MANAGERIAL ECONOMICS

QUIZZES
Make to stock (MTS) a traditional manufacturing strategy used by businesses to match inventory with anticipated consumer
demand

Variable A ______ is a quantity that can have multiple values.

Giffen Good A low-income, non-luxury item that defies conventional economic and consumer demand theory.

negative relationship Two variables have a _______ when an increase in the value of one variable is associated with a
decrease in the value of the other vanable.

Veblen good A _____ is one for which demand rises as the price rises due to its exclusivity and appeal as a status
symbol.

independent variable The determining quantity is called the _______.

law of diminishing According to the _________, as consumption increases, the marginal utility derived from each
marginal utility additional unit decreases.

bar graph A ______ uses bars of varying height or length to show the comparative sizes of different
observations of a variable.

utility In economics, ______ refers to the total satisfaction or benefit gained from consuming a good or
service.

maximum point A nonlinear curve may have a _______, which is the highest point along the curve.

aggregate demand The total amount of demand for all finished goods and services produced in an economy is measured
as _______.

demand model The ______ states that, all else being equal, a higher price for a good or service causes people to
demand a smaller quantity of that good or service.

price level The ______ is the average of current prices across an economy's entire range of goods and services.

slope The _____ of a line or curve is a measure of how steep it is.

theory of demand-side The ____________ holds that the demand for goods and services drives economic activity.
economics

causal relationship A _________ exists between two variables when the value taken by one variable directly influences
or determines the value taken by the other variable.

normal good A _______ is one that sees an increase in demand due to an increase in consumer income.

purchasing power The ________ of a currency is the number of goods or services that one unit of money can purchase.

inferior good An ________ is a term used in economics to describe a good whose demand decreases as people's
incomes rise.

Consumer goods ________, also known as final goods, are items sold to consumers for their personal use or
enjoyment.

Supply It is a fundamental economic concept that describes the total amount of a specific good or service that
consumers have access to.

Disruptive Innovation It refers to advancements and technologies that make expensive or sophisticated products and
services more accessible and affordable to a larger market.
Industrial Revolution It was a period of significant mechanization and innovation that began in the mid 18th century and
early 19th century in Great Britain and later spread throughout much of the world.

Supply Chain Finance It is a collection of technologically advanced business and financing processes that reduce costs and
increase efficiency for all parties involved in a transaction.

money supply The amount of cash or currency circulating in an economy is referred to as the ______.

Short-term supply The supply describes how a buyer's ability to purchase goods is limited by available supplies. Buyers
are not permitted to purchase items other than those supplied.

Long-term supply The supply explains the availability of time whenever demand changes - that is, the availability of
time allows the supplier to adjust to a sudden shift in demand.

Joint Supply The supply that explains the consequential supply. Lamb production, for example, has an impact on
meat and wool supply.

Market supply The supply describes the overall willingness and ability of all suppliers to supply a specific product to
the market on a daily basis purpose.

Composite supply The supply that refers to the supply of products that serve more than one purpose.

Supply curve It depicts the relationship between quantity and price.

Shift of the supply curve It is a change in the quantity supplied of a good or service at any given price.

Movement along the It is a change in the quantity supplied of a good that is the result of a change in that good's price.
supply curve

Input It is a good or service that is used to produce another good or service.

Individual supply curve It depicts the relationship between quantity supplied and price for a single producer.

Walras’s Law An economic theory that states that excess supply in one market must be matched by the demand in
another market in order for both factors to be balanced.

Marginal cost The cost difference for producing one additional good or incremental unit of service.

Free market It is one in which voluntary exchange and supply and demand laws serve as the sole foundation of the
economic system, with no government intervention.

Economies of scale When more units of a good or service can be manufactured on a larger scale while incurring(on
average) lower input costs.

Price discrimination A selling strategy in which the seller charges customers different prices for the same product or
service based on what the seller believes the customer will agree to.

Elasticity It is a measure of a variable's sensitivity to a change in another variable, most commonly the change
in quantity demanded relative to other factors such as price.

Inelastic It refers to the static quantity of a good or service when its price changes.

Cross Elasticity of It is an economic concept that measures how responsive one good's demand is when the price of
Demand another good changes.

Midpoint method It computes changes in a variable in relation to the average, or midpoint, of the starting and ending
values.

Income elasticity of Percent change in quantity of a good demanded when a consumer's income changes divided by the
demand (YED) percent change in consumer's income
 Surplus Describes the amount of an asset or resources that exceeds the portion that is actively utilized.

Deficit It occurs when expenses outnumber revenues, imports outnumber exports, or liabilities outnumber assets.

Welfare The study of how the allocation of resources and goods affects social welfare
economics

Consumer It occurs when price paid by consumer for a product or service is less than the price they are willing to pay.
surplus

Producer The difference between how much a person would be willing to accept for a given quantity of a good versus
surplus how much they can receive by selling the good at the market price.

1. If Neil's elasticity of demand for hot dogs is constantly 0.9, and he buys 4 hot dogs when the price is $1.50 per hot
dog, how many will he buy when the price is $1.00 per hot dog?

2. Katherine advertises to sell cookies for $4 a dozen. She sells 50 dozen, and decides that she can charge more. She
raises the price to $6 a dozen and sells 40 dozen. What is the elasticity of demand? Assuming that the elasticity of
demand is constant, how many would she sell if the price were $10 a box?

Price Demand Supply

60 22 14

80 20 16

100 18 18

120 16 20

Calculate the price elasticity of demand when the price is ____ and when the price is ____.
Calculate the price elasticity of supply when the price is ____ and when the price is ____.