Question 1

A corporation ________ taxes on its profits and its stockholders ________ taxes on any dividends made to them by the company.

Accepted Answer

A)  pays; pay 
B)  pays; do not pay 
C)  does not pay; pay 
D)  does not pay; do not pay 
A)  pays; pay 
B)  pays; do not pay 
C)  does not pay; pay 
D)  does not pay; do not pay

Question 2

It was more than a century ago that an engineer named Frederick Taylor walked into factories and starting timing workers with a stop watch. He dissected their movements, and organized them more efficiently. He turned factory production into a science. Suppose workers were paid a wage based on how much they produced. How does this firm organize production?

Accepted Answer

A)  through the command system 
B)  through a mixed command and incentive system 
C)  through the incentive system 
D)  through the market system 
A)  through the command system 
B)  through a mixed command and incentive system 
C)  through the incentive system 
D)  through the market system

Question 3

A high four-firm concentration ratio implies

Accepted Answer

A)  an absence of product differentiation. 
B)  a presence of product differentiation. 
C)  an absence of competition. 
D)  a presence of competition. 
A)  an absence of product differentiation. 
B)  a presence of product differentiation. 
C)  an absence of competition. 
D)  a presence of competition.

Question 4

Techniques for making 100 pizzas
  
-Labor costs $20 per worker and capital costs $100 per unit. Then, according to the above table, which of the following options for pizza production is economically efficient?

Accepted Answer

A)  Option 1 
B)  Option 3 
C)  Option 4 
D)  Both options 1 and 3 are economically efficient. 
A)  Option 1 
B)  Option 3 
C)  Option 4 
D)  Both options 1 and 3 are economically efficient.

Question 5

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 an incentive system. 
B)  organizes production based on a command system. 
C)  does not have any implicit costs. 
D)  does not have explicit costs. 
A)  organizes production based on an incentive system. 
B)  organizes production based on a command system. 
C)  does not have any implicit costs. 
D)  does not have explicit costs.

Question 6

What are three major ways that corporations can cope with the principal-agent problem?

Accepted Answer

First, employees can be made part-owners

Question 7

A principal-agent problem occurs when hiring workers to work for a firm because

Accepted Answer

A)  workers' interests are not always the same as the interests of the owners of the firm. 
B)  workers do not respond to incentives. 
C)  the owners of a firm are always in a position to exploit the workers. 
D)  workers' interests are not important in the managerial decisions of the firm. 
A)  workers' interests are not always the same as the interests of the owners of the firm. 
B)  workers do not respond to incentives. 
C)  the owners of a firm are always in a position to exploit the workers. 
D)  workers' interests are not important in the managerial decisions of the firm.

Question 8

If the four-firm concentration ratio is a very small number, then

Accepted Answer

A)  there is a high degree of competition in the market. 
B)  there is no competition in the market. 
C)  the market must be dominated by a few firms. 
D)  the market is not perfectly competitive. 
A)  there is a high degree of competition in the market. 
B)  there is no competition in the market. 
C)  the market must be dominated by a few firms. 
D)  the market is not perfectly competitive.

Question 9

If a firm chooses to produce 100 units of output for $150 with 10 units of labor and 12 units of capital, when they could produce the same 100 units for $120 with 10 units of labor and 8 units of capital, the firm is technologically ________ and economically ________.

Accepted Answer

A)  efficient; inefficient 
B)  inefficient; efficient 
C)  efficient; efficient. 
D)  inefficient; inefficient 
A)  efficient; inefficient 
B)  inefficient; efficient 
C)  efficient; efficient. 
D)  inefficient; inefficient

Question 10

The principal-agent problem refers to the fact that firms must

Accepted Answer

A)  choose between economic efficiency and technological efficiency. 
B)  choose between a managerial and an incentive system. 
C)  devise incentives to get employees to work in the best interest of the firm's owners. 
D)  choose between operating as a partnership or corporation. 
A)  choose between economic efficiency and technological efficiency. 
B)  choose between a managerial and an incentive system. 
C)  devise incentives to get employees to work in the best interest of the firm's owners. 
D)  choose between operating as a partnership or corporation.

Question 11

According to Nobel laureate Ronald Coase, firms exist in order to

Accepted Answer

A)  maximize transactions costs. 
B)  minimize transactions costs. 
C)  maximize transactions. 
D)  employ workers. 
A)  maximize transactions costs. 
B)  minimize transactions costs. 
C)  maximize transactions. 
D)  employ workers.

Question 12

A firm has achieved technological efficiency whenever it has

Accepted Answer

A)  fully depreciated all its assets. 
B)  produced the given output using the fewest inputs. 
C)  produced the given output at the lowest cost. 
D)  all of the above. 
A)  fully depreciated all its assets. 
B)  produced the given output using the fewest inputs. 
C)  produced the given output at the lowest cost. 
D)  all of the above.

Question 13

Among the opportunity costs of a firm are all of the following EXCEPT

Accepted Answer

A)  the owner's forgone wage. 
B)  costs of resources bought in markets, such as labor. 
C)  normal profits. 
D)  economic profits. 
A)  the owner's forgone wage. 
B)  costs of resources bought in markets, such as labor. 
C)  normal profits. 
D)  economic profits.

Question 14

A chief purpose of long-term contracts is to improve agents'

Accepted Answer

A)  information. 
B)  incentives. 
C)  control over principals. 
D)  security. 
A)  information. 
B)  incentives. 
C)  control over principals. 
D)  security.

