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i need these to study from please help PRACTICE QUESTIONS FOR QUIZ #4 Managerial Economics 8th Edition Thomas and Maurice Chapters 11 and 12 25 Total...

i need these to study from please help

PRACTICE QUESTIONS FOR QUIZ #4
Managerial Economics – 8th Edition – Thomas and Maurice
Chapters 11 and 12
25 Total Questions
1. In a monopoly market,
a. one firm is the only supplier of a product for which there are
no close substitutes.
b. entry into the market is blocked.
c. the firm can influence market price.
d. all of the above
2. One method of measuring the extent of a firm's market power is
a. the Lerner index.
b. price elasticity of demand for the firm's product.
c. Income elasticity of demand for the firm's product.
d. both a and b.
e. all of the above.
3. Monopolistic competition is similar to perfect competition in that:
a. there are a large number of firms.
b. firms earn economic profits in the long run.
c. firms face downward-sloping demand curves
d. both a and b.
e. all of the above.
4. A monopoly is producing a level of output at which price is $80,
marginal revenue is $40, average total cost is $100, marginal cost is
$40 and average fixed cost is $30. In order to maximize profit, the firm
should
a. produce more.
b. keep output the same.
c. produce less.
d. shut down.
5. A monopolist will maximize profit by producing the level of output at
which
a. the firm's total revenue exceeds total cost by the largest
amount.
b. marginal revenue equals marginal cost.
c. the last unit of output produced adds the same amount of total
revenue as total cost.
d. both a and b.
e. all of the above.
6. A profit-maximizing monopolist will always produce a level of output
at which
a. demand is elastic.
b. demand is inelastic.
c. price is greater than average total cost.
d. marginal revenue is greater than average total cost.
7. A monopolist which suffers losses in the short run will
a. continue to operate as long as total revenue covers fixed
costs.
b. raise price in order to eliminate losses.
c. exit in the long run if there is no plant size that will
result in economic profit that is greater than or equal to zero.
d. both a and b.
e. both a and c.
8. Which of the following is true of a monopolist in the long run?
a. The firm will charge a price that is higher than long-run
marginal cost.
b. The firm will charge a price that is equal to or greater than
long-run average cost.
c. The firm will produce that level of output at which long-run
average cost is minimum.
d. both a and b.
e. both b and c.
9. A firm with market power will maximize profit by hiring the amount of
an input at which the
a. last unit of the input hired adds the same amount to total
revenue as to total cost.
b. Additional revenue from the last unit of the input hired
exceeds the additional cost of the last unit by the largest amount.
c. last unit of the input hired adds the same amount to total
output as to total cost.
d. additional output from the last unit of the input hired
exceeds the additional cost of the last unit by the largest amount.
10. A monopolist is currently hiring 5,000 units of labor. At this
level, the marginal revenue of output is $30, the (fixed) wage rate is
$300, and the marginal product of labor is $50. In order to maximize
profit, the firm should
a. keep the level of employment the same because the firm is
earning a profit of $100,000.
b. hire more labor because the next unit of labor increase profit
by $500.
c. hire more labor because the next unit of labor increase profit
by $200.
d. hire less labor because the last unit of labor added more to
total cost ($300) than to total revenue ($10).
11. Sweet Stuff, a candy store, had total revenues last year of
$500,000. Payments for payroll, cost of goods sold, rent, and supplies
totaled $336,000. The owner invested $200,000 in the firm, although she
could have invested in bonds paying a 12% return. What is the firm's
economic profit?
a. -$36,000.00
b. $140,000.00
c. $164,000.00
d. $300,000.00
e. None of the above.
12. Which of the following is NOT a condition of a perfect competition:
a. products produced by rival firms are perfect substitutes
b. any individual firm cannot affect market supply
c. unrestricted entry and exit
d. industry sales are small
e. each firm has complete knowledge about production and prices
13. In a perfectly competitive market
a. a firm can attract more customers by lowering its price.
b. the additional revenue from selling one more unit of output is
less than price.
c. demand facing the industry is perfectly elastic.
d. all of the above
e. none of the above
14. The next 3 questions refer to the following:
Total cost schedule for a perfectly competitive firm:
PRIVATE Output Total Cost
0 $ 10
1 60
2 80
3 110
4 165
5 245
If market price is $60, how many units of output will the firm produce?
a. Zero units of output because the firm shuts down.
b. 1 unit of output.
c. 2 units of output.
d. 3 units of output.
e. none of the above.
