Question 1

Managerial economics is one of the three basic analytical areas that supply decision techniques to people working in what are sometimes called functional areas in business: accounting, finance, marketing and management.

Accepted Answer

Managerial economics does provide decision-making techniques for people working in functional areas of business such as accounting, finance, marketing, and management.

Question 2

The quantity supplied of a good or service is the amount that producers will make available for purchase at a particular price along a supply curve.

Accepted Answer

This statement accurately describes the concept of quantity supplied. As the price of a good or service increases, the quantity supplied typically increases as well, as producers are motivated to offer more of the product in order to capitalize on the higher price. This relationship is typically represented graphically as a supply curve, with the price on the vertical axis and the quantity supplied on the horizontal axis.

Question 3

Increased interdependence of nations and the efficiency with which we produce goods and services is a result of the rules that societies fashion to regulate their economic and political lives.

Accepted Answer

Increased interdependence of nations and efficiency in production are results of economic and political regulations and rules set by societies. These rules help to ensure fair competition, protect property rights, and facilitate trade, leading to greater efficiency and cooperation among nations.

Question 4

The anticipated objective of management is to increase the firm's value. The value of the firm is the firm's ability to generate revenue.

Accepted Answer

The value of the firm is determined by its ability to generate future cash flows, not just revenue. This includes considerations of profit, cost management, and investment returns, among other factors.

Question 5

Opportunity cost is the cost as measured by the next best alternative given up when a choice is made.

Accepted Answer

This is the definition of opportunity cost.

Question 6

Three alternative hypotheses of firm behavior, other than profit maximization, are market share maximization, growth maximization, and maximization of managerial returns.

Accepted Answer

These three alternative hypotheses of firm behavior are well-recognized in economics literature.

Question 7

In managerial problem solving, the time period under consideration will often be an important factor in the decision analysis.

Accepted Answer

The time period is generally considered an important factor in decision analysis in order to properly evaluate the potential impact and long-term consequences of a decision.

Question 8

The central themes of managerial economics is identifying problems and opportunities, analyzing alternatives from which choices can be made, maximizing revenue.

Accepted Answer

The central themes of managerial economics include identifying problems and opportunities, analyzing alternatives, and making optimal decisions, but not specifically maximizing revenue.

Question 9

A change in the quantity demanded refers to a change in the amount of a good or service that consumers are willing to purchase over some period of time because of a change in one of the demand function variables other than the price of a good.

Accepted Answer

A change in the quantity demanded refers to a movement along the demand curve as a result of a change in the good's price, not changes in other demand function variables. Changes in variables other than the price lead to a shift in the entire demand curve, which is referred to as a change in demand.

Question 10

Equilibrium price is the prevailing market price when quantity demanded equals quantity supplied.

Accepted Answer

Equilibrium price is defined as the price at which the quantity demanded of a good or service is equal to the quantity supplied, resulting in a market balance. This is a fundamental concept in economics and is represented graphically by the intersection of the demand and supply curves.

Question 11

When price is above the equilibrium price and results in a quantity supplied that exceeds quantity demanded there would be a shortage.

Accepted Answer

When price is above the equilibrium price, the quantity supplied exceeds the quantity demanded, resulting in a surplus, not a shortage.

Question 12

The two major things to consider when trying to minimize cost are technology of production and output prices.

Accepted Answer

The two major things to consider when trying to minimize cost are technology of production and input prices, not output prices.

Question 13

When extending the concept of marginal or incremental analysis to the area of public sector management, the effect of changes in public output on social benefits and social costs are considered just as a private sector firm considers the incremental profit resulting from its revenue and cost decisions.

Accepted Answer

The statement is true. When using marginal or incremental analysis in public sector management, changes in public output are evaluated in terms of their impact on social benefits and social costs, just as a private sector firm would evaluate incremental profit resulting from revenue and cost decisions.

Question 14

In managerial problem solving, the time period under consideration will very rarely be an important factor in the decision analysis.

Accepted Answer

The time period under consideration is often a critical factor in managerial problem solving. The duration of the decision's impact and the time frame for implementation can significantly influence the outcome of the analysis.

Question 15

Microeconomics is the branch of economic analysis that deals with aggregate economic variables such as the economy's total output, central government spending and tax policy, and money supply and interest rates.

Accepted Answer

The statement is incorrect. Microeconomics deals with the behavior of individual consumers, firms, and industries, and how they make decisions regarding the allocation of scarce resources. It focuses on topics such as pricing of goods and services, market structures, and consumer behavior. Macroeconomics, on the other hand, deals with the overall performance of the economy, including issues such as inflation, unemployment, and economic growth.

Question 16

A change in the quantity demanded refers to a change in the amount of a good or service that consumers are willing to purchase over some period of time because of a change in the price of a good.

Accepted Answer

A change in the quantity demanded is specifically related to a change in price, while a change in demand refers to a shift in the entire demand curve due to other factors such as changes in consumer preferences or income levels.

Question 17

A change in demand refers to the shift in a demand curve that occurs when a demand function variable, other than the price of the item in question, changes.

Accepted Answer

A change in demand is caused by a shift in the demand curve, which occurs when a non-price factor affecting demand changes. Factors that can cause a change in demand include income, consumer tastes and preferences, population demographics, and the availability of substitute goods.

Question 18

Microeconomics is the study of individual economic units such as consumers, business firms, or specific government agencies.

Accepted Answer

Microeconomics focuses on analyzing the behavior and decision-making of individual economic agents, rather than the economy as a whole.

Question 19

To be an efficient producer, a business firm must determine three things: what kinds of inputs to use, where to obtain those inputs and where to obtain its technology.

Accepted Answer

To produce efficiently, a firm must determine these three things: what inputs to use, where to obtain them, and what technology to use.

Question 20

A change in demand is a movement along a given good's demand curve when the price of the good changes but the other variables do not.

Accepted Answer

A change in demand refers to a shift of the demand curve, which occurs due to changes in non-price factors such as consumer preferences, income, prices of related goods, etc. A movement along a given demand curve due to a change in the price of the good itself is referred to as a change in quantity demanded.

Quiz 1: Introduction, Basic Principles, and Methodology