Managerial Economics Quiz

What does the concept of "opportunity cost" refer to in managerial economics?

• The cost of acquiring additional capital

• The cost of the next best alternative foregone

• The fixed cost of production

• The total cost of raw materials

Which of the following best describes "marginal cost"?

• Total cost divided by the number of units produced

• The cost of producing one additional unit of output

• The cost associated with the total production capacity

• The difference between average total cost and average variable cost

In the short run, which cost remains fixed regardless of the level of output?

• Variable cost

• Total cost

• Marginal cost

• Fixed cost

The concept of "price elasticity of demand" measures:

• The sensitivity of quantity demanded to changes in income

• The sensitivity of quantity demanded to changes in the price of a substitute

• The sensitivity of quantity demanded to changes in the price of the good itself

• The sensitivity of quantity demanded to changes in consumer preferences

Which market structure is characterized by a few large firms with significant market power and barriers to entry?

• Perfect competition

• Monopolistic competition

• Oligopoly

• Monopoly

In a perfectly competitive market, firms are considered:

• Price makers

• Price takers

• Market shapers

• Demand setters

The "law of diminishing marginal returns" suggests that:

In a monopolistic market, a firm maximizes profit by setting output where:

"Sunk costs" are:

Which of the following is not a characteristic of a public good?

• Non-excludability

• Non-rivalry

• High marginal cost of provision

• Free rider problem