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CA Foundation Managerial Economics — practice questions — page 2

Explore 51 free Managerial Economics questions in CA Foundation Business Economics. Open each question or exercise to read its content, reference answers and available explanation.

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Managerial Economics questions and exercises with answers

Showing questions 31–51 of 51.

Explicit costs are best described as which kind of cost to a firm?Read the answer and worked solution →Implicit costs are opportunity costs of using which resources?Read the answer and worked solution →A person earning $25 an hour leaves work for an hour to buy $200 of supplies. What is the implicit cost?Read the answer and worked solution →For the same person, what is the explicit cost of buying $200 of office supplies?Read the answer and worked solution →Which type of profit does not take opportunity costs into account?Read the answer and worked solution →Which profit measure helps a firm judge whether a decision beats the best alternative use of resources?Read the answer and worked solution →A party that produces a good at a relatively lower opportunity cost than competitors has which advantage?Read the answer and worked solution →Absolute advantage concerns how efficiently resources are used, regardless of what?Read the answer and worked solution →X forgoes 20 t wool for 100 t tea; Y forgoes 100 t wool for 30 t tea. Who has comparative advantage in tea?Read the answer and worked solution →Which economist defined economics through a relationship between ends and scarce means with alternative uses?Read the answer and worked solution →When means are limited and have alternative uses, behaviour necessarily takes the form of what?Read the answer and worked solution →Which two types of scarcity are distinguished in economics?Read the answer and worked solution →Relative scarcity is the condition where human requirements are what compared to available quantities?Read the answer and worked solution →Relative abundance is the condition where available quantities of useful goods are what?Read the answer and worked solution →A scarce good has more quantity demanded than quantity supplied at which price?Read the answer and worked solution →Goods that exist in superfluity, in quantities sufficient to satisfy all wants, are called what?Read the answer and worked solution →Why can a nonscarce good not be contested over ownership?Read the answer and worked solution →According to Samuelson, if infinite quantities of every good could be produced, which would not exist?Read the answer and worked solution →Walras described social wealth as things that are useful and available in what quantity?Read the answer and worked solution →Which decision do firms make when allocating scarce resources?Read the answer and worked solution →Consumers allocate their resources by choosing goods that maximize their happiness, taking into account what?Read the answer and worked solution →

Worked practice questions

Explicit costs are best described as which kind of cost to a firm?

  1. Hidden imputed costs
  2. Out-of-pocket costs
  3. Costs already forgotten
  4. Unmeasured benefits
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Correct answer: B. Out-of-pocket costs

Explicit costs are easily identifiable payments, such as wages and rent, paid through cash or a transfer of resources.

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Implicit costs are opportunity costs of using which resources?

  1. Borrowed bank funds
  2. Resources the firm owns
  3. Rented-in resources
  4. State grants received
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Correct answer: B. Resources the firm owns

Implicit costs arise when the firm uses its own resources that could have earned money elsewhere.

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A person earning $25 an hour leaves work for an hour to buy $200 of supplies. What is the implicit cost?

  1. $200
  2. $225
  3. $175
  4. $25
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Correct answer: D. $25

The implicit cost is the hour of pay given up, $25, while the $200 spent on supplies is the explicit cost.

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More Business Economics topics

Price-Output Determination under Different Market FormsTheory of Consumer BehaviourSupplyTheory of ProductionProduction And CostPublic FinanceBusiness CyclesBasic Problems of an Economy and Role of Price Mechanism