(Test Bank) Economics For Managers

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Test Bank

2nd Edition

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Test Bank for Economics For Managers, The downloadable file consists of 347 pages, and the total size of the file is 1.12 MB. Purchase now only for highly discounted price.

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Test Bank for Economics for Managers 2nd Edition Part 1 Which of the following statements is correct? 1.A) By and large, managerial decisions are not affected by either microeconomic or macroeconomic forces. 2.B) Managerial decisions are affected primarily by macroeconomic forces. 3.C) Managerial decisions are affected by both microeconomic and macroeconomic forces. 4.D) Managerial decisions are affected primarily by microeconomic forces. Walmartʹs decision in 1994 to continue operating stores in specific cities in Mexico when other firms were pulling out would be best classified as: 1.A) a microeconomic decision. 2.B) a macroeconomic decision. 3.C) both a microeconomic and a macroeconomic decision. 4.D) neither a microeconomic nor a macroeconomic decision. Which of the following would be considered an example of a macroeconomic problem? 1.A) Should Microsoft reduce the price of its Windows operating system? 2.B) Should JP Morgan Chase increase the interest rate it charges its credit card customers? 3.C) Should Mitsubishi eliminate one of its production shifts? 4.D) Should the federal government extend the eligibility period for unemployment benefits? Walmartʹs entry into the market in Mexico had the effect of: 1.A) reducing competition and raising the prices of many of the goods it sells. 2.B) increasing competition and raising the prices of many of the goods it sells. 3.C) increasing competition and lowering the prices of many of the goods it sells.4.D) reducing competition and lowering the prices of many of the goods it sells. Which of the following statements is false? 1.A) While managers must understand how output prices are determined, determination of input prices is irrelevant because it is beyond the managerʹs control. 2.B) Price determination is the key element in any market system. 3.C) Input prices influence a firmʹs costs of production. 4.D) Output prices influence a firmʹs revenues. All else constant, the choice of whether to use a labor-intensive production process or a capital-intensive one is depends on: 1.A) the absolute prices of capital and labor. 2.B) whether the economy is growing or shrinking. 3.C) the relative prices of capital labor. 4.D) the type of market in which the firm operates. Which of the following is not a characteristic of a perfectly competitive market? 1.A) Limited information is available to all market participants. 2.B) Ease of entry into the market. 3.C) Outputs of the firms are perfect substitutes for one another. 4.D) Large number of firms in the industry. Firms are considered to be price searchers, as opposed to price takers, in all of the following market types except: 1.A) monopoly. 2.B) perfect competition. 3.C) oligopoly. 4.D) monopolistic competition.Which of the following conditions ensures that excess profits cannot persist in a perfectly competitive market over the long run? 1.A) Large number of firms in the industry. 2.B) Complete information is available to all market participants. 3.C) Outputs of the firms are perfect substitutes for one another. 4.D) Ease of entry into the market. Which of the following statements is correct? 1.A) All else constant, a monopoly firm has more market power than a monopolistically competitive firm. 2.B) The fact that the firms in an oligopoly are mutually interdependent means that individual firms do not have any market power. 3.C) The amount of market power a firm possesses is unrelated to the type of market in which it operates. 4.D) So long as a firm is sufficiently large, it will have some amount of market power, regardless of the type of market in which it operates. The market structure that is characterized by a small number of large firms that have some market power is called: 1.A) oligopoly. 2.B) monopoly. 3.C) perfect competition. 4.D) monopolistic competition. Which of the following market structures is most similar to perfect competition? 1.A) Monopolistic competition. 2.B) Monopsony. 3.C) Monopoly. 4.D) Oligopoly. The key characteristic of an oligopolistic market is: 1.A) mutual interdependence among firms in the market.2.B) production of a homogeneous product. 3.C) the absence of market power by any one firm. 4.D) ease of entry into, and exit out of, the market. Which of the following statements about monopoly is false? 1.A) Because there is a single firm serving the entire market, the monopolist can charge whatever price it wants to for its output. 2.B) A single firm serves the market. 3.C) There are usually significant barriers to entry. 