. Total revenue minus capital costs
23: In the short run, a monopolistically competitive firm ______.
A. May incur an economic loss
B. Will leave the industry if it is incurring an economic loss
C. Either earns an economic profit or breaks even
D. Incurs an economic loss if it fails to produce the quantity at which marginal revenue equals marginal cost
24: A total product curve indicates the relationship between _____ when all other inputs are fixed.
A. A variable input and output
B. Output and price
C. A variable input and price
D. A variable input and variable cost
25: As a manufacturer increases the price, ________.
A. Target
B. Break-even volume
C. Cost-plus pricing
D. Total cost
E. Profit margin
26: ________ describes how responsive demand will be to a change in price.
A. Price elasticity
B. Break-even pricing
C. The break-even chart
D. Target costing
27: ________ refers to the sale of two or more goods or services as a single package for one price.
A. Two-part pricing
B. Captive pricing
C. Price bundling
D. List pricing
E. Everyday low pricing
28: A firm should _____ output whenever mr exceeds mc because _____.
A. Reduce; total revenues exceed total costs
B. Reduce; revenues will rise by more than costs, increasing the firm's profit
C. Not change; selling more output will increase marginal revenue by less than marginal cost
D. Expand; revenues will rise by more than costs, increasing the firm's profit
29: ______ is the most flexible element of the marketing mix.
A. Place
B. Positioning
C. Product
D. Price
30: __________ is the third step in value-based pricing.
A. Determining costs that can be incurred
B. Designing products to deliver the desired value at a target price
C. Assessing the customer needs and value perceptions
D. Setting a target price to match the customer's perceived value
31: (table 6.3) this table illustrates a _____ production function because capital and labor _____.
A. Long run, are both same
B. Short-run; can be varied
C. Long-run, can both be varied
D. Short-run, are both same
32: By finding the total cost and dividing by the number of units produced ______________ are found.
A. Average or per unit costs
B. Good Choices
C. Law of Diminishing Returns
D. Marginal Product
33: Internal factors that affect pricing include __________.
A. The company's overall marketing strategy, the nature of the market, and demand.
B. The company's overall marketing strategy, objectives, and marketing mix
C. The company's overall marketing strategy, objectives, and the nature of the market
D. The nature of the market, demand, and the economy.
E. The company's overall marketing strategy, objectives, and demand
34: Overhead costs ________ as the number of units produced increases.
A. Decrease
B. Increase steadily
C. Fluctuate
D. Remain the same
E. Increase rapidly
35: Two external factors which must be considered in pricing decisions are __________.
A. Demand and the nature of the market
B. Balanced budget.
C. Contractionary fiscal policy.
D. Discretionary fiscal policy
36: Economic costs are the sum of _____ and _____.
A. Explicit costs; implicit costs
B. Implicit costs; explicit costs
C. Increases; increases
D. None of these
37: For most products, a decrease in price will _______ value.
A. Increase
B. Have no effect on
C. Decrease
38: Profits are equal to the difference between _____ and _____.
A. Total revenue; total costs
B. Total revenue; explicit costs
C. Marginal revenue; marginal costs
D. Total revenue; marginal costs
39: The amount of money charged for a product is its __________.
A. Price
B. Cost
C. Profit
D. Revenue
E. Breakeven point
40: The demand for all carbonated beverages is likely to be ________ the demand for dr. pepper.
A. More elastic than
B. Perfectly elastic compared to
C. Less elastic than
D. Perfectly inelastic compared to
41: When ford decides to increase production of hybrid cars, it directly answers the ________ question.
A. What.
B. How.
C. For whom.
D. Where
42: To cool off an inflationary economy, a government might ________.
A. Lower interest rates
B. Raise interest rates
C. Lower foreign exchange rates
D. Raise foreign exchange rates
43: At a quantity of 130, marginal benefit equals ______ and marginal cost equals _____.
A. $1.60, $0.50
B. $3.60, $0.50
C. $1.60, $6.50
D. $1.80, $0.10
44: Marginal revenue (mr) is ____ when total revenue is maximized.
A. Greater than one
B. Equal to one
C. Less than zero
D. Equal to zero
E. Equal to minus one
45: Marginal utility is the ________ satisfaction gained by consuming ________ of a good.
A. Total; all units
B. Total; one more unit
C. Additional; all units
D. Additional; one more unit
46: Monopolistic competition might be efficient if _______.
A. The loss that arises
B. The loss that not arises
C. A downward-sloping
D. Product quality is increased
47: One defining characteristic of pure monopoly is that the _____.
A. Monopoly is a price taker
B. Monopoly produces a product with no close substitutes
C. Entry into the industry is relatively easy, but exit is difficult
D. Monopoly uses advertising
48: Price discrimination leads to a _____ price for consumers with a _____ demand.
A. Lower; less elastic
B. Higher; more elastic
C. Lower; more elastic
D. Higher; less elastic
49: Refer to the data. at 6 units of output, total fixed cost is ____ and total cost is ____.
A. $10; $30
B. $150; $300
C. $10; $300
D. $150; $100
50: When there is excess demand, there is _____.
A. Downward pressure on price because buyers are not willing to pay more.
B. Upward pressure on price because buyers are willing to pay more.
C. Downward pressure on price because buyers are willing to pay more.
D. Upward pressure on price because buyers are not willing to pay more.
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Managerial Economics MCQs
