Exam 10: Organizing Production

"The concentration measures for the United States calculated by the Department of Commerce understate the degree of concentration in the newspaper industry." Do you agree? Explain.

-The above table shows the percent of sales held by the four largest firms in an industry. a) Calculate this industry's four-firm concentration ratio. b) Is this industry competitive? c) What market type does it most likely represent?

A command system is a

Sue owns a baking company. The company's total revenue for a month is $4000. The monthly costs of resources bought in the market and of resources owned by the firm are $2000 and monthly costs of resources supplied by the owner are $1000. Sue's economic profit for the month is equal to

Professor Rush decides to quit teaching economics and opens a shoe store out at the mall. He gave up an annual income of $50,000 to open the store. A year after opening the shoe store, the total revenue for the year was $200,000. Rush's expenses were $30,000 for labor, rent was $18,000, and utilities were $1,200. He also had to purchase new shoes from manufacturers, at a cost of $60,000, which was financed by cashing in his savings of $60,000 that had been in a bank earning 8 percent per year. The normal profit from operating a shoe store in the mall is $20,000. Determine Professor Rush's total cost and economic profit.

Economies of scope exist when

Suppose that there are 10 firms in an industry, each accounting for 10 percent of industry sales. Two of these firms decide to merge. Which of the following statements about the impact of this merger is (are) INCORRECT?

Martha and Wendy start a cookie shop and the business is organized as a corporation. Because of poor planning the business goes bankrupt and the corporation's debt is $30,000. Martha has $30,000 in savings and Wendy has $80,000 in savings. Martha must pay ________ of the debt and Wendy must pay ________ of the debt.

Which of the following is TRUE?

Which market type has characteristics as follows: one firm, good or service produced has no close substitutes, barriers to entry prevent new firms from entering into the industry?

What is the major advantage of the corporate form of business organization?

-The above table shows the market shares for all the landscaping services in a suburban area. Which of the following mergers would cause the greatest increase in the four-firm concentration ratio?

The accountant for Muzhi's Sushi claims that Muzhi has accomplished "technological efficiency." This means that Muzhi's Sushi

Heidi quit her job as a chef making $40,000 per year to start her own restaurant. The first year, Heidi's restaurant earned $100,000 in revenue. Heidi pays $50,000 per year in wages to the waitresses and hostess and $20,000 per year to buy food. What is Heidi's profit as measured by an accountant for the year?

A chief reason firms give employees bonuses based on the firm's profit is to cope with

Lucinda starts a business consulting company. She makes all the business decisions and bears the risk of running the business. The typical payment for Lucinda's work is

Team production is a production process in which

Firms organize production by using a mix of

What would be an example of economies of scope achieved in the automobile insurance industry?

One of the reasons that a firm can be ________ efficient than a market is that the firm ________.