4.D) There are no close substitutes for the monopolistʹs output. The assumed goal of the firms that operate in each of the four market structures discussed in the text is to maximize: 1.A) profits. 2.B) revenue. 3.C) price. 4.D) sales. Which of the following statements about the circular flow model is false? 1.A) Households supply resources to the business sector. 2.B) Business firms buy goods and services from the household sector. 3.C) Businesses supply goods and services to the household sector. 4.D) Consumers earn income by selling resources they own to business es. Which of the following statements is false? In the circular flow model: 1.A) factor payments are made to business firms. 2.B) consumption expenditures are made by households. 3.C) the funds needed to finance investment spending come from the saving of households. 4.D) GDP can be measured either by the income received or by the expenditures made.Within the circular flow model, which of the following is not represented as a flow of funds into firms? 1.A) Government purchases. 2.B) Consumption spending. 3.C) Foreign purchases of goods and services. 4.D) Income payments. The major categories of expenditures in the economy are: 1.A) consumption, gross investment, and government purchases. 2.B) consumption, fixed investment, government purchases, and net imports. 3.C) consumption, net investment, and net exports. 4.D) consumption, gross investment, government purchases, and net exports. Which of the following is not included in gross private domestic investment spending? 1.A) Business spending on plant and equipment. 2.B) Household spending on residential construction. 3.C) Household spending on durable goods. 4.D) Spending on business inventories. Assume that with existing tax and spending laws, government spending exceeds government tax revenues. To cover the resulting shortfall, the government must: 1.A) Borrow money in the financial markets. 2.B) increase consumersʹ incomes. 3.C) lower interest rates. 4.D) print more money. Gross Domestic Product (GDP) is defined as the market value of: 1.A) all final consumer goods produced during the year by domestic and foreign suppliers.2.B) all final goods and services produced during the year by domestic and foreign-supplied resources. 3.C) all intermediate goods produced during the year by domestic and foreign suppliers. 4.D) all goods and services sold during the year by domestic and foreign producers. In the equation GDP = C + I + G + F , in which F equals net export spending (i.e., total spending on exports minus total spending on imports), imports are subtracted from the other types of expenditures because: 1.A) imports reduce national welfare. 2.B) other countries do not import goods from the U.S. 3.C) the value of imports is difficult to determine due to the fact that they are frequently stated in terms of foreign currency. 4.D) the value of imports is included in the other components of spending such as consumption spending. Assuming that C = $4,500, I = $1,000, G = $1,200, Exports = $450, Imports = $550, Depreciation = $600, and Indirect Business Taxes = $500 (all in billions of dollars), GDP equals: 1.A) $6,000 billion. 2.B) $6,600 billion. 3.C) $5,500 billion. 4.D) $6,400 billion. Which of the following statements is correct? 1.A) Because it is subject to change, and frequently does, consumer and business confidence has only a minimal impact on future economic activity. 2.B) Business confidence is extremely important and can have a great impact on future economic activity. The same is not true of consumer confidence. 3.C) Consumer and business confidence is extremely important and can have a great impact on future economic activity. 4.D) Because it has historically remained steady, consumer and business confidence has only a minimal impact on future economic activity.The type of policy that involves interest rates and the availability of loanable funds is known as: 1.A) fiscal policy. 2.B) federal policy. 3.C) strategic financial policy. 4.D) monetary policy. The type of policy that involves changes in taxes or spending by the federal government is known as: 1.A) strategic financial policy. 2.B) fiscal policy. 3.C) monetary policy. 4.D) federal policy. If a countryʹs central bank wants to stimulate spending in the economy, it should: 1.A) decrease taxes. 2.B) increase the amount of assets banks should keep on reserve at all times. 3.C) lower interest rates. 4.D) increase government spending. If a countryʹs national government wants to stimulate spending in the economy, it should: 1.A) increase taxes and government spending. 2.B) increase taxes and decrease government spending. 3.C) decrease taxes and government spending. 4.D) decrease taxes and increase government spending. Which of the following would have the greatest positive impact on a countryʹs domestic economy? 