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BUSINESS 702 SECOND EXAM KEY SPRING 1997 MANAGERIAL ECONOMICS MULTIPLE CHOICE QUESTIONS (50 pts, 2pt each) 1. A forecast method based on the informed opinion of several individuals is called: A. personal insight. > B. panel consensus. C. the Delphi method. D. qualitative analysis. 2. A rhythmic annual pattern in sales or profits is called: A. cyclical fluctuation. B. secular trend. C. trend analysis. > D. seasonal variation. 3. Growth trend analysis assumes: A. constant unit change over time. B. irregular percentage change over time. C. sporadic unit change over time. > D. constant percentage change over time. 4. Economic relations that are true by definition are called: A. behavioral equations. B. statistical models. C. econometric relations. > D. identities. 5. Lagging economic indicators include: A. personal income. B. the change in stock prices. C. orders for new plant and equipment. > D. the average duration of unemployment. 6. The maximum output that can be produced for a given amount of input is called a: A. discrete production function. > B. production function. C. continuous production function. D. discontinuous production function. 7. The output effect of a proportional increase in all inputs is called: > A. returns to scale. B. returns to a factor. C. total product. D. marginal product. 8. As the quantity of a variable input increases, the resulting rate of output increase eventually: > A. falls. B. rises. C. becomes constant. D. none of these. 9. Ridge lines identify the: A. amount of one input that must be substituted for another to maintain constant output. > B. graphic bounds for positive marginal products.
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2 C. least-cost production of a target level of output. D. different input combinations used to efficiently produce a specified output. 10. Economic efficiency is achieved when all firms equate the marginal: A. product and price for all inputs. B. cost of all inputs. > C. revenue product and price for all inputs. D. product of all inputs. 11. The amount paid under prevailing market conditions is: A. historical cost. B. opportunity cost. > C. current cost. D. replacement cost. 12. The change in cost caused by a given managerial decision is: A. implicit cost. > B. incremental cost. C. explicit cost. D. opportunity cost. 13. Costs that do not vary across decision alternatives are: A. implicit. B. explicit. > C. sunk. D. economic. 14. A cost-output relation for a specific plant and operating environment is the: > A. short-run cost curve. B. long-run total cost curve. C. long-run marginal cost curve. D. long-run average cost curve. 15. The output level at which short-run average costs are minimized is: A. minimum efficient scale. B. where multiplant economies of scale equal one. C.
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