Question 1

A market in which the Herfindahl-Hirschman Index (HHI)lies between 1,000 and 1,800 is regarded as being

Accepted Answer

A) a monopoly. 
B) an oligopoly. 
C) a perfectly competitive market. 
D) a moderately competitive market. 
E) a potential matter of concern for regulators. 
A) a monopoly. 
B) an oligopoly. 
C) a perfectly competitive market. 
D) a moderately competitive market. 
E) a potential matter of concern for regulators.

Question 2

In a monopoly,the four-firm concentration ratio is

Accepted Answer

A) 75 percent. 
B) 100 percent. 
C) almost zero. 
D) 25 percent. 
E) 50 percent. 
A) 75 percent. 
B) 100 percent. 
C) almost zero. 
D) 25 percent. 
E) 50 percent.

Question 3

Which of the following is part of a firm's opportunity cost of production?
I.wages
II.utility costs
III.interest on a bank loan
IV.interest forgone on funds used to buy capital equipment

Accepted Answer

A) I only 
B) II only 
C) III only 
D) IV only 
E) I, II, III, and IV 
A) I only 
B) II only 
C) III only 
D) IV only 
E) I, II, III, and IV

Question 4

A golf club manufacturer pays its workers based on the number of sets of clubs they produce.This firm

Accepted Answer

A) organizes production based on a command system. 
B) does not have a principal-agent problem. 
C) is a sole proprietorship. 
D) organizes production based on an incentive system. 
E) is a corporation. 
A) organizes production based on a command system. 
B) does not have a principal-agent problem. 
C) is a sole proprietorship. 
D) organizes production based on an incentive system. 
E) is a corporation.

Question 5

In the relationship between the owner of a bakery and the baker,the owner is

Accepted Answer

A) an agent, as is the baker. 
B) an agent and the baker is a principal. 
C) a principal and the baker is an agent. 
D) a principal, as is the baker. 
E) neither a principal nor an agent, but the baker is an agent. 
A) an agent, as is the baker. 
B) an agent and the baker is a principal. 
C) a principal and the baker is an agent. 
D) a principal, as is the baker. 
E) neither a principal nor an agent, but the baker is an agent.

Question 6

Marc bought a new car last year for $10,000.He can now sell the car for $8,500.To buy this year's model of the same car he would have to pay $11,000.What is the one-year amount of economic depreciation?

Accepted Answer

A) $2,500 
B) $1,500 
C) $1,000 
D) $10,000 
E) $3,500 
A) $2,500 
B) $1,500 
C) $1,000 
D) $10,000 
E) $3,500

Question 7

The North American economy is ________ and is becoming ________ competitive.

Accepted Answer

A) uncompetitive;less 
B) competitive;more 
C) competitive;less 
D) uncompetitive;more 
E) currently an oligopolistic market;more 
A) uncompetitive;less 
B) competitive;more 
C) competitive;less 
D) uncompetitive;more 
E) currently an oligopolistic market;more

Question 8

What is the maximum value of the Herfindahl-Hirschman Index?

Accepted Answer

A) 1 
B) 1,000,000 
C) 100,000 
D) 10,000 
E) 1,000 
A) 1 
B) 1,000,000 
C) 100,000 
D) 10,000 
E) 1,000

Question 9

Use the information below to answer the following question.
Fact 10.5.1
Two leading design firms, Astro Studios of San Francisco and Hers Experimental Design Labouratory, Inc.of Osaka, Japan, worked with Microsoft to design the Xbox 360 video game console.IBM, ATI, and SiS designed the Xbox 360's hardware.Three firms, Flextronics, Wistron, and Celestica, manufacture the Xbox 360 at their plants in China and Taiwan.
-Refer to Fact 10.5.1.Microsoft works with a large number of other firms to bring the Xbox to market,rather than performing all the required tasks at its headquarters in Seattle because

Accepted Answer

A) Microsoft wants to control as many firms as possible and by sending Xbox design and production to other firms, Microsoft gains control in a new market. 
B) this is the method of production with the lowest cost. 
C) Microsoft employees do not have the expertise to perform the necessary tasks. 
D) Microsoft already dominates too many markets and the government requires that other firms coordinate Xbox design and production. 
E) All of the above. 
A) Microsoft wants to control as many firms as possible and by sending Xbox design and production to other firms, Microsoft gains control in a new market. 
B) this is the method of production with the lowest cost. 
C) Microsoft employees do not have the expertise to perform the necessary tasks. 
D) Microsoft already dominates too many markets and the government requires that other firms coordinate Xbox design and production. 
E) All of the above.

Question 10

A profit-maximizing firm is constrained by

Accepted Answer

A) demand for its product. 
B) limited resources. 
C) available technology. 
D) limited information. 
E) all of the above. 
A) demand for its product. 
B) limited resources. 
C) available technology. 
D) limited information. 
E) all of the above.

Question 11

Which one of the following statements describes a market that is monopolistically competitive?

Accepted Answer

A) The presence of significant barriers to entry. 
B) The products produced by the firms are identical. 
C) Many firms compete by making similar but slightly different products. 
D) There is a small number of large firms. 
E) The product produced by one firm has no close substitutes. 
A) The presence of significant barriers to entry. 
B) The products produced by the firms are identical. 
C) Many firms compete by making similar but slightly different products. 
D) There is a small number of large firms. 
E) The product produced by one firm has no close substitutes.

Question 12

Product differentiation is always a feature in

Accepted Answer

A) perfect competition. 
B) monopolistic competition. 
C) oligopoly. 
D) monopoly. 
E) all of the above. 
A) perfect competition. 
B) monopolistic competition. 
C) oligopoly. 
D) monopoly. 
E) all of the above.

