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Stack #793297

Question	Answer
Economics assumes that the decision maker maximizes profits. Which of the following is a possible alternative model of managerial behavior	Maximizing Management compensation
Managerial Economics:	Helps managers identify alternate choices
Profit is maximized when:	the first derivative is zero and the second is negative
When total profit is increasing with increasing levels of output, marginal profit must be	Positive
The difference between demand curve and the inverse demand curve is:	The demand curve has P as the independent variable and the inverse has p as dependent variable
If marginal Profit is negative when sales are 10,000 units, the firm should	Decrease Q
Total profit is maximized when	Marginal profit is zero
If the prices of MP3 Players decreases	The demand for downloading songs will increase
For a garage of fixed capacity, the owner sets different parking rates for sort term and long term parkers. To maximize revenue, the operator should set prices and target the number of places for each segment such that	Short term parkers (exhibiting more inelastic demand) pay a higher hourly price
A good whose demand curve shifts to the left as income increases is	An inferior good
The demand for a product is more elastic	The longer the time period covered
As we move down a linear demand curve, demand becomes	Less eleastic
Suppose a firms fixed costs increase. What is the impact on the marginal costs, MR, and MP curves	None of these will change
The first derivative of total profit with respecdt to quantity is	Marginal profit
Total profit is maximized when	MP equals zero
The profit maximizing firm sets its price	In the elastic portion of the demand curve
The idea of income elasticity of demand is	Percentage change in Q divided by the percentage change in Income
Managerial economics can be defined as	The analysis of management decisions using economics tools
Marginal revenue is	Change in revenue from producing and selling and additional unit of output.
Each of the following affects the level of demand except	Marginal Costs
At its current level, a firms marginal profit is positive. Therefore it should	Increase output because MR>MC
Which of the following would not cause demand for a product to be inelastic	The good is a luxury
If demand is price inelastic	A decrease in price means total revenue will decrease
A firm faces a pure selling problem when	Marginal costs is small relative to fixed costs
In practicing price discrimination, the firm	must be albe to identify separate market segments with different elasticities
The cost function shows the relationship between	total cost and output
Sensitivity analysis can best be defined as	Examining the impact of changes in a key economic fact
The difference between the demand curve and the inverse demand curve is	the demand curve has P as hte independent variable and the inverse demand curve has P as the dependent variable
A good whose demand curve shifts to the left as income increases is	An inferior good
Assume a gobovie has a linear demand curve. As price decreases, demand becomes	Less elastic
If the price of MP3 players decreases	The demand for downloading songs will increase
Satisficing by managers means	Achieving forecasts profits and sales rather than maximizing profits
The demand curve for a product is more elastic	The longer the time period covered
When an increase in output increases profit, MP must be	positive
Profit is maximized when the first derivative of the profit function with respect to quantity is	Zero and the second is negative
If the MP is negative when sales are 10,000 units the firm should	Decrease Q
Managerial Econ can best be defined as	Analysis of major management decisions using economic tools
For a negatively sloped demand curve, MR is	Less than price
For a linear demand curve, MR curve	Has the same price intercept but a steeper slope than the demand curve
The demand for a firms product dramatically increases. What are the most likely effects on the MR and MC curves	MR increase and MC will not change
Which of the following is not an assumption of hte firm	Stock options are part of managements compensation
Which of the following is not a condition for a firm to engage in price discrimination	The consumers are assured to be sincere in telling their true natures
Macaroni is a normal good, if an increase in income leads to	An increase in demand for macaroni
The law of demand states that hold all else constant	As price falls, Q rises
Suppose good X is a sub for good Y. An increase in the price of good Y leads to	An increase in the demand of good X
Which of the following factors would not affect thw own-price elasticity of a good?	Price of an input
If the cross price elasticity between good A and B is negative, we know the goods are	Complements
If MR exceeds MC, it is profitable to	Increase Quantity
To Max profits, a firm should continue to increase production of a good until	MR equals MC
As we moove down along a linear demand curve, the price elasticity of a demand becomes	More inelastic
Assume the price elasticity of demand is -2 for a certain firms product. If the firm raises price, the firms managers can expect total revenue to	Decrease
The confidence interval for a forecast is calculated as the forecast value plus or minus	A multiple of the standard error of the regression
The greater the standard error of an estimated coefficient	The lower the t-value of the estimated coefficient
A regression coefficient measures	The change in the dependent variable for a unit change in a particular independent variable
The Lagged variable should be used when	The previous periods value is useful in forecasting this periods value
When Multicollinearity occurs	Two or more independent variables tend to move together
Which of the following is used to determine the statistical significance of a regression coefficient	T-stat
The standard error of the regression	Is used to calculate a confidence interval for predicting the dependent variable
As a rule of thum, a parameter estimate is statistically different from zero when the absolute value of the t-stat is	Greater than or equal to two
