HBX Core Economics for Managers Exam
Question: A market's equilibrium outcome maximizes __
CORRECT ANSWER : Total Surplus. Sum of Producer and
Consumer Surplus
Question: Are auctions more effective when buyers'
valuations are within a narrow range? Or when buyers' valuations are widely spread out?
CORRECT ANSW ER: Auctions are more effective when
valuations are within a narrow range, ensuring that the sale price will be close to the WTP of the second highest bidder
Question: As a business that exhibits network effects gains
market share, buyers' WTP should __
CORRECT ANSWER : Increase. Buyers should be willing
to pay more for their products
Question: As more substitute goods become available, price
elasticity of demand __
CORRECT ANSWER : Increases. The more substitute
goods are available, the less willing consumers will be to put up with increases in price
Question: As more substitute goods become available, price
elasticity of demand __. Why?
CORRECT ANSWER : Increases. The more available are
substitute goods, the less willing consumers will be to put up with increases in price
Question: As price increases, the price elasticity of demand
__? Why?
CORRECT ANSWER : Increases. The higher the price, the
less willing consumers will be to put up with additional increases in price
Question: As price of a product increases, the price elasticity
of demand for that product __
CORRECT ANSWER : Increases. The higher the price, the
less willing consumers may be to accommodate further increases in price
Question: At what point in the demand/supply curve do all
buyers and all sellers participate in the transaction?
CORRECT ANSWER : Market Equilibrium
Question: Businesses that exhibit network effects may
experience __ growth
CORRECT ANSWER : Exponential
Question: What is the definition of Conjoint Analysis?
CORRECT ANSWER : Specialized survey that determines
consumers' preferences for individual features of a product by first ranking the importance of features and then assigning values to each product attribute based on those features
Question: What is Consumer Surplus?
CORRECT ANSWER : Value to Buyers = WTP - Price
Question: What is the definition and formula for Elasticity?
CORRECT ANSWER : Measure of the responsiveness in
one variable to a change in another variable. e = % change in quantity/ % change in price
Question: What is the difference between Elasticity and
Slope?
CORRECT ANSWER : Elasticity varies along a linear
demand curve while slope remains constant
Question: What are the elements of Conjoint Analysis?
CORRECT ANSWER : 1) Pair Wise Rankings 2) Infer
Value from Rankings
Question: High fixed costs lead to ___ minimum efficient
scales of operation for a firm
CORRECT ANSWER : High
Question: How do prices and quantity change with: Increased Demand, Lower Cost, Alternative Substitutes, Higher Cost, Increased Supply, Decreased Supply?