Exam Managerial Economics 2016-17 Quiz 1

Marks: 10 Time: 15 minutes

Choose the one alternative that best completes the statement or answers the question.

1)
Which of the following markets has the most restrictive geographic boundary?
A)
The market for gold
B)
The market for beef
C)
The market for housing
D)
The market for retail gasoline

2)
A supply curve reveals:
A)
the difference between quantity demanded and quantity supplied at each price.
B)
the quantity of output consumers are willing to purchase at each possible market price.
C)
the maximum level of output an industry can produce, regardless of price.
D)
the quantity of output that producers are willing to produce and sell at each possible market price.

3)
Plastic and steel are substitutes in the production of body panels for certain automobiles. If the price
of plastic increases, with other things remaining the same, we would expect:
A)
the demand curve for steel to shift to the right.
B)
the price of steel to fall.
C)
the demand curve for steel to shift to the left.
D)
nothing to happen to steel because it is only a substitute for plastic.

4)
Coffee and cream:
A)
are both luxury goods.
B)
are complements.
C)
have a positive cross price elasticity of demand.
D)
are both more inelastic in demand in the long run than in the short run.

5)
The current market price for good X is below the equilibrium price, and then the demand curve for X
shifts rightward. What is the likely outcome of the demand shift?
A)
The surplus increases.
B)
The shortage increases.
C)
The surplus decreases.
D)
The shortage decreases.

6) Which of the following events will cause a leftward shift in the supply curve of gasoline?
A. An improvement in oil refining technology
B. An increase in the wage rate of refinery workers
C. A decrease in the price of gasoline
D. Decrease in the price of crude oil

7) Consider the demand curve of the form Q = a - bP. If a is a positive real number, and b = 0, then demand is
A. elastic, but not infinitely.
B. inelastic, but not completely.
C. unit elastic.
D. completely inelastic.

8) When the price of a Caesar salad is $4.00, the demand for Caesar salads is inelastic, and when the price is
$5.00, the demand is unit elastic. If Mike's Roadside Restaurant raises the price from $4.00 to $5.00, then its
total revenue from Caesar salads
A. will increase
B. will remain the same
C. will decrease
D. might increase, decrease, or remain the same

9) Assume that average product for six workers is fifteen. If the marginal product of the
seventh worker is eighteen,
a. average product is rising.
b. marginal product is falling.
c. average product is falling.
d. marginal product is rising.

10) When the average product is decreasing, marginal product

a. is decreasing.
b. is increasing.
c. equals average product.
d. exceeds average product.
e. is less than average product.