Question 1

Which one of the following statements is not true?

Accepted Answer

A) A production process is technologically efficient only if it is producing a given output at the lowest possible cost. 
B) If a process is economically efficient, it must be technologically efficient as well. 
C) Economic efficiency depends on the relative price of inputs, while technological efficiency does not. 
D) Economically efficient firms will be more likely to survive than economically inefficient firms. 
E) Technologically efficient firms are more likely to survive than technologically inefficient firms. 
A) A production process is technologically efficient only if it is producing a given output at the lowest possible cost. 
B) If a process is economically efficient, it must be technologically efficient as well. 
C) Economic efficiency depends on the relative price of inputs, while technological efficiency does not. 
D) Economically efficient firms will be more likely to survive than economically inefficient firms. 
E) Technologically efficient firms are more likely to survive than technologically inefficient firms.

Question 2

A firm with a lower unit cost from producing a wider range of goods and services has economies of

Accepted Answer

A) transactions costs. 
B) scale. 
C) scope. 
D) team production. 
E) market coordination. 
A) transactions costs. 
B) scale. 
C) scope. 
D) team production. 
E) market coordination.

Question 3

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. Choose the best statement.

Accepted Answer

A) When your wage rate is $5 per hour, the economically efficient method is method C. 
B) When your wage rate is $50 per hour, the economically efficient method is method B. 
C) When your wage rate is $500 per hour, the economically efficient method is method A. 
D) all of the above 
E) B and C only 
A) When your wage rate is $5 per hour, the economically efficient method is method C. 
B) When your wage rate is $50 per hour, the economically efficient method is method B. 
C) When your wage rate is $500 per hour, the economically efficient method is method A. 
D) all of the above 
E) B and C only

Question 4

In a monopoly, the four-firm concentration ratio is

Accepted Answer

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

Question 5

Use the information below to answer the following questions.
Fact 10.4.1 GameStop Racks Up the Points
No retailer has more cachet among gamers than GameStop. For now, only Wal-Mart has a larger market share-21.3% last year. GameStop's share was 21.1% last year, and may well overtake Wal-Mart this year. But if new women gamers prefer shopping at Target to GameStop, Wal-Mart and Target might erode GameStop's market share.
Source: Fortune, June 9, 2008
-Refer to Fact 10.4.1. According to the news clip, the U.S. video game market is

Accepted Answer

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

Question 6

The major factor determining whether a firm or a market coordinates a particular set of activities is

Accepted Answer

A) cost. 
B) a sale. 
C) depreciation. 
D) the size of the market. 
E) the number of workers. 
A) cost. 
B) a sale. 
C) depreciation. 
D) the size of the market. 
E) the number of workers.

Question 7

Use the table below to answer the following questions.
Table 10.2.1
  
-Refer to Table 10.2.1, which shows three methods for making photon torpedoes. Which method is technologically efficient?

Accepted Answer

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

Question 8

Use the information below to answer the following questions.
Fact 10.1.1 The Colvin Interview: Chrysler
The key driver of profitability will be that the focus of the company isn't on profitability. Our focus is on the customer. If we can find a way to give customers what they want better than anybody else, then what can stop us?
Source: Fortune, April 14, 2008
-Refer to Fact 10.1.1. In spite of what Chrysler's vice chairman and co-president claims, Chrysler's focus actually is on profitability because

Accepted Answer

A) all car firms are greedy. 
B) without profitability the UAW will be unable to negotiate high enough wage rates for its members. 
C) without a focus on profitability, Chrysler will either be eliminated from the market or taken over by another firm. 
D) without a focus on profitability, Chrysler will face an unreasonably high implicit rental rate. 
E) without profitability, Chrysler will not have enough money for research and development. 
A) all car firms are greedy. 
B) without profitability the UAW will be unable to negotiate high enough wage rates for its members. 
C) without a focus on profitability, Chrysler will either be eliminated from the market or taken over by another firm. 
D) without a focus on profitability, Chrysler will face an unreasonably high implicit rental rate. 
E) without profitability, Chrysler will not have enough money for research and development.

Question 9

In general, (1) opportunity cost is greater than accounting cost.
(2) opportunity cost is less than accounting cost.
(3) economic profit is greater than accounting profit.
(4) economic profit is less than accounting profit.

Accepted Answer

A) 1 only 
B) 1 and 3 
C) 1 and 4 
D) 2 and 3 
E) 2 and 4 
A) 1 only 
B) 1 and 3 
C) 1 and 4 
D) 2 and 3 
E) 2 and 4

Question 10

A firm that uses the latest technology ________ technologically efficient because ________.

