Question 1

High concentration measures will understate the extent of competition in a market if

Accepted Answer

A)  the true geographical scope of the market is global rather than national. 
B)  entry into the industry is easy. 
C)  the geographical scope of the market is regional rather than national. 
D)  Both answers A and B are correct. 
A)  the true geographical scope of the market is global rather than national. 
B)  entry into the industry is easy. 
C)  the geographical scope of the market is regional rather than national. 
D)  Both answers A and B are correct.

Question 2

"When the cost of producing a unit of a good falls because the firm uses specialized resources to produce a range of goods and services" is the definition of

Accepted Answer

A)  economies of scope. 
B)  economies of scale. 
C)  economic efficiency. 
D)  technological efficiency. 
A)  economies of scope. 
B)  economies of scale. 
C)  economic efficiency. 
D)  technological efficiency.

Question 3

For monopoly

Accepted Answer

A)  the four-firm concentration ratio is 100. 
B)  the Herfindahl-Hirschman Index is 10,000. 
C)  there is only one firm in the industry. 
D)  All of the above answers are correct. 
A)  the four-firm concentration ratio is 100. 
B)  the Herfindahl-Hirschman Index is 10,000. 
C)  there is only one firm in the industry. 
D)  All of the above answers are correct.

Question 4

The minimum value of the Herfindahl-Hirschman Index is

Accepted Answer

A)  -100. 
B)  -1. 
C)  approximately 0. 
D)  1. 
A)  -100. 
B)  -1. 
C)  approximately 0. 
D)  1.

Question 5

U.S. auto sales took a beating in September 2008 as the nation's worsening economy turned dealer showrooms into ghost towns. Automakers reported a sharp drop-off in sales in the last ten days of the month as news of bank failures and a stock market meltdown increased economic uncertainty. What type of constraint do the automakers face when there is increased economic uncertainty?

Accepted Answer

A)  information constraint 
B)  technology constraint 
C)  market constraint 
D)  price constraint 
A)  information constraint 
B)  technology constraint 
C)  market constraint 
D)  price constraint

Question 6

Gilda's Art Gallery rewards its employees with stock each year the gallery makes profits. This stock allows the employees to own part of the gallery. This practice is known as

Accepted Answer

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

Question 7

Economic efficiency occurs when the firm produces a given output

Accepted Answer

A)  by using the least amount of inputs. 
B)  by using the maximum amount of inputs. 
C)  at the least cost. 
D)  at the greatest cost. 
A)  by using the least amount of inputs. 
B)  by using the maximum amount of inputs. 
C)  at the least cost. 
D)  at the greatest cost.

Question 8

A company needs to know the price of each resource it employs if it wants to determine whether or not it is achieving

Accepted Answer

A)  technological efficiency. 
B)  economic efficiency. 
C)  accounting efficiency. 
D)  managerial efficiency. 
A)  technological efficiency. 
B)  economic efficiency. 
C)  accounting efficiency. 
D)  managerial efficiency.

Question 9

A firm uses labor and capital. To tell if the firm is technologically efficient, you

Accepted Answer

A)  do not need to know the cost of labor or the cost of capital. 
B)  need to know the cost of capital but not the cost of labor. 
C)  need to know the cost of labor and the cost of capital. 
D)  need to know the cost of labor but not the cost of capital. 
A)  do not need to know the cost of labor or the cost of capital. 
B)  need to know the cost of capital but not the cost of labor. 
C)  need to know the cost of labor and the cost of capital. 
D)  need to know the cost of labor but not the cost of capital.

Question 10

Greg, a landscaper, is planning on opening his own landscaping company. He currently earns $40,000 per year working for his uncle but he will need to quit that job. He plans to use $10,000 in savings to pay for the equipment he needs, though even after use he could sell the equipment for what he paid, $10,000. The current interest rate on savings is 5 percent. What is the total opportunity cost incurred by Greg in running his own business?

Accepted Answer

A)  $10,000 
B)  $40,500 
C)  $40,000 
D)  $50,000 
A)  $10,000 
B)  $40,500 
C)  $40,000 
D)  $50,000

Question 11

Corporations that offer incentive pay schemes that link pay to meeting profit, production, or sales targets are doing so to cope with the

Accepted Answer

A)  scarcity problem. 
B)  inefficiencies usually found in large firms. 
C)  principal-agent problem. 
D)  problems of unionization. 
A)  scarcity problem. 
B)  inefficiencies usually found in large firms. 
C)  principal-agent problem. 
D)  problems of unionization.

Question 12

The most prevalent market structures in the U.S. economy are perfect competition and monopolistic competition.

Accepted Answer

A) True 
 B)False

Question 13

Over the years, the U.S. economy has become increasingly

Accepted Answer

A)  monopolistic. 
B)  oligopolistic. 
C)  competitive. 
D)  cartelized. 
A)  monopolistic. 
B)  oligopolistic. 
C)  competitive. 
D)  cartelized.

Question 14

The maximum value that the Herfindahl-Hirschman Index can attain is

Accepted Answer

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

Question 15

Smith's Shoes is a failed business enterprise, with debts of $10 million. Steve Smith has an ownership stake in Smith's shoes. Which of the following statements INCORRECTLY characterizes Steve Smith's legal liability for the debts of Smith's Shoes, depending on the firm's type of business organization?

