1. Which of the following is considered an implicit cost?

A. Use of your labor services in manning your business without paying yourself

B. Converting your existing warehouse to a store without charging any cost

C. The assistance provided by a relative without receiving a payment

D. All are examples of implicit cost

E. No correct answer

2. Which of the following is correct with respect to economic profit?

A. Economic profit is positive if total revenue is higher than explicit cost

B. Economic profit is positive if total revenue is higher than implicit cost

C. Economic profit is positive if total revenue is higher than the sum of implicit and explicit costs

D. Any of the A, B, and C are correct

E. None is correct

3 Managerial economics is based on the principles of:

A. Monetary economics

B. Public sector economics

C. Microeconomics

D. Institutional economics

E. None is correct

4. Which is/are correct?

A. Managerial economics is based on the Keynesians framework of correcting the short-run fluctuations in the economy

B. Managerial economics is based on the Neoclassical framework of maximizing the profits of the firm

C. Managerial economics is based on the Keynesian framework of aligning production with demand

D. A and B are correct

E. B and C are correct

5 Which of the following is important in making managerial decisions?

A. Analyzing the number of competitors to decide on optimal output and pricing

B. Understanding the psychology of the consumers to aid in developing a marketing strategy

C. Getting updates on government regulations and policies so the manager can violate the rules without being caught

D. A and B are important

E. A, B and C are important

6. Given a demand equation Q = 100 - 10 P, what is the inverse demand? Note that Q refers to the quantity demanded even if we do not represent it by Qd

A. P = 100 - 10 Q

B. P = 100 - 0.10 Q

C. P = 10 - 10 Q

D. P = 10 - 1/10 Q

E. No correct answer

7. Given the information in number 8, what is the total revenue equation? Note: caret (^) is used to indicate that the number next to it is an exponent

A. TR = 10 Q - 0.10 Q^2

B. TR = 100 Q - 10 Q^2

C. TR = 100 Q - 10 Q^3

D. TR = 10 Q - 10 Q^2

E. No correct answer

8. Which is correct in the graphical presentation of data in economics?

A. Price is an considered a dependent variable so it is written on the vertical axis, quantity demanded is the independent variable so it is written on the horizontal axis

B. Price is an considered the independent variable although it is written on the vertical axis, quantity demanded is the dependent variable although it is written on the horizontal axis

C. The graphical representation of demand is based on the inverse demand equation

D. A and C are correct

E. B and C are correct

9. Which of the representations of demand for a product provides a quick analysis?

A. Table because it shows the specific values for the quantities demanded by the consumers for the given prices

B. Graph which provides a generalization of the relationship between quantity demanded and price for the product

C. Equation which shows how the quantity demanded is calculated given the prices

D. There is no quick way to analyze data, one has to look at the minute details before one can make a conclusion on the basic relationship between price and quantity demanded

10. Which of the following statements is correct with respect to profit maximization?

A. If the total revenue and the total cost functions are linear functions, and the total revenue function is above the total cost function, the firm can produce as many as it wants and there will be economic profits.

B. If the total revenue and the total cost functions are linear functions, but the total revenue function is below the total cost function, the optimal output is zero.

C. If the total cost function is linear, the total revenue function is quadratic with an inverted U shape, and there are output where the total revenue is greater than the total cost, there is a unique optimal output that maximizes profits

D. A and C are correct

E. A, B and C are correct