15. If market price is $60, what is the maximum profit the firm can
earn?
a. -$10
b. zero profit, the firm shuts down.
c. $75
d. $80
e. $85
16. If market price is $30, how many units of output will the firm
produce?
0, the firm shuts down
a. 1
b. 2
c. 3
d. 4
17. Which of the following is NOT a characteristic of long-run
equilibrium for a perfectly competitive firm?
a. Price is greater than long-run average cost.
b. Price is equal to long-run marginal cost.
c. Economic profit is zero.
d. The firm is producing the level of output at which long-run
average cost is minimum.
e. None of the above.
18. Firm A and firm B both have total revenues of $200,000 and total
costs of $250,000; firm A has total fixed costs of $40,000, while firm B
has total fixed costs of $70,000. Which of the following statements are
true in the short run?
a. Firm A should operate.
b. Firm B should operate.
c. Firm A should shut down.
d. Firm B should shut down.
e. Both b and c.
19. Which of the following is NOT a characteristic of an increasing cost
competitive industry? As the industry expands in the long run,
a. The price of product remains constant.
b. The prices of some inputs rise.
c. The cost of production increases.
d. the number of firms increase.
e. none of the above.
20. An industry is in long-run competitive equilibrium. The price of a
substitute good increases.
a. The product price will rise.
b. New firms will enter the market.
c. Firms will begin earning economic profit.
d. a and b.
e. All of the above.
21. Economic rent
a. is the payment to a more productive resource above its
opportunity cost.
b. cannot be earned in long-run competitive equilibrium.
c. is competed away in the long run.
d. both b and c
e. all of the above.
22. In a perfectly competitive market
a. a firm faces a perfectly elastic demand because there is
unrestricted entry and exit.
b. if a firm raises its price, it will lose some, but not all, of
its customers.
c. when a firm sells another unit of output, the addition to
total revenue is equal to market price.
d. all of the above.
e. none of the above.
23. Firms that employ exceptionally productive resources
a. have lower costs than other firms in the industry and are able
to earn positive economic profit in the long run.
b. earn only a normal rate of return.
c. will typically have to pay the exceptional resource economic
rent equal to the reduction in cost attributable to employing the
exceptionally productive resource.
d. both a and b
e. both b and c
24. The short-run market supply in a perfectly competitive market is the
horizontal summation of the firms' marginal cost curves when
a. increases in industry output do not affect input prices.
b. increases in industry output lead to increases in input
prices.
c. increases in industry output lead to increases in market
price.
d. increases in industry output do not affect market price.
25. In a monopolistically competitive market,
a. firms are small relative to the total market.
b. no firm has any market power.
c. there is easy entry and exit in the market.
d. a and b
e. a and c
PRACTICE QUESTIONS—UNIT 5 QUIZ MANAGERIAL ECONOMICS
Chapter 13 – 22 Total Questions
1. What is the most important characteristic of oligopoly?
a. firms have market power
b. product differentiation
c. barriers to entry
d. interdependence of profits
e. none of the above
2. Which of the following methods do oligopolies use to compete for
sales?
a. price competition
b. advertising competition
c. price leadership competition
d. both a and b
e. all of the above
3. Interdependence occurs when
a. firms take the actions of other firms into account when making
price and output decisions.
b. all firms in an industry are affected by the same general
economic conditions, like consumer incomes and the unemployment rate.
c. firms cooperate to increase profit.
d. both a and b
e. all of the above
4. Which of the following is an example of strategic entry deterrence?
a. price reductions
b. building excess capacity
c. economies of scale
d. both b and c
e. both a and b
5. A form of strategic entry deterrence is
a. forming a cartel.
b. maintaining excess capacity.
c. limit pricing
d. both b and c
e. all of the above
6. One reason a firm or firms might charge a price lower than its
profit-maximizing price is
a. to discourage the entry of new firms.
b. to follow a tit-for-tat strategy.
c. to erect multiproduct barriers to entry.
d. both a and c
e. all of the above
7. Profits are interdependent in oligopoly markets because
a. products are differentiated.
b. managers are trying to set prices cooperatively in order to
maximize total industry profit.
c. entry into the market is restricted by some form of entry
barrier.
d. each firm in the market is relatively large.
e. all of the above
8. If incumbent firm Dell threatens potential new entrant Rising Star
with the threat, “If you enter this market, we will lower our price
and keep it low until you are driven out of the market,” then
a. Rising Star would never go ahead and enter if Dell has a cost
advantage over Rising Star.
b. Rising Star’s decision to enter will be unaffected by the
threat if the threat is not credible.