Accepted Answer

A)  If Smith's Shoes is a proprietorship, then Steve Smith is fully liable for the entire $10 million in debt of the failed shoe store. 
B)  If Steve Smith is a partner in Smith's Shoes, then his legal liability for the debts of Smith Shoes is $10 million divided by the number of partners. 
C)  If Smith's Shoes is a corporation in which Steve Smith is a stockholder, then Steve Smith does not need to use any of his wealth to pay the debt because the company has limited liability. 
D)  None of the above statements is incorrect. 
A)  If Smith's Shoes is a proprietorship, then Steve Smith is fully liable for the entire $10 million in debt of the failed shoe store. 
B)  If Steve Smith is a partner in Smith's Shoes, then his legal liability for the debts of Smith Shoes is $10 million divided by the number of partners. 
C)  If Smith's Shoes is a corporation in which Steve Smith is a stockholder, then Steve Smith does not need to use any of his wealth to pay the debt because the company has limited liability. 
D)  None of the above statements is incorrect.

Question 16

Firm A can produce a unit of output with 10 hours of labor and 5 units of material. Firm B can produce a unit of output with 5 hours of labor and 10 units of material. Firm C can produce a unit of output with 10 hours of labor and 10 units of material. If the prices of labor and material are $10 per hour and $5 per unit, respectively, which of these firms is economically efficient?

Accepted Answer

A)  firm A only 
B)  firm B only 
C)  firm C only 
D)  Firms A and B could both be economically efficient. 
A)  firm A only 
B)  firm B only 
C)  firm C only 
D)  Firms A and B could both be economically efficient.

Question 17

Technological efficiency occurs when the firm produces a given output

Accepted Answer

A)  by using the least amount of inputs. 
B)  by using the maximum amount of inputs. 
C)  at the least cost. 
D)  at the greatest cost. 
A)  by using the least amount of inputs. 
B)  by using the maximum amount of inputs. 
C)  at the least cost. 
D)  at the greatest cost.

Question 18

The principal-agent problem suggests that

Accepted Answer

A)  principals and agents always have the same goals. 
B)  principals and agents will never have the same goals. 
C)  principals and agents are more likely to have the same goals if the principal gives the agent flexibility to make his own decisions. 
D)  principals and agents are more likely to have the same goals if the agent's pay is tied to satisfying the principal's goals. 
A)  principals and agents always have the same goals. 
B)  principals and agents will never have the same goals. 
C)  principals and agents are more likely to have the same goals if the principal gives the agent flexibility to make his own decisions. 
D)  principals and agents are more likely to have the same goals if the agent's pay is tied to satisfying the principal's goals.

Question 19

-The table above shows techniques that can be used to produce 100 shirts. The technique that is NOT technologically efficient is

Accepted Answer

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

Question 20

When Acme, Inc. produces a certain amount of output at least cost, Acme, Inc. definitely

Accepted Answer

A)  achieves economic efficiency. 
B)  uses more capital than labor. 
C)  earns a normal profit. 
D)  None of the above is true. 
A)  achieves economic efficiency. 
B)  uses more capital than labor. 
C)  earns a normal profit. 
D)  None of the above is true.

High concentration measures will understate the extent of competition in a market if

"When the cost of producing a unit of a good falls because the firm uses specialized resources to produce a range of goods and services" is the definition of

For monopoly

The minimum value of the Herfindahl-Hirschman Index is

Gilda's Art Gallery rewards its employees with stock each year the gallery makes profits. This stock allows the employees to own part of the gallery. This practice is known as

Economic efficiency occurs when the firm produces a given output

A company needs to know the price of each resource it employs if it wants to determine whether or not it is achieving

A firm uses labor and capital. To tell if the firm is technologically efficient, you

Corporations that offer incentive pay schemes that link pay to meeting profit, production, or sales targets are doing so to cope with the

The most prevalent market structures in the U.S. economy are perfect competition and monopolistic competition.

Over the years, the U.S. economy has become increasingly

The maximum value that the Herfindahl-Hirschman Index can attain is

Technological efficiency occurs when the firm produces a given output

The principal-agent problem suggests that

-The table above shows techniques that can be used to produce 100 shirts. The technique that is NOT technologically efficient is

When Acme, Inc. produces a certain amount of output at least cost, Acme, Inc. definitely

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

High concentration measures will understate the extent of competition in a market if

"When the cost of producing a unit of a good falls because the firm uses specialized resources to produce a range of goods and services" is the definition of

For monopoly

The minimum value of the Herfindahl-Hirschman Index is

Gilda's Art Gallery rewards its employees with stock each year the gallery makes profits. This stock allows the employees to own part of the gallery. This practice is known as

Economic efficiency occurs when the firm produces a given output

A company needs to know the price of each resource it employs if it wants to determine whether or not it is achieving

A firm uses labor and capital. To tell if the firm is technologically efficient, you

Corporations that offer incentive pay schemes that link pay to meeting profit, production, or sales targets are doing so to cope with the

The most prevalent market structures in the U.S. economy are perfect competition and monopolistic competition.

Over the years, the U.S. economy has become increasingly

The maximum value that the Herfindahl-Hirschman Index can attain is

Technological efficiency occurs when the firm produces a given output

The principal-agent problem suggests that

-The table above shows techniques that can be used to produce 100 shirts. The technique that is NOT technologically efficient is

When Acme, Inc. produces a certain amount of output at least cost, Acme, Inc. definitely

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