Final Mock Sol
Mock Final Examination
Managerial Economics
Prof. Volker Hoffmann
Prof. Thomas Rutherford
Florian Landis
February 10, 2012
N.B. Mock questions related to Professor Hoffmann’s case studies are not included here.
1
Multiple Choice
Note the one correct answer on your answer sheet.
1. Which of the following statements is most likely true regarding economic and accounting profits? A. Economic profits minus accounting profits generally equal zero.
B. Economic profits plus accounting profits generally equal zero.
C. Economic profits are generally less than accounting profits.
D. Economic profits are generally greater than explicit costs.
2. If the interest rate is 2.5%, $870 received at the end of 8 years is worth how much today?
A. 870/(0.025)8 .
B. 870/(1 + 0.025)8 .
C. 870/(1 − 0.025)8 .
D. None of the above.
3. When government imposes a price floor below the market price, the result will be that
A. surpluses occur.
B. shortages become a problem.
C. supply and demand will shift up to the new equilibrium.
D. A price floor set below the equilibrium price will have no effect on the market equilibrium.
4. If an increase in the price of hot tea decreases the demand for honey, this indicates that
A. the two goods are substitutes.
B. the two goods are complements.
C. hot tea is an inferior good.
D. honey is an inferior good.
1
5. The demand for good X has been estimated to be Qx = 11−0.5Px +5Py . Suppose that good
X sells at $4 per unit and good Y sells for $1 per unit. Calculate the own price elasticity.
A. -0.14.
B. -0.3.
C. -0.4.
D. -0.6.
6. The own-price elasticity of demand for oranges is -4.5. If the price of oranges decreases by
2%, what will happen to the quantity of oranges demanded?
A. It will rise 9%.
B. It will rise 2.25%.
C. It will fall 9%.
D. It will fall 2.25%.
7. A decrease in the price of good X will have what effect on the budget line on a normal X-Y graph? A. Decrease the vertical intercept.
B. Increase the vertical intercept.
C. Decrease the
Managerial Economics
Prof. Volker Hoffmann
Prof. Thomas Rutherford
Florian Landis
February 10, 2012
N.B. Mock questions related to Professor Hoffmann’s case studies are not included here.
1
Multiple Choice
Note the one correct answer on your answer sheet.
1. Which of the following statements is most likely true regarding economic and accounting profits? A. Economic profits minus accounting profits generally equal zero.
B. Economic profits plus accounting profits generally equal zero.
C. Economic profits are generally less than accounting profits.
D. Economic profits are generally greater than explicit costs.
2. If the interest rate is 2.5%, $870 received at the end of 8 years is worth how much today?
A. 870/(0.025)8 .
B. 870/(1 + 0.025)8 .
C. 870/(1 − 0.025)8 .
D. None of the above.
3. When government imposes a price floor below the market price, the result will be that
A. surpluses occur.
B. shortages become a problem.
C. supply and demand will shift up to the new equilibrium.
D. A price floor set below the equilibrium price will have no effect on the market equilibrium.
4. If an increase in the price of hot tea decreases the demand for honey, this indicates that
A. the two goods are substitutes.
B. the two goods are complements.
C. hot tea is an inferior good.
D. honey is an inferior good.
1
5. The demand for good X has been estimated to be Qx = 11−0.5Px +5Py . Suppose that good
X sells at $4 per unit and good Y sells for $1 per unit. Calculate the own price elasticity.
A. -0.14.
B. -0.3.
C. -0.4.
D. -0.6.
6. The own-price elasticity of demand for oranges is -4.5. If the price of oranges decreases by
2%, what will happen to the quantity of oranges demanded?
A. It will rise 9%.
B. It will rise 2.25%.
C. It will fall 9%.
D. It will fall 2.25%.
7. A decrease in the price of good X will have what effect on the budget line on a normal X-Y graph? A. Decrease the vertical intercept.
B. Increase the vertical intercept.
C. Decrease the