Question 1

A profit-maximizing firm is constrained by all of the following except

Accepted Answer

A) demand for its product. 
B) limited resources. 
C) available technology. 
D) limited information. 
E) location. 
A) demand for its product. 
B) limited resources. 
C) available technology. 
D) limited information. 
E) location. E

Question 2

Which of the following pairs of market types are both characterized by having a large number of firms?

Accepted Answer

A) oligopoly and monopolistic competition 
B) monopoly and oligopoly 
C) perfect competition and monopolistic competition 
D) monopoly and monopolistic competition 
E) perfect competition and oligopoly 
A) oligopoly and monopolistic competition 
B) monopoly and oligopoly 
C) perfect competition and monopolistic competition 
D) monopoly and monopolistic competition 
E) perfect competition and oligopoly C

Question 3

Use the information below to answer the following question.
Fact 10.5.1
Two leading design firms, Astro Studios of San Francisco and Hers Experimental Design Laboratory, Inc. of Osaka, Japan, worked with Microsoft to design the Xbox 360 video game console. IBM, ATI, and SiS designed the Xbox 360's hardware. Three firms, Flextronics, Wistron, and Celestica, manufacture the Xbox 360 at their plants in China and Taiwan.
-Refer to Fact 10.5.1. Microsoft works with a large number of other firms to bring the Xbox to market, rather than performing all the required tasks at its headquarters in Seattle because

Accepted Answer

A) Microsoft wants to control as many firms as possible and by sending Xbox design and production to other firms, Microsoft gains control in a new market. 
B) this is the method of production with the lowest cost. 
C) Microsoft employees do not have the expertise to perform the necessary tasks. 
D) Microsoft already dominates too many markets and the government requires that other firms coordinate Xbox design and production. 
E) All of the above 
A) Microsoft wants to control as many firms as possible and by sending Xbox design and production to other firms, Microsoft gains control in a new market. 
B) this is the method of production with the lowest cost. 
C) Microsoft employees do not have the expertise to perform the necessary tasks. 
D) Microsoft already dominates too many markets and the government requires that other firms coordinate Xbox design and production. 
E) All of the above B

Question 4

Use the table below to answer the following questions.
Table 10.2.2
Three methods of making one medical hologram
  
-In Table 10.2.2, which method of making a medical hologram is technologically efficient?

Accepted Answer

A) 1 only 
B) 2 only 
C) 3 only 
D) all of the above 
E) 1 and 3 only 
A) 1 only 
B) 2 only 
C) 3 only 
D) all of the above 
E) 1 and 3 only

Question 5

A group of business people are having coffee. Which of the following quotations describes economies of scale?

Accepted Answer

A) "The new production process we've installed uses less capital and labour than the old one." 
B) "The new assembly line has higher capital costs, but the fall in workers' hours has lowered overall costs." 
C) "The costs of per-unit production have fallen dramatically as we have increased the length of the production runs." 
D) "Despite the higher costs of negotiating the contracts, hiring the cleaning firm is much cheaper than using our own staff." 
E) "The computer servicing people we have hired work very well as an integrated problem-solving group." 
A) "The new production process we've installed uses less capital and labour than the old one." 
B) "The new assembly line has higher capital costs, but the fall in workers' hours has lowered overall costs." 
C) "The costs of per-unit production have fallen dramatically as we have increased the length of the production runs." 
D) "Despite the higher costs of negotiating the contracts, hiring the cleaning firm is much cheaper than using our own staff." 
E) "The computer servicing people we have hired work very well as an integrated problem-solving group."

Question 6

Most establishments in Canada

Accepted Answer

A) employ between 5 and 99 people. 
B) employ more than 100 people. 
C) employ fewer than 5 people. 
D) employ more than 500 people. 
E) are partnerships. 
A) employ between 5 and 99 people. 
B) employ more than 100 people. 
C) employ fewer than 5 people. 
D) employ more than 500 people. 
E) are partnerships.

Question 7

In a perfectly competitive market, the four-firm concentration ratio is

Accepted Answer

A) almost zero. 
B) 50 percent. 
C) 100 percent. 
D) 75 percent. 
E) 25 percent. 
A) almost zero. 
B) 50 percent. 
C) 100 percent. 
D) 75 percent. 
E) 25 percent.

