Managerial Economics Chapter 1 Quiz

Economics is the study of how societies manage scarce resources.

Microeconomics focuses on individual consumers and firms, while macroeconomics studies the aggregate economy.

Scarcity arises from the insufficient resources to produce goods and services that can satisfy all needs and desires.

<p>The goal of managerial economics is to make optimal decisions that lead to maximal profit.</p> Signup and view all the answers

<p>Efficiency in economics refers to the absence of waste in resource allocation and production.</p> Signup and view all the answers

<p>The study of economics seeks to understand how societies make choices in managing scarce resources.</p> Signup and view all the answers

<p>Opportunity cost is the highest-valued alternative that must be given up to obtain something.</p> Signup and view all the answers

<p>In economics, rational behavior refers to consumers maximizing their utility and producers maximizing their profit, leading to efficient market outcomes.</p> Signup and view all the answers

<p>People make decisions by comparing costs and benefits, and their behavior may change when costs and/or benefits change.</p> Signup and view all the answers

<p>Trade allows each party to specialize in the activity they do best, leading to a greater variety of goods and services and a higher standard of living.</p> Signup and view all the answers

<p>The 'invisible hand' refers to the idea that prices guide decision makers to reach outcomes that tend to maximize the welfare of society as a whole.</p> Signup and view all the answers

<p>A market economy allocates resources through the decentralized decisions of many firms and households.</p> Signup and view all the answers

<p>Marginal changes are small incremental adjustments to a plan of action, and rational decision makers take an action if the marginal benefit exceeds its marginal cost.</p> Signup and view all the answers

<p>Changes in incentives, such as price changes or regulations, can lead to changes in people's behavior.</p> Signup and view all the answers

<p>To increase equity, society may need to give up on efficiency to some extent, and vice versa.</p> Signup and view all the answers

<p>Externalities refer to consequences of a commercial activity affecting other parties without being reflected in market prices.</p> Signup and view all the answers