If a study examis several different markets at the same time, and compares outcomes with conditions in each market, the study is using	Cross sectional Data
Serial Correlation of erros occurs when	The value of the random error in one period depends on its value in the previous period
Dummy variables can be used to	Add qualitative variables such as the weather or the seasons to a regression
Time-series patterns can be decomposed into	Trends and seasonal variations
For a given set of data and regression equation, the greater the R square	The greater the Adjusted R
Which of the following provides a measure of the overall fit of a regression	F-stat and R-square
Sample Bias occurs in survey data when	The wrong gropu of respondents is surveyed
Regressions are used to	Estimate an underlying relationship between independent and dependent variables based on observed data
What is the best Definition of R Square, the coefficient of determination?	The proportion of the variation of the dependent variable that is explained by the regression
If a study examines several different markets at the same time, and analyzes the outcomes, the study is using	Cross Sectional Data
The tstat	is the estimated coefficient divided by its standard error
Heteroskedasticity occurs when	The standard deviation of the error term is not constant
The statistic that tests the statistical significans of the coefficients is the	t-stat
Goodness of fit is another name for	R2 Stat
The inability to estimate a demand curve from only observed prices and quantities is known as the	Identification problem
Dummy variables are used to	Include qualitative information in a regression
The adjusted R2 is gnerally less than the R2 because	THe adusted R is the R2 adusted by the number of observations and coefficients
In calculating the coefficients for a multiple regression, teh ordinary least squares method minimizes	the sum of squared errors
The marginal rate of technical substitution is defined as	The rate at which one input substitutes for another without changing output
In seeking to maximize profit in the short run, How much labor should a company hire	MRPL=MCL
Minimum Efficient scale is	The lowest output level where minimum LRAC is achieved
Money spent on past research and development should be considered	Sunk Costs
If a production takes place with fixed proportions, the inputs used in the production process	Cannot be substituted for one another
Under constant returns to scale	The LRAC curve will be horizontal
If labor costs increase, what happens to production isoquants	They will be unchanged
The law of diminishing marginal returns requires	All inputs except one are held constant
A firms average fixed costs	Always decrease as output increases
A firm that is maximizing profit should nonetheless shut down in the short run if	TR is less than TC
The learning curve is the	Inverse relationship between average costs and cumulative output
Duke energy has two plants, one using NG to generate power and the other nuclear. With a limited amount of labor to allocate between the two plans, Dukes decision rule	The Marginal products of the variable input are the same in each facility
MRPL is defined as	The extra revenue resulting from a unit increase in the input
Economies of scope is defined as	Increase in efficiency due to the joint production of multiple products
For a given combo of inputs, a production function shows the corresponding	Maximum output level
In the short run, the MP of labor is zero, then total output	maximized
Marginal Revenue Product of Labor is	(MPl)(MR)
A manager who is considering two alternatives should	Ignore costs that are common to both alternatives
In the SR, if the marginal product of labor is decreasing then	Marginal cost is increasing
A firm maximizes profit by	Expanding or contracting output until MC = MR
The learning curve is the	The relationship between average costs and cumulative output
The MPL is defined as	The additional output produced by an additional unit of labor, ceteris paribus
In the short run, if a firm shuts down, its total cost are	Total fixed costs
A firms average fixed costs	Decrease as output increases
With constant returs to scale	The LRAC curve is horizontal
Economies of scope describe the cost reduction from	Joint production of multiple goods
The law of diminishing marginal returns	Is a short run idea
If the LRAC curve slopes downward over the entire relevant range of outputs, then	The firm has increasing returns to scale
AVC is the	Variable costs divided by output
The opportunity costs of investing all of your savings in a new business is equal to	The rate of return on your savings you could have earned in a comparable investment
A production function is a table, graph, or an equation showing the	Maximum output that can be achieved from specified levels of input
The marginal rate of techinical substitution between inputs	Shows the rate at which one input can be substituted for another without changing the output
The partial Derivative of the production function with respect to labor is	Marginal Product of labor
Whenever marginal product is declining with increasing use of an input, as use of the input increases	Total output is increasing at a decreasing rate
The law of diminishing marginal returns states	The marginal product of the input decreases as inputs increased ceteris peribus
Optimal amount of capital and labor to use in the LR is determined by	MPL/MPK = PL/PK
A graph of the alternative combinations of captial and labor taht can be used to produce a given level of outpt is called	Isoquant
An example of an implicit cost for a small business is te	opportunity ocosts of the capital the owners invested in the business
Over a range of output, AVC costs increases when output increases. Over this range, total fixed costs will	Remain unchanged with increases in output
Average costs decreases as output increases ina production process with	Increasing returns to scale
The minimum efficient scale for a typical firm in teh craset industry is 2 millino units per month. If the total demand for crasets is 6 mil per moth the industry	Is likely to support no more than 3 firms in the LR
When ATC is at a minimum	Marginal Costs is also at a minimum

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