Question 15

The CORRECT ranking of the four basic market structures from low (Herfindahl-Hirschman Index) HHI to high HHI is

Accepted Answer

A)  perfect competition, oligopoly, monopolistic competition, monopoly. 
B)  monopoly, oligopoly, monopolistic competition, perfect competition. 
C)  perfect competition, monopolistic competition, oligopoly, monopoly. 
D)  monopoly, monopolistic competition, oligopoly, perfect competition. 
A)  perfect competition, oligopoly, monopolistic competition, monopoly. 
B)  monopoly, oligopoly, monopolistic competition, perfect competition. 
C)  perfect competition, monopolistic competition, oligopoly, monopoly. 
D)  monopoly, monopolistic competition, oligopoly, perfect competition.

Question 16

Compared to corporations, businesses that are proprietorships

Accepted Answer

A)  are far more numerous. 
B)  account for a larger percentage of the economy's total revenue each year. 
C)  can raise capital more cheaply. 
D)  All of the above are correct answers. 
A)  are far more numerous. 
B)  account for a larger percentage of the economy's total revenue each year. 
C)  can raise capital more cheaply. 
D)  All of the above are correct answers.

Question 17

Gilda's Art Gallery pays a commission to her sales people when they sell a painting. This practice is known as

Accepted Answer

A)  the principal-agent problem. 
B)  incentive pay. 
C)  minimizing implicit costs. 
D)  minimizing explicit costs. 
A)  the principal-agent problem. 
B)  incentive pay. 
C)  minimizing implicit costs. 
D)  minimizing explicit costs.

Question 18

What are the four types of markets? Give a brief description of each type.

Accepted Answer

The four types of markets are perfect co

Question 19

Industry concentration measures the extent to which

Accepted Answer

A)  products are differentiated by the firms in the industry. 
B)  the market is dominated by a small number of firms. 
C)  the industry executives concentrate on their product. 
D)  consumers are geographically concentrated. 
A)  products are differentiated by the firms in the industry. 
B)  the market is dominated by a small number of firms. 
C)  the industry executives concentrate on their product. 
D)  consumers are geographically concentrated.

Question 20

The air travel market, which is dominated by a few large firms, is an example of

Accepted Answer

A)  a monopoly market. 
B)  an oligopolistic market. 
C)  a perfectly competitive market. 
D)  a monopolistically competitive market. 
A)  a monopoly market. 
B)  an oligopolistic market. 
C)  a perfectly competitive market. 
D)  a monopolistically competitive market.

A corporation taxes on its profits and its stockholders taxes on any dividends made to them by the company.

A high four-firm concentration ratio implies

Techniques for making 100 pizzas -Labor costs $20 per worker and capital costs $100 per unit. Then, according to the above table, which of the following options for pizza production is economically efficient?

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

What are three major ways that corporations can cope with the principal-agent problem?

A principal-agent problem occurs when hiring workers to work for a firm because

If the four-firm concentration ratio is a very small number, then

If a firm chooses to produce 100 units of output for $150 with 10 units of labor and 12 units of capital, when they could produce the same 100 units for $120 with 10 units of labor and 8 units of capital, the firm is technologically and economically .

The principal-agent problem refers to the fact that firms must

According to Nobel laureate Ronald Coase, firms exist in order to

A firm has achieved technological efficiency whenever it has

Among the opportunity costs of a firm are all of the following EXCEPT

A chief purpose of long-term contracts is to improve agents'

The CORRECT ranking of the four basic market structures from low (Herfindahl-Hirschman Index) HHI to high HHI is

Compared to corporations, businesses that are proprietorships

Gilda's Art Gallery pays a commission to her sales people when they sell a painting. This practice is known as

What are the four types of markets? Give a brief description of each type.

Industry concentration measures the extent to which

The air travel market, which is dominated by a few large firms, is an example of

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

A corporation ________ taxes on its profits and its stockholders ________ taxes on any dividends made to them by the company.

A high four-firm concentration ratio implies

Techniques for making 100 pizzas -Labor costs $20 per worker and capital costs $100 per unit. Then, according to the above table, which of the following options for pizza production is economically efficient?

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

What are three major ways that corporations can cope with the principal-agent problem?

A principal-agent problem occurs when hiring workers to work for a firm because

If the four-firm concentration ratio is a very small number, then

If a firm chooses to produce 100 units of output for $150 with 10 units of labor and 12 units of capital, when they could produce the same 100 units for $120 with 10 units of labor and 8 units of capital, the firm is technologically ________ and economically ________.

The principal-agent problem refers to the fact that firms must

According to Nobel laureate Ronald Coase, firms exist in order to

A firm has achieved technological efficiency whenever it has

Among the opportunity costs of a firm are all of the following EXCEPT

A chief purpose of long-term contracts is to improve agents'

The CORRECT ranking of the four basic market structures from low (Herfindahl-Hirschman Index) HHI to high HHI is

Compared to corporations, businesses that are proprietorships

Gilda's Art Gallery pays a commission to her sales people when they sell a painting. This practice is known as

What are the four types of markets? Give a brief description of each type.

Industry concentration measures the extent to which

The air travel market, which is dominated by a few large firms, is an example of

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

A corporation taxes on its profits and its stockholders taxes on any dividends made to them by the company.

If a firm chooses to produce 100 units of output for $150 with 10 units of labor and 12 units of capital, when they could produce the same 100 units for $120 with 10 units of labor and 8 units of capital, the firm is technologically and economically .