Question 8

A firm's goal is to

Accepted Answer

A) maximize revenue. 
B) maximize cost while minimizing revenue. 
C) maximize profit. 
D) minimize costs. 
E) minimize risk. 
A) maximize revenue. 
B) maximize cost while minimizing revenue. 
C) maximize profit. 
D) minimize costs. 
E) minimize risk.

Question 9

Gerald is a freelance writer who could work for a newspaper at $25,000 a year but instead runs his own business making revenue of $40,000 a year. His only business expenses are $1,000 for writing materials and $12,000 for rent. What is Gerald's economic profit from working as a freelance writer?

Accepted Answer

A) $2,000 
B) $28,000 
C) $15,000 
D) $25,000 
E) $27,000 
A) $2,000 
B) $28,000 
C) $15,000 
D) $25,000 
E) $27,000

Question 10

Use the table below to answer the following questions.
Table 10.2.1
  
-Refer to Table 10.2.1. If the price of labour is $10 per unit and the price of capital is $20 per unit, which method is economically efficient?

Accepted Answer

A) 1 only 
B) 2 only 
C) 3 only 
D) all of the above 
E) 1 and 3 only 
A) 1 only 
B) 2 only 
C) 3 only 
D) all of the above 
E) 1 and 3 only

Question 11

When Jitters Coffee Company, Inc., can lower the cost of packaging a kilogram of coffee by doubling the quantity packaged each day, it is achieving

Accepted Answer

A) economies of scope. 
B) lower transactions costs 
C) economies of scale. 
D) efficient team production. 
E) all of the above 
A) economies of scope. 
B) lower transactions costs 
C) economies of scale. 
D) efficient team production. 
E) all of the above

Question 12

A market in which the Herfindahl-Hirschman Index (HHI)lies between 1,000 and 1,800 is regarded as being

Accepted Answer

A) a monopoly. 
B) an oligopoly. 
C) a perfectly competitive market. 
D) a moderately competitive market. 
E) a potential matter of concern for regulators. 
A) a monopoly. 
B) an oligopoly. 
C) a perfectly competitive market. 
D) a moderately competitive market. 
E) a potential matter of concern for regulators.

Question 13

When the cost of producing a unit of a good falls as its output rate increases,

Accepted Answer

A) economies of scale exist. 
B) economies of scope exist. 
C) transactions costs are zero. 
D) market coordination is unnecessary. 
E) the firm is a partnership. 
A) economies of scale exist. 
B) economies of scope exist. 
C) transactions costs are zero. 
D) market coordination is unnecessary. 
E) the firm is a partnership.

Question 14

The implicit rental rate to a firm of owning a building is

Accepted Answer

A) the sum of economic depreciation and foregone interest. 
B) economic depreciation only. 
C) foregone interest only. 
D) the cost of using an alternative building. 
E) the rent paid on the building. 
A) the sum of economic depreciation and foregone interest. 
B) economic depreciation only. 
C) foregone interest only. 
D) the cost of using an alternative building. 
E) the rent paid on the building.

Question 15

Use the information below to answer the following questions.
Fact 10.2.1
Consider the following three methods of preparing your tax return. Method A uses a personal computer (cost equal to $1,000)and 1 hour of your time. Method B uses a calculator (cost equal to $30)and 12 hours of your time. Method C uses pen and paper (cost equal to $1)and 2 days (16 hours)of your time.
-Consider Fact 10.2.1. Which production method is technologically inefficient?

Accepted Answer

A) A 
B) B 
C) C 
D) all of the above 
E) none of the above 
A) A 
B) B 
C) C 
D) all of the above 
E) none of the above

Question 16

It is a disadvantage of ________ that retained profits are taxed twice. It is a disadvantage of ________ that bad decisions are not checked by the need for consensus.

