Name  

Date  

03 ManEco Q2 Score  

1. It is an individual who purchases goods and se vices from fi ms for the purpose of
consumption.
A Consumer

B Buyer

C Costumer

D Buyer

2. This factor of consumer behavior represents the possible goods and se vices consumers can
afford to consume.
A Consumer oppo tunity

B Consumer preferences

C Affordability

D Willingness

3. This factor of consumer behavior dete mines which of the goods will be consumed.
A Consumer preference

B Consumer oppo tunity

C Affordability

D Willingness

4. The manager of a company has an analysis for their offered bundles that consumers do not
prefer one over another, meaning, consumers prefer whichever in the choices. This prope ty
of consumer behavior is an example of
A Completeness

B More is better

C Diminishing marginal rate of substitution

D Transitivity
5. The consumers prefer bundles with more content than the other where both bundles meet
the indifference cu ve. This prope ty of consumer behavior is an example of
A More is better

B Completeness

C Diminishing marginal rate of substitution

D Transitivity

6. This prope ty of consumer behavior states that if the first bundle is better than the second
bundle and the second bundle is better than the third bundle, therefore, the first bundle is
better than the third bundle
A Transitivity

B More is better.

C Completeness

D Diminishing marginal rate of substitution

7. This defines the combinations of two goods that give a consumer the same level of
satisfaction.
A Indifference cu ve

B Combinato y satisfaction

C Satisfaction cu ve

D Indifference combination

8. Individuals making decision face constraints which include all of the following, except
A None of the choices

B legal constraints

C time constraints

D physical constraints

9. This constraint rest icts consumer behavior by forcing the consumer to select a bundle of
goods that is affordable, meaning, those do not exceed the consume ’s income.
A budget constraint

B income constraint

C time constraint

D physical constraint
10. Applications of indifference cu ve analysis include all of the following, except
A None of the choices

B Reward points

C Gift Ce tificates

D Buy Two, Get One Free

E Income and Leisure Choice

11. The break-even point is that level of activity where:

A total revenue equals total cost.

B va iable cost equals fixed cost.

C total cont ibution margin equals the sum of va iable cost plus fixed cost.

D sales revenue equals total va iable cost.

12. The unit cont ibution margin is calculated as the difference between:
A selling p ice and va iable cost per unit.

B selling p ice and fixed cost per unit.

C selling p ice and product cost per unit.

D fixed cost per unit and va iable cost per unit.

13. At a volume of 15,000 units, Boston repo ted sales revenues of P600,000, va iable costs of
P225,000, and fixed costs of P$120,000. The company's cont ibution margin per unit is:
A P25.

B P17.

C P47.

D P55.

14. A recent income statement of Fox Corporation repo ted the following data: Sales revenue,
P3,600,000; Va iable costs, P1,600,000; Fixed costs, P1,000,000. If these data are based on
the sale of 10,000 units, the break-even point would be:
A 5,000 units.

B 2,000 units.

C 2,778 units.

D 3,600 units.
15. A recent income statement of Yale Corporation repo ted the following data: Sales revenue,
P2,500,000; Va iable costs, P1,500,000; Fixed costs, P800,000. If these data are based on
the sale of 5,000 units, the break-even sales would be:
A P2,000,000.

B P2,206,000.

C P2,500,000.

D P10,000,000.

16. Lawton, Inc., sells a single product for P12. Va iable costs are P8 per unit and fixed costs total
P360,000 at a volume level of 60,000 units. Assuming that fixed costs do not change,
Lawton's break-even point would be:
A 90,000 units.

B 30,000 units.

C 45,000 units.

D Answer not given

17. O ion recently repo ted sales revenues of P800,000, a total cont ibution margin of P300,000,
and fixed costs of P180,000. If sales volume amounted to 10,000 units, the company's
va iable cost per unit must have been:
A P50.

B P12.

C P32.

D P92.

18. The cont ibution-margin ratio is:

A unit cont ibution margin divided by the selling p ice.

B the difference between the selling p ice and the va iable cost per unit.

C fixed cost per unit divided by va iable cost per unit.

D va iable cost per unit divided by the selling p ice.

19. Which of the following expressions can be used to calculate the break-even point with the
cont ibution-margin ratio CMR ?
A Fixed costs ÷ CMR.

B CMR ÷ fixed costs.

C CMR x fixed costs.

D Fixed costs + va iable costs) x CMR.

E Sales revenue - va iable costs) ÷ CMR.

20. Archie sells a single product for $50. Va iable costs are 60% of the selling p ice, and the
company has fixed costs that amount to $400,000. Cu rent sales total 16,000 units. Archie:
A will break-even by selling 1,000,000 units.

