Managerial Economics Questions

A firm has only five possible factory (plant) sizes to choose from, represented by the short-run average total cost (SRATC) curves on the long-run average total cost (LRATC) curve shown on the graph belowThe firm's minimum efficient scale occurs on

Kieran owns and operates his own bike shop. In the past week, he received two offers: one to work for a competitor for $50,000 per year and one to sell his bike shop for $100,000. Assume the annual interest rate is 6 percent, and Kieran is indifferent between owning his bike shop or working for the competitor. Kieran currently receives enough annual revenue to cover all explicit costs and has $60,000 left over. There are no additional implicit costs (excluding the items listed above). Under these circumstances, Kieran's economic profit is equal to which of the following?

A profit-maximizing firm is currently producing a quantity at which price is less than average variable cost. To maximize profit, the firm will do which of the following in the short run and the long run?

Habib withdrew $100,000 from his bank account paying 5% interest to purchase equipment for his construction company. If Habib earns an accounting profit of $10,000 and he has no other opportunity costs, his economic profit will be equal to

If a typical firm in a perfectly competitive market earns economic profit in the short run, what will most likely happen in the long run?

A graph shows quantity of output produced on the horizontal axis and shows total variable cost and total cost on the vertical axis. Which of the following is true about the vertical distance between total variable cost and total cost as output increases?

firms operate at a loss but should still stay open when

cheaper to shut down a firm temporarily when

in an inndifference curve/budget linne diagram, generally when the price of a good increases, the consumer purchases _____ of the good and moves to a _______ indifference curve

if the marginal product curve is ______ the average product curve, then the average product curve is _____

If a company triples its plant size and its average cost decreases, then the firm is experiencing:

when the average variablle cost is falling, which of the following is allways true

All of the following are critical considerations that should enter into pricing decisions EXCEPT:a.) Governmental interventionb.) Perceived customer valuec.) Competitiond.) Strategic objectives

In which of the following pricing strategies does the firm earn high profit margins by pricing high, but provides less value to its relatively few customers?a.) partity pricingb.) vertical pricingc.) penetration pricingd.) skim pricing

Which of the following types of costs is defined as the cost to make and sell one additional unit?a.) marginal costs b.) fully loaded costsc.) variable costsd.) fixed costs

According to the text, a price-elastic demand curve occurs when volume is relatively insensitive to changes in price.

Electricity and heart pacemakers are examples of which of the following market-level price sensitive situations?a.) price-elastic b.) price-inelasticc.) positive-slopingd.) negative-sloping

Cost-plus pricing is a pricing technique that considers customer value

According to the text, costs have all of the following important price-setting roles EXCEPT:a.) birth controlb.) death controlc.) cultural controld.) profit planning

_______________ vary directly with the volume of sales and production, increasing as volume increases and decreasing as volume decreases.a.) Fixed costsb.) Marginal costsc.) Variable costsd.) Segmented costs