Managerial economics MBA 2

Which of the following explains the Law of Demand?

• As the price of a good rises, its quantity demanded also rises.

• As the price of a good rises, its quantity demanded falls.

• As the price of a good falls, the demand for the good becomes infinite.

• As income rises, demand decreases.

The price elasticity of demand is defined as the ratio of:

• Percentage change in demand to the percentage change in supply.

• Percentage change in quantity demanded to the percentage change in price.

• Percentage change in quantity supplied to the percentage change in price.

• Percentage change in price to the percentage change in quantity demanded.

If the price elasticity of demand is greater than 1, the demand is:

• Inelastic

• Unitary elastic

• Elastic

• Perfectly elastic

The Law of Supply states that:

• As the price of a good rises, the quantity supplied falls.

• As the price of a good rises, the quantity supplied also rises.

• As the price of a good falls, the quantity supplied remains constant.

• Supply is independent of price.

The production function describes the relationship between:

• Output and inputs in the production process.

• Input costs and revenue.

• Government intervention and demand.

• Price and quantity supplied.

Which of the following is the short-run cost that changes with the level of output?

• Fixed cost

• Total cost

• Variable cost

• Opportunity cost

The total cost curve typically becomes steeper due to:

• Diminishing returns to the variable factor.

• Increasing economies of scale.

• Lower variable costs.

• Decreasing fixed costs.

In perfect competition, firms:

• Have control over the market price.

• Are price takers.

• Can set prices above the equilibrium level.

• Operate in monopolistic conditions.

The marginal cost curve intersects the average total cost curve at:

• The minimum point of the marginal cost curve.

• The point of maximum profit.

• The minimum point of the average total cost curve.

• The average revenue curve.

Monopoly is characterized by:

• Many firms producing similar products.

• A single firm controlling the entire market.

• No barriers to entry.

• Perfect competition.