B will break-even by selling 8,000 units.

C will break-even by selling 13,333 units.

D will break-even by selling 20,000 units.

21. The difference between budgeted sales revenue and break-even sales revenue is the:
A margin of safety.

B cont ibution margin.

C cont ibution-margin ratio.

D target net profit.

22. With respect to a fixed cost, an increase in the activity level within the relevant range results
in:
A a decrease in fixed cost per unit.

B an increase in fixed cost per unit.

C a propo tionate increase in total fixed costs.

D an unchanged fixed cost per unit.

23. Which of the following would usually be considered a discretiona y fixed cost for a soft d ink
bottling company?
A the cost of adve tising its products

B the cost of fire insurance on its facto y building

C depreciation on its manufactu ing equipment

D none of teh choices

24. A va iable cost fluctuates in total as activity changes but remains constant on a per unit basis
over the relevant range. Within the relevant range, a change in activity results in a change in
total va iable cost and the per unit fixed cost.
A T ue, T ue

B False, False

C False, T ue

D T ue, False
25. Fixed costs remain constant in total, but va y inversely with changes in activity when
expressed on a per unit basis. Committed fixed costs have a sho t-te m planning ho izon-
usually one year.
A T ue, False

B T ue, T ue

C False, False

D False, T ue

26. A p ice elasticity of zero co responds to a demand cu ve that is:

A ve tical.

B ho izontal.

C downward sloping with a slope always equal to 1.

D either ve tical or ho izontal.

27. As we move down along a linear demand cu ve, the p ice elasticity of demand becomes
more:
A inelastic.

B elastic.

C log-linear.

D va iable.

28. If apples have an own p ice elasticity of 1.2 we know the demand is:
A elastic.

B unita y.

C indete minate.

D inelastic.

29. If quantity demanded for sneakers falls by 10 percent when p ice increases 25 percent, we
know that the absolute value of the own p ice elasticity of sneakers is:
A 0.4.

B 2.5.

C 2.0.

D 0.27.
30. The quantity consumed of a good is relatively unresponsive to changes in p ice whenever
demand is:
A inelastic.

B elastic.

C unita y.

D falling.

31. If the absolute value of the own p ice elasticity of steak is 0.4, a decrease in p ice will lead to:
A a reduction in total revenue.

B an increase in total revenue.

C no change in total revenue.

D None of the statements is co rect.

32. If a p ice increase from P5 to P7 causes quantity demanded to fall from 150 to 100, what is
the absolute value of the own p ice elasticity at a p ice of P7?
A 1.75

B 0.57

C 0.02

D 1.24

33. Demand is pe fectly elastic when the absolute value of the own p ice elasticity of demand is:
A infinite.

B zero.

C one.

D unknown.

34. The demand cu ve for a good is ho izontal when it is:

A a pe fectly elastic good.

B a pe fectly inelastic good.

C a unita y elastic good.

D an infe ior good.

35. Which of the following factors would NOT affect the own p ice elasticity of a good?
A P ice of an input

B Time

C Available substitutes

D Expenditure share

36. Lemonade, a good with many close substitutes, should have an own p ice elasticity that is:
A relatively elastic.

B unita y.

C relatively inelastic.

D pe fectly inelastic.

37. We would expect the demand for jeans to be:

A more elastic than the demand for clothing.

B less elastic than the demand for clothing.

C the same as the demand for clothing.

D neither more elastic, less elastic, nor the same elasticity as that of the demand for clothing.

38. Demand is more inelastic in the sho t te m because consumers:

A have no time to find available substitutes.

B are impatient.

C are present-o iented.

D None of the statements is co rect.

39. The elasticity which shows the responsiveness of the demand for a good due to changes in
the p ice of a related good is the:
A own p ice elasticity.

B income elasticity.

C log-linear elasticity.

D cross-p ice elasticity.

40. If the cross-p ice elasticity between goods A and B is negative, we know the goods are:
A complements.

B infe ior goods.

C no mal goods.

D substitutes.
41. If the cross-p ice elasticity between ketchup and hamburgers is 1.2, a 4 percent increase in
the p ice of ketchup will lead to a 4.8 percent:
A drop in quantity demanded of hamburgers.

B drop in quantity demanded of ketchup.

C increase in quantity demanded of ketchup.

D increase in quantity demanded of hamburgers.

42. If the p ice of pork chops falls from P8 to P6, and this leads to an increase in demand for
apple sauce from 100 to 140 jars, what is the cross-p ice elasticity of apple sauce and pork
chops at a pork chop p ice of P6?
A 0.86

B 1.17

C 2.71

D 0.42

43. The elasticity that measures the responsiveness of consumer demand to changes in income
is the:
A income elasticity.

B own p ice elasticity.