Question 13

Federal Express enters into contracts with independent truck operators who offer FedEx service and who are rewarded by the volume (cubic feet)of packages they carry.
FedEx does not hire more independent drivers because

Accepted Answer

A) it is concerned about a possible downturn in the economy and the effects of overexpansion. 
B) it cannot afford more trucks and more drivers. 
C) of the principal-agent problem. 
D) it is a corporation, so it wants to have a limited number of independent truck owners operating as proprietorships. 
E) trucks are not a technologically efficient method of transporting parcels. 
A) it is concerned about a possible downturn in the economy and the effects of overexpansion. 
B) it cannot afford more trucks and more drivers. 
C) of the principal-agent problem. 
D) it is a corporation, so it wants to have a limited number of independent truck owners operating as proprietorships. 
E) trucks are not a technologically efficient method of transporting parcels.

Question 14

When the Herfindahl-Hirschman Index (HHI)is greater than 1,800,

Accepted Answer

A) the market is very competitive. 
B) a monopoly exists. 
C) there are many producers in the market. 
D) the market is moderately competitive. 
E) the market is uncompetitive. 
A) the market is very competitive. 
B) a monopoly exists. 
C) there are many producers in the market. 
D) the market is moderately competitive. 
E) the market is uncompetitive.

Question 15

An industry with a high four-firm concentration ratio may have little monopoly power if

Accepted Answer

A) its production is geographically concentrated. 
B) its barriers to entry are low. 
C) its barriers to entry are high. 
D) there are no international producers of the product. 
E) there are no close substitutes for its product. 
A) its production is geographically concentrated. 
B) its barriers to entry are low. 
C) its barriers to entry are high. 
D) there are no international producers of the product. 
E) there are no close substitutes for its product.

Question 16

The four-firm concentration ratio measures the share of the largest four firms in total industry

Accepted Answer

A) profit. 
B) sales. 
C) cost. 
D) capital. 
E) loss. 
A) profit. 
B) sales. 
C) cost. 
D) capital. 
E) loss.

Question 17

Which one of the following statements is not true?

Accepted Answer

A) A production process is technologically efficient only if it is producing a given output at the lowest possible cost. 
B) If a process is economically efficient, it must be technologically efficient as well. 
C) Economic efficiency depends on the relative price of inputs, while technological efficiency does not. 
D) Economically efficient firms will be more likely to survive than economically inefficient firms. 
E) Technologically efficient firms are more likely to survive than technologically inefficient firms. 
A) A production process is technologically efficient only if it is producing a given output at the lowest possible cost. 
B) If a process is economically efficient, it must be technologically efficient as well. 
C) Economic efficiency depends on the relative price of inputs, while technological efficiency does not. 
D) Economically efficient firms will be more likely to survive than economically inefficient firms. 
E) Technologically efficient firms are more likely to survive than technologically inefficient firms.

Question 18

Most establishments in Canada

Accepted Answer

A) employ between 5 and 99 people. 
B) employ more than 100 people. 
C) employ fewer than 5 people. 
D) employ more than 500 people. 
E) are partnerships. 
A) employ between 5 and 99 people. 
B) employ more than 100 people. 
C) employ fewer than 5 people. 
D) employ more than 500 people. 
E) are partnerships.

Question 19

A market structure where a small number of firms compete occurs in

Accepted Answer

A) perfect competition. 
B) monopolistic competition. 
C) the worldwide market for wheat, corn, and rice. 
D) oligopoly. 
E) monopoly. 
A) perfect competition. 
B) monopolistic competition. 
C) the worldwide market for wheat, corn, and rice. 
D) oligopoly. 
E) monopoly.

Question 20

A firm with a single owner who has unlimited liability is

Accepted Answer

A) a corporation. 
B) a sole proprietorship. 
C) a limited partnership. 
D) an unlimited partnership. 
E) a cooperative. 
A) a corporation. 
B) a sole proprietorship. 
C) a limited partnership. 
D) an unlimited partnership. 
E) a cooperative.

Exam 10: Organizing Production

A market in which the Herfindahl-Hirschman Index (HHI)lies between 1,000 and 1,800 is regarded as being

In a monopoly,the four-firm concentration ratio is

Which of the following is part of a firm's opportunity cost of production? I.wages II.utility costs III.interest on a bank loan IV.interest forgone on funds used to buy capital equipment

A golf club manufacturer pays its workers based on the number of sets of clubs they produce.This firm

In the relationship between the owner of a bakery and the baker,the owner is

Marc bought a new car last year for $10,000.He can now sell the car for $8,500.To buy this year's model of the same car he would have to pay $11,000.What is the one-year amount of economic depreciation?

The North American economy is ________ and is becoming ________ competitive.

What is the maximum value of the Herfindahl-Hirschman Index?

A profit-maximizing firm is constrained by

Which one of the following statements describes a market that is monopolistically competitive?

Product differentiation is always a feature in

Federal Express enters into contracts with independent truck operators who offer FedEx service and who are rewarded by the volume (cubic feet)of packages they carry. FedEx does not hire more independent drivers because

When the Herfindahl-Hirschman Index (HHI)is greater than 1,800,

An industry with a high four-firm concentration ratio may have little monopoly power if

The four-firm concentration ratio measures the share of the largest four firms in total industry

Which one of the following statements is not true?

Most establishments in Canada

A market structure where a small number of firms compete occurs in

A firm with a single owner who has unlimited liability is

What Is Economics?

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: The Keynesian Model

Canadian Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

The North American economy is and is becoming competitive.