1.A) A decrease in the confidence of foreign investors in the countryʹs economy.2.B) An increase in spending by foreigners on the countryʹs exports. 3.C) An increase in spending on imports from other countries. 4.D) A decrease in the incomes of consumers in foreign countries. Chapter 1  Question 1 Which of the following statements is correct? Correct Answer: All else constant, a monopoly firm has more market power than a monopolistically competitive firm.  Question 2 Which of the following statements is false? In the circular flow model: Correct Answer: factor payments are made to business firms.  Question 3 Which of the following would be considered an example of a macroeconomic problem? Correct Answer: Should the federal government extend the eligibility period for unemployment benefits?  Question 4 Which of the following is not included in gross private domestic investment spending? Correct Answer: Household spending on durable goods.  Question 5 Which of the following is not a characteristic of a perfectly competitive market? Correct Answer: Limited information is available to all market participants.  Question 6 Which of the following statements is correct? Correct Answer: Managerial decisions are affected by both microeconomic and macroeconomic forces.  Question 7 Which of the following statements about monopoly is false? Correct Answer: Because there is a single firm serving the entire market, the monopolist can charge whatever price it wants to for its output.  Question 8 The key characteristic of an oligopolistic market is: Correct Answer: mutual interdependence among firms in the market.  Question 9 Which of the following statements is false? Correct Answer: While managers must understand how output prices are determined, determination of input prices is irrelevant because it is beyond the manager's control.  Question 10 The type of policy that involves interest rates and the availability of loanable funds is known as: Correct Answer: monetary policy.  Question 11 If a country's central bank wants to stimulate spending in the economy, it should: Correct Answer: lower interest rates.  Question 12 Which of the following would be an illustration of a microeconomic issue affecting U.S. auto manufacturers? Correct Answer: An introduction of new, more fuel efficient models by Japanese competitors. Question 13 Which of the following would have the greatest positive impact on a country's domestic economy? Correct Answer: An increase in spending by foreigners on the country's exports.  Question 14 If a country's national government wants to stimulate spending in the economy, it should: Correct Answer: decrease taxes and increase government spending.  Question 15 Within the circular flow model, which of the following is not represented as a flow of funds into firms? Correct Answer: Income payments.  Question 16 Firms are considered to be price searchers, as opposed to price takers, in all of the following market types except: Correct Answer: perfect competition.  Question 17 Which of the following statements is correct? Correct Answer: Consumer and business confidence is extremely important and can have a great impact on future economic activity.  Question 18 The type of policy that involves changes in taxes or spending by the federal government is known as: Correct Answer: fiscal policy.  Question 19 Assume that with existing tax and spending laws, government spending exceeds government tax revenues. To cover the resulting shortfall, the government must: Correct Answer: Borrow money in the financial markets.  Question 20 All else constant, the choice of whether to use a labor-intensive production process or a capital-intensive one is depends on: Correct Answer: the relative prices of capital labor.  Question 21 Which of the following statements about the circular flow model is false? Correct Answer: Business firms buy goods and services from the household sector.  Question 22 Gross Domestic Product (GDP) is defined as the market value of: Correct Answer: all final goods and services produced within the boundaries of an economy during the year by domestic and foreign-supplied resources.  Question 23 Which of the following conditions ensures that excess profits cannot persist in a perfectly competitive market over the long run? Correct Answer: Ease of entry into the market.  Question 24 Which of the following market structures is most similar to perfect competition? Correct Answer: Monopolistic competition.  Question 25 The assumed goal of the firms that operate in each of the four market structures discussed in the text is to maximize: Correct Answer: profits.  Question 26 A strong Japanese yen: Correct Answer: induced Japanese auto manufacturers to shift their production of cars to the U.S. Chapter 2  Question 1 Which of the following is not considered a factor that influences supply? Correct Answer: The number of buyers.  