Nationalu ECO607 Week Week One Quiz 2022

Question 1 Managerial economics is best defined as the economic study of

Question 1 options:

1) how businesses can make the most profits.

2) how businesses can decide on the best use of scarce resources.

3) how businesses can operate at the lowest costs.

4) how businesses can sell the most products.

Question 2 Which of the following is the best example of opportunity cost?

Question 2 options:

1) a company's expenditures on a training program for its employees.

2) the rate of return on a company's investment.

3) the amount of money that a company can earn by depositing excess funds in a moneymarket fund.

4) the amount of profit that a company forgoes when it decides to drop a particular product line in favor of another one.

Question 3 Which of the following will result in a decrease in demand for residential housing in the short run?

Question 3 options:

1) a decrease in the price of lumber

2) an increase in the wages of carpenters

3) a decrease in real household incomes

4) a decrease in the prices of residential housing

Question 4 Coke and Pepsi are substitutes if:

Question 4 options:

1) the demand for Coke increases when the price of Pepsi falls

2) the demand for Coke increases when the price of Pepsi rises

3) the supply of Coke increases when the price of Pepsi falls

4) the demand for Coke and Pepsi rise and fall together

Question 5 Demand price is defined as

Question 5 options:

1) Lowest price consumers are willing to pay

2) Highest price consumers are willing to pay

3) The equilibrium price

4) The market price

Question 6 A traditional solution to negative externality is

Question 6 options:

1) Subsidize the activity

2) Let the market determine the outcome

3) Impose a tax of some form

4) None of the above

Question 7 In an economy with limited or no government intervention, resources tend to be optimally distributed. With appropriate example, explain how this happens. (Make sure to provide a good example and your response should be at least 6 sentences).