Name: Class number:

Section: Schedule: Date:

QUIZ #1
Score:
Part 1. Multiple Choice (1 pt. each)
Direction: Write the letter of your answer on the space provided after the given number.

1. The characteristic from which all economic problem arise is

a. a valid economic choice c. hunger
b. how to make profit d. scarcity.

2. . If a decision is made and it is the best choice for society, the decision is said to be
a. a valid economic decision c. made in social interest
b. made in self-interest d. a want-maximizing choice.

3. Scarcity results from the fact that

a. people’s wants exceed the resources available to satisfy them
b. not all goods are desirable
c. we cannot answer the major economic question
d. the population is growing

4. . To economist, scarcity means that

a. Limited wants cannot be satisfied by the unlimited resources.
b. A person looking for work is not able to find work.
c. The number of people without jobs rises when economic times are bad.
d. There can never be answers to the what, how or for whom questions.

5. Ceteris paribus is a Latin phrase that literally means

a. “after this therefore because of this.” c. “to respond slowly to a change in price.”
b. “other things being equal.” d. “There’s no such thing as a free lunch.”

6. The question “Should we produce LCD televisions or computer monitors?” is an example of a question
question.
a. What b. How c. For Whom d. Why

7. The question “Should we produce houses using bricks or wood?” is an example of a

question.
a. What b. How c. For Whom d. Why

8. The question “Should economic majors or sociology majors earn more after they graduate?” is an example
of a question.
a. What b. How c. For Whom d. Why

9. Buyer power is high if:

a. Differentiation is low.
b. Switching costs are low.
c. They have little information.
d. The buyer requires a high-quality product for their own production.

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10. The opportunity cost of any action is
a. all the possible alternatives forgone. c. the time required but not the monetary cost.
b. the best alternative forgone. d. the monetary cost but not the time required.

11. . Suppose a firm sells its product at a price lower than the opportunity cost of the inputs used to
produce it. Which is true?
a. The firm will earn accounting and economic profits.
b. The firm will face accounting and economic losses.
c. The firm will face an accounting loss, but earn economic profits.
d. The firm may earn accounting profits, but will face economic losses.

12. . The opportunity cost of an item is

a. what you give up to get that item.
b. always equal to the dollar value of the item.
c. always less than the dollar value of the item.
d. the number of hours needed to earn the money to buy it.

13. Which would be an implicit cost for a firm? The cost:

a. of worker wages and salaries for the firm.
b. paid for leasing a building for the firm.
c. paid for production supplies for the firm.
d. of wages foregone by the owner of the firm.

14. Which of the following is the best definition of managerial economics? Managerial economics is
a. a distinct field of economic theory.
b. a field that applies economic theory and the tools of decision science.
c. a field that combines economic theory and mathematics.
d. none of the above.

15. Which of the following areas of economic theory is the single most important element of managerial
economics?
a. Mathematical economics c. Macroeconomics
b. Econometrics d. Microeconomics

16. If Diane receives an increase in her pay, we would expect Diane’s demand for
a. each good to remain unchanged. c. for luxury goods to decrease.
b.for inferior goods to increase. d. for normal goods to increase.

17 .Scarcity guarantees that

a. wants will exceed demands. b. demands will be equal to wants.
c. demands will exceed wants. d. most demands will be satisfied.

18 .A drop in the price of a compact disc shifts the demand curve for prerecorded tapes leftward. From that you know
compact discs and prerecorded tapes are
a. normal goods. b. substitutes. c. inferior goods. d. complements

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19 Demonstrating how an economic variable changes from one year to the next is best illustrated by a
b. Scatter diagram c. linear graph
c. Time-series graph d. cross-section graph

20 To show the values of an economic variable for different groups in a population at a point in time, it is best to use a
d. Scatter diagram c. linear graph
e. Time-series graph d. cross-section graph

21 If whenever one variable increases, another variable also increases, then these two variable are
related.
a. positively b. negatively c. inversely d. cross-sectional

22 A graph of the relationship between two variables is a line that slopes down to the right. These two variables are
related.
a. positively b. directly c. negatively d. trend-line

Enumeration:

I. Enumerate Porter’s Five Forces Framework

II. Enumerate three sources of rivalry

PORTER’S FIVE FORCES FARMEWORK

1. Industry rivalry

2. Power of Input suppliers

3. Power of Buyers

4. Threat to new entry

5. Substitutes and Complements

THREE SOURCES OF RIVALRY

1. Consumer-Consumer Rivalry

2. Consumer-Producer Rivalry

3. Producer- Producer Rivalry

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