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 inMexico
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 amacroeconomic 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 creditcard
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 itsells.
2. B) increasing competition and raising the prices of many of the goods itsells.
3. C) increasing competition and lowering the prices of many of the goods itsells.
, 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 productionprocess 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 competitivemarket?
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, inall 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 cannotpersist 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 typeof
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 perfectcompetition?
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 monopolistcan
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 marketstructures
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 businesses.
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 savingof
households.
4. D) GDP can be measured either by the income received or by the
expenditures made.
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 inMexico
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 amacroeconomic 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 creditcard
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 itsells.
2. B) increasing competition and raising the prices of many of the goods itsells.
3. C) increasing competition and lowering the prices of many of the goods itsells.
, 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 productionprocess 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 competitivemarket?
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, inall 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 cannotpersist 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 typeof
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 perfectcompetition?
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 monopolistcan
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 marketstructures
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 businesses.
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 savingof
households.
4. D) GDP can be measured either by the income received or by the
expenditures made.
