Question 1

Which of the following is a reason why firms can be more efficient than markets as coordinators of economic activity?

Accepted Answer

A)  economies of scale and scope 
B)  higher transactions charges 
C)  elimination of the principal-agent problem 
D)  all of the above 
A)  economies of scale and scope 
B)  higher transactions charges 
C)  elimination of the principal-agent problem 
D)  all of the above

Question 2

As owner of a one-third share of a partnership, Josh is legally liable for

Accepted Answer

A)  none of its debts. 
B)  one-third of its debts. 
C)  all of its debts. 
D)  all of its taxes but none of its private debt. 
A)  none of its debts. 
B)  one-third of its debts. 
C)  all of its debts. 
D)  all of its taxes but none of its private debt.

Question 3

If an industry's Herfindahl-Hirschman Index is less than 1, the industry is likely to be

Accepted Answer

A)  competitive. 
B)  an oligopoly. 
C)  a monopoly. 
D)  technologically inefficient. 
A)  competitive. 
B)  an oligopoly. 
C)  a monopoly. 
D)  technologically inefficient.

Question 4

Economic efficiency necessarily occurs when the firm

Accepted Answer

A)  produces a given output at least cost. 
B)  produces a given output by using the least inputs. 
C)  earns a normal profit. 
D)  earns an economic profit. 
A)  produces a given output at least cost. 
B)  produces a given output by using the least inputs. 
C)  earns a normal profit. 
D)  earns an economic profit.

Question 5

-The table above shows four methods for producing 10 computer desks a day. If the cost of a worker is $50 a day and the cost of capital is $150 a day, ________ economically efficient.

Accepted Answer

A)  method A is 
B)  method B is 
C)  method D is 
D)  method A or C is 
A)  method A is 
B)  method B is 
C)  method D is 
D)  method A or C is

Question 6

A firm's basic goal is best described as

Accepted Answer

A)  maximizing total revenue. 
B)  maximizing sales. 
C)  maximizing profit. 
D)  minimizing total cost. 
A)  maximizing total revenue. 
B)  maximizing sales. 
C)  maximizing profit. 
D)  minimizing total cost.

Question 7

In the personal computer (PC) market in the first half of 2008, Hewlett-Packard maintained its worldwide No. 1 ranking at a market share of 19.1 percent. Dell's market share was 16 percent and Acer held onto third place with a 9.5 percent share, and Lenovo maintained fourth place, with a 7.9 percent share. What is the Herfindahl-Hirschman Index for the firms mentioned?

Accepted Answer

A)  52.5 
B)  1643 
C)  773 
D)  105 
A)  52.5 
B)  1643 
C)  773 
D)  105

Question 8

-Based on the above table, which shows the firms and sales in an industry, what is the approximate value of the Herfindahl-Hirschman Index?

Accepted Answer

A)  1,660 
B)  2,300 
C)  4,800 
D)  10,000 
A)  1,660 
B)  2,300 
C)  4,800 
D)  10,000

Question 9

Bill is working as the only employee at a local store. The relation between Bill and the owner of the store is such that Bill is ________ and the owner is ________.

Accepted Answer

A)  the agent; the principal 
B)  both principal and agent; neither a principal nor an agent 
C)  neither a principal nor an agent; both principal and agent 
D)  the principal; the agent 
A)  the agent; the principal 
B)  both principal and agent; neither a principal nor an agent 
C)  neither a principal nor an agent; both principal and agent 
D)  the principal; the agent

Question 10

An advantage of the corporate form of organization is that

Accepted Answer

A)  the management structure is usually simple. 
B)  owners have limited liability. 
C)  owners have unlimited liability. 
D)  a corporation cannot go bankrupt. 
A)  the management structure is usually simple. 
B)  owners have limited liability. 
C)  owners have unlimited liability. 
D)  a corporation cannot go bankrupt.

Question 11

In a corporation, the stockholders are the

Accepted Answer

A)  principals. 
B)  agents. 
C)  level coordinators. 
D)  entrepreneurs. 
A)  principals. 
B)  agents. 
C)  level coordinators. 
D)  entrepreneurs.

Question 12

A normal profit for a self-employed entrepreneur is I. an opportunity cost.
II) part of the implicit rental rate of the funds invested in the business.

Accepted Answer

A)  only I 
B)  only II 
C)  both I and II 
D)  neither I nor II 
A)  only I 
B)  only II 
C)  both I and II 
D)  neither I nor II

Question 13

-The table above shows techniques that can be used to produce 100 shirts. If the price of an hour of labor is $10 and the price of a unit of capital is $12, then the economically efficient technique is

Accepted Answer

A)  W. 
B)  X. 
C)  Y. 
D)  Z. 
A)  W. 
B)  X. 
C)  Y. 
D)  Z.

Question 14

Which of the following is a CORRECT statement?

