Midterm - Midterm Spring 2010: Managerial Economics:...

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Midterm Spring 2010: Managerial Economics: 6:00-7:30 pm, March 10, 2010 Answer all questions. 1. Which of the following is true of a model? A. A model is useful if its underlying assumptions refer to things that are directly measurable. B. A model is not formulated to make predictions about the real world. C. A model is composed of a number of assumptions that are highly realistic. D. A model is applicable only to problems of normative economics. E. A model abstracts from the real situation. 2. The most important test of a model is whether it A. is free of value judgments. B. predicts more accurately than any other model. C. embodies a highly realistic set of assumptions. D. contains more mathematical equations than any other model. E. yields verifiable predictions. 3. Microeconomics can be defined as the branch of economics that deals with the economic behavior of A. individual consumers, firms, and resource owners. B. government interest groups. C. single countries. D. groups of consumers, firms, and resource owners. E. none of the above. 4. For a model to have predictive power, all assumptions used in its construction must be A. descriptive. B. relevant. C. predictive. D. realistic. E. none of the above. 5. A model should not be used unless it A. explains what it predicts. B. is always correct in its predictions. C. focuses only on a narrow range of issues. D. is based on totally realistic assumptions. E. is the best one available. Page 1, v2
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6. For there to be a market, there must be A. a well-defined center of exchange, such as a building. B. mobile resources. C. buyers and sellers. D. perfect knowledge of prices and profit opportunities. E. all of the above. 7. A market demand curve shows A. which price will prevail in the marketplace. B. the minimum price consumers will have to pay to get a certain quantity. C. how much of a commodity will be purchased at each price per unit of time. D. that as the price falls, consumers will spend less money on a commodity. E. the rate at which the consumption of a commodity will decrease as income falls. 8. Which of the following would cause the demand curve for gasoline to shift to the right? 1. A large increase in the price of public transportation 2. A large decrease in the price of automobiles 3. A large reduction in the cost of producing gasoline A. 1, 2, and 3 B. 1 and 2 only C. 2 and 3 only D. 1 only E. 2 only 9. If Fred prefers apples to oranges and oranges to pears and if he is indifferent between apples and kiwi, he must A. be indifferent between oranges and kiwi. B. prefer kiwi to pears. C. prefer oranges to kiwi. D. be indifferent between apples and pears. E. be indifferent between pears and kiwi. 10. If a market basket is changed by adding more to at least one of the goods, then consumers will
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This note was uploaded on 04/27/2010 for the course 223 581 taught by Professor Crew during the Spring '10 term at Rutgers.

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Midterm - Midterm Spring 2010: Managerial Economics:...

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