Managerial Economics Quiz

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What is the underlying reason behind the increasing steepness of the short-run marginal cost curve?

The law of diminishing marginal returns (correct)

The law of increasing marginal returns

The law of variable marginal returns

The law of constant marginal returns

What is the term for the phenomenon where rivals match price decreases but not increases in an oligopoly market?

Kinked demand curve model (correct)

Monopsony model

Perfect competition model

Monopolistic competition model

What is the primary reason why fixed costs occur in the short run?

The law of diminishing marginal returns

Some inputs are fixed in the short run (correct)

Some inputs are variable in the long run

The law of increasing marginal returns

What is the term for a section of an organization where revenue and costs can be traced to determine profits?

Profit Center Signup and view all the answers

What is the term for the value to society of all resources used in the production of an item?

Economic cost Signup and view all the answers

For a monopolist, what is the relationship between marginal revenue and price?

Marginal revenue is less than price Signup and view all the answers

Why does the short-run marginal cost curve have an increasingly steeper slope?

Because of the law of diminishing marginal returns Signup and view all the answers

What type of merger occurs between firms operating in different sectors of the economy?

Conglomerate merger Signup and view all the answers

What is the term for the combination of two or more companies at different stages in the value chain?

Vertical integration Signup and view all the answers

When should a firm in perfect competition cease production in the short run?

When price is less than average variable cost Signup and view all the answers

What is the characteristic of the demand curve facing a monopolist?

A negative slope Signup and view all the answers

What is the term for the combination of two or more companies in the same business, carrying out the same process or production?

Horizontal Integration Signup and view all the answers

What happens to the short-run marginal cost curve due to the law of diminishing marginal returns?

It has an increasingly steeper slope Signup and view all the answers

What is the outcome of a dominant firm in an industry?

It sets the price at the same level as a monopolist Signup and view all the answers

What is the characteristic of a well-organized cartel?

It sets prices and quantity at the same levels as a monopolist Signup and view all the answers

What does an economic profit of zero imply?

All inputs are earning as much in their present use as they could in their next best use Signup and view all the answers

What is the term for the prices at which goods and services are bought and sold between divisions or subsidiaries within a group of companies?

Transfer price Signup and view all the answers

What is the term for the series of activities within a firm that serve to create value for the customer?

Value chain Signup and view all the answers