Accepted Answer

A)  Economic efficiency definitely occurs when a firm cannot increase production without using more resources. 
B)  Technological efficiency depends on the costs of resources while economic efficiency depends on only production methods. 
C)  Technological efficiency depends only on production methods, while economic efficiency depends on the costs of resources. 
D)  all of the above 
A)  Economic efficiency definitely occurs when a firm cannot increase production without using more resources. 
B)  Technological efficiency depends on the costs of resources while economic efficiency depends on only production methods. 
C)  Technological efficiency depends only on production methods, while economic efficiency depends on the costs of resources. 
D)  all of the above

Question 15

If a firm produces a given amount of output using the least amount of inputs, it definitely achieves economic efficiency.

Accepted Answer

A) True 
 B)False

Question 16

Concentration ratios are generally computed for ________ markets.

Accepted Answer

A)  local 
B)  regional 
C)  national 
D)  global 
A)  local 
B)  regional 
C)  national 
D)  global

Question 17

Which type of firm produces the largest share of manufacturing output in the United States?

Accepted Answer

A)  proprietorships only 
B)  partnerships only 
C)  corporations only 
D)  Proprietorships and corporations are tied. 
A)  proprietorships only 
B)  partnerships only 
C)  corporations only 
D)  Proprietorships and corporations are tied.

Question 18

Owners of ________ have unlimited liability.

Accepted Answer

A)  partnerships and corporations 
B)  corporations 
C)  proprietorships and partnerships 
D)  partnerships, proprietorships, and corporations 
A)  partnerships and corporations 
B)  corporations 
C)  proprietorships and partnerships 
D)  partnerships, proprietorships, and corporations

Question 19

Giving managers an ownership stake in a company is an example of

Accepted Answer

A)  a command system. 
B)  an incentive system. 
C)  a system that encourages managers to become agents that monitor their principals. 
D)  economies of scope. 
A)  a command system. 
B)  an incentive system. 
C)  a system that encourages managers to become agents that monitor their principals. 
D)  economies of scope.

Question 20

The legal responsibility for losses incurred by a proprietorship falls upon the

Accepted Answer

A)  stockholders. 
B)  partners. 
C)  owner. 
D)  creditors. 
A)  stockholders. 
B)  partners. 
C)  owner. 
D)  creditors.

Which of the following is a reason why firms can be more efficient than markets as coordinators of economic activity?

As owner of a one-third share of a partnership, Josh is legally liable for

If an industry's Herfindahl-Hirschman Index is less than 1, the industry is likely to be

Economic efficiency necessarily occurs when the firm

-The table above shows four methods for producing 10 computer desks a day. If the cost of a worker is $50 a day and the cost of capital is $150 a day, ________ economically efficient.

A firm's basic goal is best described as

-Based on the above table, which shows the firms and sales in an industry, what is the approximate value of the Herfindahl-Hirschman Index?

Bill is working as the only employee at a local store. The relation between Bill and the owner of the store is such that Bill is and the owner is .

An advantage of the corporate form of organization is that

In a corporation, the stockholders are the

A normal profit for a self-employed entrepreneur is I. an opportunity cost. II) part of the implicit rental rate of the funds invested in the business.

-The table above shows techniques that can be used to produce 100 shirts. If the price of an hour of labor is $10 and the price of a unit of capital is $12, then the economically efficient technique is

Which of the following is a CORRECT statement?

If a firm produces a given amount of output using the least amount of inputs, it definitely achieves economic efficiency.

Concentration ratios are generally computed for ________ markets.

Which type of firm produces the largest share of manufacturing output in the United States?

Owners of ________ have unlimited liability.

Giving managers an ownership stake in a company is an example of

The legal responsibility for losses incurred by a proprietorship falls upon the

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 10: Organizing Production

Which of the following is a reason why firms can be more efficient than markets as coordinators of economic activity?

As owner of a one-third share of a partnership, Josh is legally liable for

If an industry's Herfindahl-Hirschman Index is less than 1, the industry is likely to be

Economic efficiency necessarily occurs when the firm

-The table above shows four methods for producing 10 computer desks a day. If the cost of a worker is $50 a day and the cost of capital is $150 a day, ________ economically efficient.

A firm's basic goal is best described as

-Based on the above table, which shows the firms and sales in an industry, what is the approximate value of the Herfindahl-Hirschman Index?

Bill is working as the only employee at a local store. The relation between Bill and the owner of the store is such that Bill is ________ and the owner is ________.

An advantage of the corporate form of organization is that

In a corporation, the stockholders are the

A normal profit for a self-employed entrepreneur is I. an opportunity cost. II) part of the implicit rental rate of the funds invested in the business.

-The table above shows techniques that can be used to produce 100 shirts. If the price of an hour of labor is $10 and the price of a unit of capital is $12, then the economically efficient technique is

Which of the following is a CORRECT statement?

If a firm produces a given amount of output using the least amount of inputs, it definitely achieves economic efficiency.

Concentration ratios are generally computed for ________ markets.

Which type of firm produces the largest share of manufacturing output in the United States?

Owners of ________ have unlimited liability.

Giving managers an ownership stake in a company is an example of

The legal responsibility for losses incurred by a proprietorship falls upon the

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Bill is working as the only employee at a local store. The relation between Bill and the owner of the store is such that Bill is and the owner is .