Accepted Answer

A) a sole proprietorship; both a partnership and a sole proprietorship 
B) a corporation; a sole proprietorship 
C) both a partnership and a sole proprietorship; a partnership 
D) a corporation; both a partnership and a sole proprietorship 
E) both a corporation and a partnership; a sole proprietorship 
A) a sole proprietorship; both a partnership and a sole proprietorship 
B) a corporation; a sole proprietorship 
C) both a partnership and a sole proprietorship; a partnership 
D) a corporation; both a partnership and a sole proprietorship 
E) both a corporation and a partnership; a sole proprietorship

Question 17

The difference in the market value of a new van owned by a firm and the market value of the same van one year later is

Accepted Answer

A) economic depreciation. 
B) physical depreciation. 
C) economic deterioration. 
D) physical deterioration. 
E) conventional depreciation. 
A) economic depreciation. 
B) physical depreciation. 
C) economic deterioration. 
D) physical deterioration. 
E) conventional depreciation.

Question 18

Which of the following industries in Canada has the highest four-firm concentration ratio?

Accepted Answer

A) audio and video equipment 
B) clothing 
C) bakery items 
D) fabrics 
E) tobacco products 
A) audio and video equipment 
B) clothing 
C) bakery items 
D) fabrics 
E) tobacco products

Question 19

Economic profit equals total revenue minus

Accepted Answer

A) the cost of resources bought in the market. 
B) the implicit rental rate. 
C) the opportunity cost of production. 
D) the cost of resources supplied by the owner. 
E) the cost of resources owned by the firm. 
A) the cost of resources bought in the market. 
B) the implicit rental rate. 
C) the opportunity cost of production. 
D) the cost of resources supplied by the owner. 
E) the cost of resources owned by the firm.

Question 20

Normal profit is the ________. Normal profit ________ part of a firm's opportunity cost.

Accepted Answer

A) return that an entrepreneur can expect to receive on the average; is 
B) profit used by the Canada Revenue Agency to calculate tax owing; is 
C) profit used by the Canada Revenue Agency to calculate tax owing; is not 
D) return that an entrepreneur can expect to receive on the average; is not 
E) difference between total revenue and total cost; is 
A) return that an entrepreneur can expect to receive on the average; is 
B) profit used by the Canada Revenue Agency to calculate tax owing; is 
C) profit used by the Canada Revenue Agency to calculate tax owing; is not 
D) return that an entrepreneur can expect to receive on the average; is not 
E) difference between total revenue and total cost; is

Exam 10: Organizing Production

A profit-maximizing firm is constrained by all of the following except

Which of the following pairs of market types are both characterized by having a large number of firms?

Use the table below to answer the following questions. Table 10.2.2 Three methods of making one medical hologram -In Table 10.2.2, which method of making a medical hologram is technologically efficient?

A group of business people are having coffee. Which of the following quotations describes economies of scale?

Most establishments in Canada

In a perfectly competitive market, the four-firm concentration ratio is

A firm's goal is to

Gerald is a freelance writer who could work for a newspaper at $25,000 a year but instead runs his own business making revenue of $40,000 a year. His only business expenses are $1,000 for writing materials and $12,000 for rent. What is Gerald's economic profit from working as a freelance writer?

Use the table below to answer the following questions. Table 10.2.1 -Refer to Table 10.2.1. If the price of labour is $10 per unit and the price of capital is $20 per unit, which method is economically efficient?

When Jitters Coffee Company, Inc., can lower the cost of packaging a kilogram of coffee by doubling the quantity packaged each day, it is achieving

A market in which the Herfindahl-Hirschman Index (HHI)lies between 1,000 and 1,800 is regarded as being

When the cost of producing a unit of a good falls as its output rate increases,

The implicit rental rate to a firm of owning a building is

It is a disadvantage of ________ that retained profits are taxed twice. It is a disadvantage of ________ that bad decisions are not checked by the need for consensus.

The difference in the market value of a new van owned by a firm and the market value of the same van one year later is

Which of the following industries in Canada has the highest four-firm concentration ratio?

Economic profit equals total revenue minus

Normal profit is the ________. Normal profit ________ part of a firm's opportunity cost.

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Governments Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

Macro Only: International Trade Policy

Filters

It is a disadvantage of that retained profits are taxed twice. It is a disadvantage of that bad decisions are not checked by the need for consensus.

Normal profit is the . Normal profit part of a firm's opportunity cost.