c. Dell is making a strategic move designed to increase its
profits at the expense of Rising Star.
d. both b and c.
e. all of the above
9. Oligopolists recognize their interdependence because
a. there are few firms in the market.
b. the product is differentiated.
c. industry sales are large.
d. both a and b
e. all of the above
10. In game theory, a dominant strategy is
a. a strategy used by a large firm to compete against smaller
firms.
b. a strategy followed by the price leader.
c. a strategy involving a high risk but also a high return.
d. a strategy that leads to the best outcome no matter what a
rival does.
e. none of the above
11. Actions taken by oligopolists to plan for and react to actions of
rival firms represent
a. strategic behavior
b. interdependence
c. cooperative behavior
d. game theory
e. all of the above
12. When participants in a game are in Nash equilibrium,
a. no participant has an incentive to change.
b. each participant has chosen the best action possible, given
what the others have chosen.
c. No change could make all participants better off.
d. a and b.
e. all of the above.
13. Which of the following is not an implication of oligopoly
interdependence:
a. strategic behavior
b. the need to get into the heads of rival managers
c. making decisions that result in equating marginal revenue and
marginal cost
d. thinking ahead in sequential decisions to anticipate rivals'
future actions
14. A second-mover advantage
a. exists when can earn greater profit by reacting to earlier
decisions made by rivals.
b. always arises when there is not a first-mover advantage in a
sequential decision.
c. arises because rivals have imperfect information about
payoffs.
d. none of the above.
15. Answer questions 15 through 19 using the following payoff table for
hardaway Corporation and Paxton industries. These two firms must make
simultaneous pricing decisions. They can choose low, medum, or high
prices. The payoffs are given in thousands of dollars of profit per
month.
Paxton Industries
  Low Medium High
 
Hardaway Corp.
  Low A
$30, $30 B 
$45, $20 C
$32, $20
Medium D
$20, $45 E
$40, $40 F
$45, $35
High G
$15, $48 H
$38, $52 I
$50, $50
Following the procedure of successive eliminationof dominated
strategies, the manager of the hardaway Corporation will eliminate the
first round of strategy of setting
a. a low price.
b. a medium price.
c. a high price.
d. None of the above, hardaway does not have a dominated
startegy.
16. Following the procedure of successive elimination of dominated
strategies, the manager of Paxton Industries will eliminate in the first
round the strategy of setting
a. a low price.
b. a medium price.
c. a high price.
d. None of the above, the Paxton industries does not have a
dominated strategy.
17. After the first round of eliminating dominated strategies for both
firms,
a. Hardaway Corporation has a dominant strategy, which is to
price low.
b. Hardaway Corporation has a dominant strategy, which is to
price medium.
c. Paxton industries has a dominant strategy, which is to price
low.
d. Paxton industries has a dominant strategy, which is to price
medium.
e. Both b and d.
18. After the first round of eliminating dominated strategies for both
firms,
a. no more dominated strategies remain for further elimination.
b. setting a medium price for Hardaway Corporation can next be
eliminated in a second round.
c. setting ahigh price for Hardaway Corporation can next be
eliminated in a second round.
d. no other dominated strategies can be eliminated for Paxton
Industries.
e. both c and d.
19. For the simultaneous pricing decision facing Hardaway Corporation
and Paxton Industries,
a. cell I a strategically stable pricing outconme
b. cell A is the likely outcome of the pricing decision.
c. cell E is the equilibrium pricing decision.
d. both firms pricing low is a Nash equilibrium.
e. both b and d.
20. A second-mover advantage
a. exists when a firm can earn greater profit by reacting to
earlier decisions made by rivals.
b. always arises when there is not a first-mover advantage in a
sequential decision.
c. arises because rivals have imperfect information about
payoffs.
d. none of the above.
21. A credible commitment is
a. always irreversible.
b. a way of becoming the first-mover in sequential decision
situation.
c. an unconditional strategic move.
d. both a and c.
e. all of the above.
22. Limit pricing can be difficult to practice successfully because
a. incumbents usually do better after a new firm enters by
raising their prices.
b. incumbents usually do better after a new firm enters by
lowering their prices.
c. new entrants frequently wish to engage in a price war to gain
market share.
d. hardly differentiated products make it difficult to raise
price profitably.
e. knowledge is seldom common.
