Prelims

Question 1

Simply the total cost of production divided by the number of units produced

Answer 1

Average cost

Question 2

Process of breaking down a decision into a series of yes or no decision

Answer 2

Marginal Analysis

Question 3

Is the cost to make and sell one additional unit of output .

Answer 3

Marginal Cost

Question 4

Additional Revenue gained from selling one more unit

Answer 4

Marginal Revenue

Question 5

Often have to decide between competing strategies to achieve the same end

Answer 5

Managers

Question 6

When choosing between two alternatives, usually only one of the two choices can be selected

Answer 6

Opportunity Cost

Question 7

Financial or non-monetary reward offered to employees for performance rather than the total number of hours worked.

Answer 7

Incentive Pay

Question 8

Used as motivated tool to boost morale

Answer 8

Incentive Pay

Question 9

Can be offer individually

Answer 9

Reward

Question 10

Disadvantage of incentive pay

Answer 10

•Overtime, it can create a sense of entitlement, decreasing motivation and lowering performance.
•It can negatively affect employees job satisfaction
• It can create tension among co-workers

Question 11

Process whereby interest is credited to an existing principal amount

Answer 11

Compounding

Question 12

Process of converting a value received in a future time period

Answer 12

Discounting

Question 13

Critical element in investment decision

Answer 13

Time

Question 14

Financial calculation that weights the cost of a new business

Answer 14

Break-even analysis

Question 15

Average avoidable cost per unit

Answer 15

Break-even price

Question 16

sometimes called retrospective cost

Answer 16

sunk cost

Question 17

two partners may able to work most efficiently by cooperating

Answer 17

post investment hold up

Question 18

often called dismal science

Answer 18

economic

Question 19

is a term coined by Scottish essayist and historian thomas Carlyle

Answer 19

dismal science

Question 20

cose of a single firm, selling a single product at a single price

Answer 20

simple pricing

Question 21

consumer purchase more as price fall

Answer 21

first law of demand

Question 22

relationship between the price and the number of purchases made by this group of consumer

Answer 22

aggregate or market demand curve

Question 23

deman curve present seller with a dilemma

Answer 23

marginal analysis of pricing

Question 24

measure the sensitivity of quantity demanded to price change

Answer 24

price elasticity

Question 25

5 factors that affect demand

Answer 25

1. product with close substitutes have more elastic demand
2. demand for an individual brand is more elastic than industry aggregate demand
3. product with many complements have elastic demand
4. in long run, demand curve become more elastic
5. as price increases, demand become more elastic

Question 26

measures the change in demand arising from changes in income

Answer 26

income elasticity of demand

Question 27

pricing strategy in which company add as markup to the price of a product over the cost of production and manufacturing

Answer 27

cost based pricing

Question 28

where it is the price point at which the total profit of the seller is maximized

Answer 28

optimal price

Question 29

refers to increase in production cost generated by the production of additional product unit

Answer 29

marginal cost

Question 30

often arise when more workers, or any variable input, must share fixed amount of a complementary input

Answer 30

bottlenecks

Question 31

production becomes more efficient as the number of goods being produced increases

Answer 31

economies of scale

Question 32

Important input to the production process

Answer 32

management

Question 33

characteristics of many processes

Answer 33

learning curves

Question 34

if the cost of producing two products jointly is less than the cost of producing those two products separately, then there are ____

Answer 34

economies of scope

Question 35

if the cost producing two products together is higher than the cost of producing them separately

Answer 35

diseconomies of scope