C cross-p ice elasticity.

D neither the income elasticity, the own p ice elasticity, nor the cross-p ice elasticity.

44. An income elasticity less than zero tells us that the good is:
A an infe ior good.

B a no mal good.

C an elastic good.

D an inelastic good

45. If the income elasticity for lobster is 0.4, a 40 percent increase in income will lead to a:
A 16 percent increase in demand for lobster.

B 10 percent drop in demand for lobster.

C 20 percent increase in demand for lobster.

D 4 percent increase in demand for lobster.

46. Which of the following is a co rect statement about the own p ice elasticity of demand?
A All of the statements are co rect.

B Demand tends to be more inelastic in the sho t te m than in the long te m.

C Demand tends to be more elastic as more substitutes are available.

D Demand tends to be more inelastic for goods that comp ise a smaller share of a consume 's
budget.

47. You are the manager of a popular hat company. You know that the adve tising elasticity of
demand for your product is 0.25. How much will you have to increase adve tising in order to
increase demand by 5 percent?
A 20 percent

B 0.05 percent

C 25 percent

D 1.25 percent

48. In the long un, fi ms may expe ience increasing retu ns because they operate more
efficiently. With growth comes specialization of labor and related production efficiencies
related to the law of diminishing retu ns. This phenomenon is called
A Economies of scale.

B Law of diminishing retu ns.

C Law of supply and demand.

D Efficiency va iance.

49. Because of the existence of economies of scales, business fi ms may find that
A Increasing the size of a facto y will result in lower average costs.

B Each additional unit of labor is less efficient that the previous unit.

C As more labor is added to a facto y, increases in output will diminish in the sho t un.

D Increasing the size of a facto y will result in lower total costs.

50. In the long un, a fi m may expe ience increasing retu ns due to
A Economies of scale.

B Law of diminishing retu ns.

C Comparative advantage.

D Oppo tunity costs.

51. Marginal cost
A Is the additional cost of producing one additional item.

B Is the income or benefit foregone when the next best alte native is chosen.

C Is the difference between relevant costs.

D Is a sunk cost.

52. Which of the following statements about the different types of economic market is inco rect?
A A monopolistiv competition is characte ized by one fi m selling different products.

B Oligopoly is characte ized by a few fi ms in the indust y.

C A natural monopoly has only one fi m.

D A ca tel is a group of fi ms that have joined together to fix p ices.

53. Which of the following is not a characte istic of pe fect competition?

A Each fi m can set a p ice higher than the indust y p ice.

B The level of the fi m's output is small relative to the indust y's total output.

C Fi ms sell a homogenous product.

D Customers are indifferent about which fi m to buy from.

54. The ultimate purpose of competitor analysis is to

A Understand and predict the behavior of the competition.

B Provide ent y ba iers to competitors.

C Fo m a ca tel.

D Dete mine the competito 's strengths and weaknesses.

55. In any competitive market, an equal increase in both demand and supply can be expected to
always
A increase market-clea ing quantity.

B increase both p ice and market clea ing-quantity.

C decrease both p ice and market clea ing-quantity.

D increase p ice.
56. In a competitive market for labor, in which demand is stable if workers t y to increase their
wage?
A Employment must fall.

B Gove nment must set a maximum wage below equilib ium wage.

C Fi ms in the indust y must become smaller.

D Product supply must decrease.

57. A characte istic of a monopoly is that

A A monopoly will produce when marginal revenue is equal to marginal cost.

B There are multiple p ices for the product to the consumer.

C There is a unique relationship between the market p ice and the quantity supplied.

D In optimizing profits, a monopoly will increase its supply cu ve to where the demand cu ve
becomes inelastic.

58. The distinguishing characte istic of oligopolistic markets is

A Mutual interdependence of fi m p icing and output decisions.

B Lack of ent y and exit ba iers in the indust y.

C A single seller of a homogeneous product with no close substitute.

D A single seller of a heterogeneous product with no close substitute.

59. An indust y that is oligopolistic would be best characte ized by

A Significant ba iers to ent y.

B The absence Of the profit-maximizing goal.

C One fi m selling a product with no close substitutes.

D Ho izontal or flat demand cu ves for the output of individual fi ms.

60. ABC Corporation is pe fo ming research to dete mine the feasibility of ente ing the t uck
rental indust y. The decision to enter the market is most likely to be defe red if
A The market is dominated by a small conso tium of buyers.

B Buyers view the product as differentiated.

C Buying fi ms enjoy large profit margins on their end products.

D The fixed costs are high in relation to va iable costs in the t uck rental indust y.