PRACTICE QUESTIONS—QUIZ #6 MANAGERIAL ECONOMICS
Chapter 15
19 Total Questions
1. A probability distribution
a. is a way of dealing with uncertainty.
b. lists all possible outcomes and the corresponding
probabilities of occurrence.
c. shows only the most likely outcome in an uncertain situation.
d. both a and b
e. both a and c
2. The variance of a probability distribution is used to measure risk
because a higher variance is associated with
a. a wider spread of values around the mean.
b. a more compact distribution.
c. a lower expected value.
d. both a and b
e. all of the above
3. Risk exists when
a. all possible outcomes are known but probabilities can't be
assigned to the outcomes.
b. all possible outcomes are known and probabilities can be
assigned to each.
c. all possible outcomes are known but only objective
probabilities can be assigned to each.
d. future events can influence the payoffs but the decision maker
has some control over their probabilities.
e. c and d
4. When a manager can list all outcomes and assign probabilities to each
a. uncertainty exists
b. both risk and uncertainty exist
c. risk exists.
d. the manager should use the minimax rule for making a decision.
e. b and d.
5. Subjective probabilities are
a. determined from actual data on part experiences.
b. used in the presence of uncertainty.
c. almost never used from decision making.
d. are based on feelings or hunches.
e. c and d.
6. Choosing the decision with the maximum possible payoff
a. is the maximax rule.
b. ignores possible bad outcomes.
c. is a guide for decision making under uncertainty.
d. all of the above
e. none of the above
7. The maximin rule
a. ignores bad outcomes.
b. is used by optimistic managers.
c. minimizes the potential regret.
d. a and c
e. none of the above
8. If marginal benefits and marginal costs of an activity are risky and
have a constant variance, expected net benefits are maximized when level
of the activity is chosen so
a. expected marginal cost equals expected marginal benefits.
b. expected marginal benefits exceeds expected marginal cost by
the largest amount.
c. expected marginal benefits equal expected marginal cost and
the decision maker must be risk neutral.
d. expected marginal benefits equal expected marginal cost and
the decision maker is not risk loving.
e. c and d
9. In making decisions under risk
a. maximizing expected value is always the best rule.
b. mean variance analysis is always the best rule.
c. the coefficient of variation rule is always best.
d. maximizing expected value is most reliable for making repeated
decisions with identical probabilities.
e. none of the above
10. In the maximax strategy a manager choosing between two options will
choose the option that
a. has the highest expected profit.
b. provides the best of the worst possible outcomes.
c. provides the best of the highest possible outcomes.
d. has the lowest variance.
e. a and d
11. The next 5 questions refer to the following:
A firm making production plans believes there is a 30% probability the
price will be $10, a 50% probability the price will be $15%, and a 20%
probability the price will be $20. The manager must decide whether to
produce 6000 units of output (A), 8000 units (B) or 10000 units (C). The
following table shows 9 possible outcomes depending on the output chosen
and the actual price.
  Profit (loss)when price is
        $10.0    $15.0     $20.0
6000  (A) -$200      $400 $1000
Production 8000  (B) -$400 $600 $1600
10000(C) -$1000      $800 $3000
What is the expected profit if 6000 units are produced?
a. $171
b. $840
c. $640
d. $340
e. $260
12. What is the expected profit if 10,000 units are produced?
a. $500
b. $700
c. $625
d. $1000
e. $1754
13. If the mean-variance rule is used, how much should the firm produce?
a. 6,000
b. 8,000
c. 10,000
d. can't use this rule to make the decision
14. What is the variance if 6,000 units are produced?
a. 490,000
b. 176,400
c. 100,000
d. 68,200
e. 76,460
15. For the above payoff matrix, suppose the manager has no idea about
the probability of any of the three prices occuring. If the maximax rule
is used how much will the firm produce?
a. 6,000
b. 8,000
c. 10,000
d. can't use this rule to make the decision.
16. For the above payoff matrix, suppose the manager has no idea about
the probability of any of the three prices occuring. If the maximin rule
is used how much will the firm produce?
a. 6,000
b. 8,000
c. 10,000
d. can't use this rule to make the decision
17. The minimax regret rule:
a. ensures that any managerial decision will maximize profit.
b. is a way of considering possible losses due to incorrect
decisions
c. requires managers to know the state of nature when they make
their first decisions
d. all of the above
e. none of the above
18. The marginal utility of profit is:
infinite, since more profit is always better than less
equal to the MU of any good consumed multiplied by its price
equal to the value of a manager's salary divided by the amount of
additional profit a decision generates
the change in total utility derived from an additional dollar of profit
earned
all of the above.
19. True or False:
Guidelines for decision-making under risk and uncertainty are useful
because managers cannot always assume certain knowledge of the outcome
of a decision.

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