Question 1

If an industry is monopolized by one firm, the four-firm concentration ratio equals

Accepted Answer

A)  1 percent. 
B)  25 percent. 
C)  40 percent. 
D)  100 percent. 
A)  1 percent. 
B)  25 percent. 
C)  40 percent. 
D)  100 percent.

Question 2

-The above table gives techniques Jitters Coffee Company can use to package 5,000 pounds of coffee. Which technique(s) is (are) technologically inefficient?

Accepted Answer

A)  A 
B)  C 
C)  B and C 
D)  B, C, and D 
A)  A 
B)  C 
C)  B and C 
D)  B, C, and D

Question 3

The Roomba 980 is a robotic vacuum cleaner made and sold by iRobot. It can vacuum 4 rooms on a single battery charge and it costs $2 of electricity to charge the Roomba. Lynn is a house cleaner and can vacuum 4 rooms in 1 hour with a traditional vacuum. Suppose you want the 4 rooms in your house vacuumed once a week for one year. Ignoring the cost of any electricity Lynn uses, what is the maximum Lynn could charge per hour for you to choose her over the Roomba?

Accepted Answer

A)  $10.23 per hour 
B)  $20.45 per hour 
C)  $8.27 per hour 
D)  $16.54 per hour 
A)  $10.23 per hour 
B)  $20.45 per hour 
C)  $8.27 per hour 
D)  $16.54 per hour

Question 4

Is the number of sellers in the market the only thing that is different in each of the four market types economists study?

Accepted Answer

No, the number of sellers is not the onl

Question 5

A firm that has limited liability is classified as a

Accepted Answer

A)  proprietorship. 
B)  partnership. 
C)  partnership or proprietorship. 
D)  corporation. 
A)  proprietorship. 
B)  partnership. 
C)  partnership or proprietorship. 
D)  corporation.

Question 6

A normal profit is

Accepted Answer

A)  the revenue remaining after all opportunity costs have been paid. 
B)  the profit a firm makes each year. 
C)  the average return for entrepreneurship. 
D)  part of the implicit rental rate of capital. 
A)  the revenue remaining after all opportunity costs have been paid. 
B)  the profit a firm makes each year. 
C)  the average return for entrepreneurship. 
D)  part of the implicit rental rate of capital.

Question 7

The market structure in which a large number of firms compete by making similar but slightly different products is called

Accepted Answer

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

Question 8

The vast majority of all business sales in the United States are accounted for by

Accepted Answer

A)  partnerships. 
B)  proprietorships. 
C)  corporations. 
D)  nonprofit organizations. 
A)  partnerships. 
B)  proprietorships. 
C)  corporations. 
D)  nonprofit organizations.

Question 9

-Based on the above table, which shows the firms and sales in an industry, what is the four-firm concentration ratio?

Accepted Answer

A)  55 
B)  74 
C)  100 
D)  $740 million 
A)  55 
B)  74 
C)  100 
D)  $740 million

Question 10

-The table above lists the market shares of the twenty makers of personal computers. Based upon the Herfindahl-Hirschman Index for this industry, the Justice Department would

Accepted Answer

A)  regard the industry as highly concentrated. 
B)  be against any two firms merging. 
C)  consider the market oligopolistic. 
D)  regard the industry as competitive. 
A)  regard the industry as highly concentrated. 
B)  be against any two firms merging. 
C)  consider the market oligopolistic. 
D)  regard the industry as competitive.

Question 11

A command system is a method of organizing production that

Accepted Answer

A)  uses a market-like mechanism inside the firm. 
B)  relies on competitive markets. 
C)  uses a managerial hierarchy. 
D)  uses incentives most extensively. 
A)  uses a market-like mechanism inside the firm. 
B)  relies on competitive markets. 
C)  uses a managerial hierarchy. 
D)  uses incentives most extensively.

Question 12

Economies of scale exist when the

Accepted Answer

A)  total cost of production falls as the output increases. 
B)  cost of producing a unit of a good falls as its output decreases. 
C)  cost of producing a unit of a good falls as its output increases. 
D)  firm uses specialized resources to produce a range of goods and services. 
A)  total cost of production falls as the output increases. 
B)  cost of producing a unit of a good falls as its output decreases. 
C)  cost of producing a unit of a good falls as its output increases. 
D)  firm uses specialized resources to produce a range of goods and services.

Question 13

Dell uses outsourcing, that is, Dell buys the components of the computers it produces from other firms. This is an example of

Accepted Answer

A)  firm coordination. 
B)  a partnership. 
C)  a command system. 
D)  market coordination. 
A)  firm coordination. 
B)  a partnership. 
C)  a command system. 
D)  market coordination.

Question 14

Which of the following statements is CORRECT?

