Ivy Software MBA Fundamentals of Economics Prep
Comprehensive Resource To Help You Ace 2026-2027
Includes Frequently Tested Questions With ELABORATED
100% Correct COMPLETE SOLUTIONS
Guaranteed Pass First Attempt!!
Current Update!!
1. Economies of scale - ANSWER occur over a range of production in which
average total costs decline as output increases (ie: creation of software, a
pharmaceutical pill) they have large fixed costs and relatively low marginal
costs.
2. Diseconomies of scale - ANSWER occur over a range of output in which
average total costs increase as output increases
3. Constant economies of scale - ANSWER occur over a range of
production where constant average total cost as output increases
4. Economies of scope - ANSWER occur when an organization can produce
several products together at less cost than could a group of single product
firms operating independently
5. Whenever marginal cost is higher than average variable cost or average
total cost, the average variable cost or average total cost must
a) increase
b) decrease
,c) stay the same - ANSWER increase
6. whenever marginal cost is lower than average variable cost or average total
cost, then the average variable cost or the average total cost must
a) increase
b) decrease
c) stay the same - ANSWER decrease
7. Whenever the marginal cost curve crosses the average variable or total cost
curve then the values are
a) higher
b) lower
c) equal - ANSWER equal
8. Price takers - ANSWER businesses operating in a perfectly competitive
industry
9. In a perfectly competitive industry, market prices are determined by -
ANSWER the interaction of the market demand and market supply
curves
10.Total revenue - ANSWER calculated by multiplying price and quantity or
Marginal Revenue and quantity
11.Market price - ANSWER change in total revenue resulting from a on-unit
increase in the quantity sold equals the market price.
,12.In the pursuit of maximizing profits, business owners are constrained in two
fundamental ways: - ANSWER 1) the competency of its employees and
the market prices of inputs into the production process dictate the costs of
producing output
2) the price that a perfectly competitive business can charge is determined by
the market, and not the business owner
13.long run decision - ANSWER states that a business should exit the
industry if production at the profit maximizing quantity where (MR=MC)
generates total revenues that are less than total cost. Otherwise they stay
open.
14.three characteristics of a monopolistic industry include: - ANSWER 1)
there are many buyers and only one seller
2) the good is heterogeneous, and
3) barriers to entering the market exist (ie: patents are barriers that make it
illegal for someone to produce a product without permission from the patent
owner)
15.price setter - ANSWER in a monopolistic industry, because there is only
one seller of a product the business owner actually goes through a process
of setting the price of its product, a task that competitive firms are unable
to do. Thus monopolistic firms are called price setters.
16.constraints of a monopoly - ANSWER 1) ....?
2) the market demand
, 17.three decisions faced by a monopoly - ANSWER 1) determine the profit
maximizing quantity to produce
2) decide what price to charge
3) because this is the short run, decide whether to produce or shut down the
business for a short period of time.
18.profit maximizing quantity - ANSWER marginal revenue equals marginal
cost
19.Marginal cost is the increase in total cost that arises from an extra unit of
production (T/F) - ANSWER True.
20.A production process has economies of scale if average total cost decreases
as production increases (true or false) - ANSWER True
21.A production process has diseconomies of scale if average total costs
increase as output increases (T/F) - ANSWER True.
22.The production of a product has either economies of scale, constant
economies of scale, or diseconomies of scale (t/F) - ANSWER True
23.If a company's average total costs remain constant as output increases, then
the company has constant economies of scale. (t/F) - ANSWER TRUE
Comprehensive Resource To Help You Ace 2026-2027
Includes Frequently Tested Questions With ELABORATED
100% Correct COMPLETE SOLUTIONS
Guaranteed Pass First Attempt!!
Current Update!!
1. Economies of scale - ANSWER occur over a range of production in which
average total costs decline as output increases (ie: creation of software, a
pharmaceutical pill) they have large fixed costs and relatively low marginal
costs.
2. Diseconomies of scale - ANSWER occur over a range of output in which
average total costs increase as output increases
3. Constant economies of scale - ANSWER occur over a range of
production where constant average total cost as output increases
4. Economies of scope - ANSWER occur when an organization can produce
several products together at less cost than could a group of single product
firms operating independently
5. Whenever marginal cost is higher than average variable cost or average
total cost, the average variable cost or average total cost must
a) increase
b) decrease
,c) stay the same - ANSWER increase
6. whenever marginal cost is lower than average variable cost or average total
cost, then the average variable cost or the average total cost must
a) increase
b) decrease
c) stay the same - ANSWER decrease
7. Whenever the marginal cost curve crosses the average variable or total cost
curve then the values are
a) higher
b) lower
c) equal - ANSWER equal
8. Price takers - ANSWER businesses operating in a perfectly competitive
industry
9. In a perfectly competitive industry, market prices are determined by -
ANSWER the interaction of the market demand and market supply
curves
10.Total revenue - ANSWER calculated by multiplying price and quantity or
Marginal Revenue and quantity
11.Market price - ANSWER change in total revenue resulting from a on-unit
increase in the quantity sold equals the market price.
,12.In the pursuit of maximizing profits, business owners are constrained in two
fundamental ways: - ANSWER 1) the competency of its employees and
the market prices of inputs into the production process dictate the costs of
producing output
2) the price that a perfectly competitive business can charge is determined by
the market, and not the business owner
13.long run decision - ANSWER states that a business should exit the
industry if production at the profit maximizing quantity where (MR=MC)
generates total revenues that are less than total cost. Otherwise they stay
open.
14.three characteristics of a monopolistic industry include: - ANSWER 1)
there are many buyers and only one seller
2) the good is heterogeneous, and
3) barriers to entering the market exist (ie: patents are barriers that make it
illegal for someone to produce a product without permission from the patent
owner)
15.price setter - ANSWER in a monopolistic industry, because there is only
one seller of a product the business owner actually goes through a process
of setting the price of its product, a task that competitive firms are unable
to do. Thus monopolistic firms are called price setters.
16.constraints of a monopoly - ANSWER 1) ....?
2) the market demand
, 17.three decisions faced by a monopoly - ANSWER 1) determine the profit
maximizing quantity to produce
2) decide what price to charge
3) because this is the short run, decide whether to produce or shut down the
business for a short period of time.
18.profit maximizing quantity - ANSWER marginal revenue equals marginal
cost
19.Marginal cost is the increase in total cost that arises from an extra unit of
production (T/F) - ANSWER True.
20.A production process has economies of scale if average total cost decreases
as production increases (true or false) - ANSWER True
21.A production process has diseconomies of scale if average total costs
increase as output increases (T/F) - ANSWER True.
22.The production of a product has either economies of scale, constant
economies of scale, or diseconomies of scale (t/F) - ANSWER True
23.If a company's average total costs remain constant as output increases, then
the company has constant economies of scale. (t/F) - ANSWER TRUE