Question 2 "Demand" is best defined as the relationship between: Correct Answer: the price of a good and the quantity consumers are willing and able to buy at each price level.  Question 3 Which of the following statements is correct? Correct Answer: If price is currently above equilibrium, market adjustments will result in a decrease in price and quantity supplied.  Question 4 All of the following are non-price factors that influence demand except: Correct Answer: quantity supplied.  Question 5 If the price of salmon increases relative to the price of cod, the demand for: Correct Answer: cod will increase.  Question 6 Which of the following would not cause the supply curve for gasoline to shift? Correct Answer: A change in the incomes of drivers.  Question 7 All else held constant, an increase in foreign imports of cameras would cause the supply of cameras in the United States to: Correct Answer: increase.  Question 8 In the market for a normal good, what is the ultimate market reaction of suppliers to an increase in the incomes of consumers? Correct Answer: Quantity supplied increases as the equilibrium moves along the supply curve due to a rise in the demand.  Question 9 DSL and broadband internet service would be considered an example of: Correct Answer: substitute goods.  Question 10 A home theater system and an HD television would be considered an example of: Correct Answer: complementary goods.  Question 11 Assume that in the market for plasma TVs there is an increase in supply. The result will be: Correct Answer: a decrease in equilibrium price and increase in equilibrium quantity.  Question 12 In the market for cell phones, all of the following would cause the supply of cell phones to change except: Correct Answer: an increase in the number of buyers in the market for cell phones.  Question 13 Assuming there is a rise in supply of copper, if the market for copper is allowed to adjust, the ultimate result will be: Correct Answer: a decrease in price and an increase in the quantity demanded.  Question 14 If movies on DVD for home rental and movies seen at a theater are substitutes, and the price of movies seen at a theater increases, the demand for movies on DVD will: Correct Answer: increase.  Question 15 "Supply" is best defined as the relationship between: Correct Answer: the price of a good or service and the quantity supplied by producers at each price during a period of time.  Question 16 Which of the following would cause a change in supply, as opposed to a change in quantity supplied, in the market for used homes? Correct Answer: A decrease in the price of rental housing.  Question 17 Many people consider hot dogs to be an inferior good. For such people, all else held constant, a decrease in income would cause their demand for hot dogs to: Correct Answer: increase.  Question 18 All else constant, all of the following would cause the demand curve for a good to shift except: Correct Answer: a change in the cost of producing the good.  Question 19 All else constant, an increase in the number of buyers in the market for cell phone service would cause: Correct Answer: equilibrium price and quantity to increase.  Question 20 In the market for French wines, an increase in demand is illustrated by: Correct Answer: a shift of the demand curve to the right.  Question 21 Which of the following best describes the influence of successful advertising on the market for aspirin? Correct Answer: The market demand curve shifts to the right, creating a shortage at the original equilibrium price.  Question 22 An increase in the number of buyers in the market for LED TVs would cause the market demand curve for LED TVs to: Correct Answer: shift right. Question 1 If electricity demand is inelastic, and electric rates increase, which of the following is likely to occur? Correct Answer: Quantity demanded will fall by a relatively small amount.  Question 2 An increase in price will result in an increase in total revenue if demand is: Correct Answer: inelastic.  Question 3 Which of the following statements is true when the consumer is in utility-maximizing equilibrium? Correct Answer: The rate at which the consumer is willing to trade one good for another is equal to the ratio of their market prices.  Question 4 If the cross-price elasticity of demand between two goods is positive, we can assume that the two goods in question are: Correct Answer: substitutes.  Question 5 Information on the price elasticity of demand is particularly important to managerial decision making because: Correct Answer: it allows one to predict how total revenue will respond, i.e., increase or decrease, to a change in price.  Question 6 The slope of the budget constraint: Correct Answer: is the ratio of the prices of the two goods.  Question 7 Which of the following is a plausible reason that restaurants offer "Senior Citizen Discounts"? Correct Answer: Senior citizens tend to have relatively more elastic demands for restaurant meals than other consumer groups.