Accepted Answer

A)  Technological efficiency depends on the relative costs of resources. 
B)  Economic efficiency occurs when the firm produces a given output at the least cost. 
C)  A firm can be economically efficient without being technologically efficient. 
D)  Economic efficiency depends only on production methods. 
A)  Technological efficiency depends on the relative costs of resources. 
B)  Economic efficiency occurs when the firm produces a given output at the least cost. 
C)  A firm can be economically efficient without being technologically efficient. 
D)  Economic efficiency depends only on production methods.

Question 15

If the Herfindahl-Hirschman Index for an industry is 8,528, is the industry competitive or concentrated?

Accepted Answer

With a Herfindahl-Hirschman In

Question 16

Which of the following best defines "economies of scope"?

Accepted Answer

A)  As output expands the cost of producing a good decreases. 
B)  As output expands the cost of producing a unit of a good decreases. 
C)  Because firms use specialized resources to produce a range of goods, as the number of products produced increases, the cost of producing a unit decreases. 
D)  Costs increase as firms seek to find more consumers. 
A)  As output expands the cost of producing a good decreases. 
B)  As output expands the cost of producing a unit of a good decreases. 
C)  Because firms use specialized resources to produce a range of goods, as the number of products produced increases, the cost of producing a unit decreases. 
D)  Costs increase as firms seek to find more consumers.

Question 17

Bud opened a flower shop. He rented a building for $9,000 a year. To buy equipment for the store, he withdrew $10,000 from his savings account, which earned an annual interest rate of 3 percent. During the first year of operation, Bud paid $4,000 for utilities and $12,000 to his suppliers. The store's total annual revenue was $55,000. The market value of the store's equipment at the end of the year was $8,000. If Bud had not started this business, he would have continued to work as an employee at another flower shop for $30,000 a year. What was Bud's opportunity cost of running his business?

Accepted Answer

A)  $57,300 
B)  $67,000 
C)  $67,300 
D)  $27,000 
A)  $57,300 
B)  $67,000 
C)  $67,300 
D)  $27,000

Question 18

What is the difference between a four-firm concentration ratio and a Herfindahl-Hirschman Index?

Accepted Answer

A four-firm concentration rati

Question 19

The implicit rental rate for capital is

Accepted Answer

A)  an accounting cost. 
B)  part of the firm's normal profit. 
C)  an opportunity cost. 
D)  a cost that is irrelevant to the business. 
A)  an accounting cost. 
B)  part of the firm's normal profit. 
C)  an opportunity cost. 
D)  a cost that is irrelevant to the business.

Question 20

The possibility that the managers of a corporation might not always act in the best interest of its owners is an example of the principal-agent problem.

Accepted Answer

A) True 
 B)False

If an industry is monopolized by one firm, the four-firm concentration ratio equals

-The above table gives techniques Jitters Coffee Company can use to package 5,000 pounds of coffee. Which technique(s) is (are) technologically inefficient?

Is the number of sellers in the market the only thing that is different in each of the four market types economists study?

A firm that has limited liability is classified as a

A normal profit is

The market structure in which a large number of firms compete by making similar but slightly different products is called

The vast majority of all business sales in the United States are accounted for by

-Based on the above table, which shows the firms and sales in an industry, what is the four-firm concentration ratio?

-The table above lists the market shares of the twenty makers of personal computers. Based upon the Herfindahl-Hirschman Index for this industry, the Justice Department would

A command system is a method of organizing production that

Economies of scale exist when the

Dell uses outsourcing, that is, Dell buys the components of the computers it produces from other firms. This is an example of

Which of the following statements is CORRECT?

If the Herfindahl-Hirschman Index for an industry is 8,528, is the industry competitive or concentrated?

Which of the following best defines "economies of scope"?

What is the difference between a four-firm concentration ratio and a Herfindahl-Hirschman Index?

The implicit rental rate for capital is

The possibility that the managers of a corporation might not always act in the best interest of its owners is an example of the principal-agent problem.

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

If an industry is monopolized by one firm, the four-firm concentration ratio equals

-The above table gives techniques Jitters Coffee Company can use to package 5,000 pounds of coffee. Which technique(s) is (are) technologically inefficient?

Is the number of sellers in the market the only thing that is different in each of the four market types economists study?

A firm that has limited liability is classified as a

A normal profit is

The market structure in which a large number of firms compete by making similar but slightly different products is called

The vast majority of all business sales in the United States are accounted for by

-Based on the above table, which shows the firms and sales in an industry, what is the four-firm concentration ratio?

-The table above lists the market shares of the twenty makers of personal computers. Based upon the Herfindahl-Hirschman Index for this industry, the Justice Department would

A command system is a method of organizing production that

Economies of scale exist when the

Dell uses outsourcing, that is, Dell buys the components of the computers it produces from other firms. This is an example of

Which of the following statements is CORRECT?

If the Herfindahl-Hirschman Index for an industry is 8,528, is the industry competitive or concentrated?

Which of the following best defines "economies of scope"?

What is the difference between a four-firm concentration ratio and a Herfindahl-Hirschman Index?

The implicit rental rate for capital is

The possibility that the managers of a corporation might not always act in the best interest of its owners is an example of the principal-agent problem.

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