Accepted Answer

A) is not necessarily; the firm might not use the least amount of inputs to produce a given output 
B) is not necessarily; new technology is more expensive than old technology 
C) is; efficiency is about costs rather than when the technology was developed 
D) is; new technology isn't developed unless it is efficient 
E) is; most consumers want access to the latest technology 
A) is not necessarily; the firm might not use the least amount of inputs to produce a given output 
B) is not necessarily; new technology is more expensive than old technology 
C) is; efficiency is about costs rather than when the technology was developed 
D) is; new technology isn't developed unless it is efficient 
E) is; most consumers want access to the latest technology

Question 11

Firms organize production by using

Accepted Answer

A) command systems only. 
B) incentive systems only. 
C) command and incentive systems. 
D) market systems only. 
E) principal-agent systems only. 
A) command systems only. 
B) incentive systems only. 
C) command and incentive systems. 
D) market systems only. 
E) principal-agent systems only.

Question 12

The possibility that an employee may not work hard is an example of the

Accepted Answer

A) limited liability problem. 
B) principal-agent problem. 
C) transactions cost problem. 
D) technological efficiency problem. 
E) partnership problem. 
A) limited liability problem. 
B) principal-agent problem. 
C) transactions cost problem. 
D) technological efficiency problem. 
E) partnership problem.

Question 13

Which of the following activities is most likely to be coordinated by a firm, instead of a market?

Accepted Answer

A) a large rock concert in Vancouver 
B) producing paperclips 
C) running a golf course 
D) selling groceries 
E) all of the above except A 
A) a large rock concert in Vancouver 
B) producing paperclips 
C) running a golf course 
D) selling groceries 
E) all of the above except A

Question 14

The four-firm concentration ratio measures the share of the largest four firms in total industry

Accepted Answer

A) profit. 
B) sales. 
C) cost. 
D) capital. 
E) loss. 
A) profit. 
B) sales. 
C) cost. 
D) capital. 
E) loss.

Question 15

What is the maximum value of the Herfindahl-Hirschman Index?

Accepted Answer

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

Question 16

The purpose of calculating the concentration ratio is

Accepted Answer

A) to obtain the firm's total profit. 
B) to obtain the firm's production cost. 
C) to measure the losses the firm incurred. 
D) to measure the extent to which the market is dominated by a small number of firms. 
E) to distinguish between the firm's total profit and production cost. 
A) to obtain the firm's total profit. 
B) to obtain the firm's production cost. 
C) to measure the losses the firm incurred. 
D) to measure the extent to which the market is dominated by a small number of firms. 
E) to distinguish between the firm's total profit and production cost.

Question 17

Typical examples of a partnership would include which one of the following?

Accepted Answer

A) a law firm 
B) a corner drugstore 
C) an automobile manufacturer 
D) a bank 
E) a freelance writer 
A) a law firm 
B) a corner drugstore 
C) an automobile manufacturer 
D) a bank 
E) a freelance writer

Question 18

Flora's Flowers bought a new van last year for $10,000. It can now sell the car for $8,500. To buy this year's model it would have to pay $11,000. Flora's also had to take out a $9,000 loan to buy the van which had to be paid back in yearly installments of $3,300 per year over three years. What is the implicit rental rate of the first year's use of the van?

Accepted Answer

A) $2,800 
B) $1,300 
C) $1,800 
D) $13,300 
E) $4,800 
A) $2,800 
B) $1,300 
C) $1,800 
D) $13,300 
E) $4,800

Question 19

In a partnership, each partner is legally liable for

Accepted Answer

A) all the debts of the partnership. 
B) the fraction of the debts corresponding to the fraction of ownership. 
C) 50 percent of the debt. 
D) all debts of the partnership limited by the personal wealth of the partner. 
E) an amount of debt limited to the amount of the partner's investment in the partnership. 
A) all the debts of the partnership. 
B) the fraction of the debts corresponding to the fraction of ownership. 
C) 50 percent of the debt. 
D) all debts of the partnership limited by the personal wealth of the partner. 
E) an amount of debt limited to the amount of the partner's investment in the partnership.

Question 20

Susan invests $1,000 to buy shares of TooNew stock. The company declares bankruptcy, leaving many debts unpaid, including Susan's $1,000 investment. Susan has a personal net worth of $50,000. What will be Susan's final net worth if TooNew has total unpaid debts of $30,000?

Accepted Answer

A) $19,000 
B) $21,000 
C) $49,000 
D) $51,000 
E) $20,000 
A) $19,000 
B) $21,000 
C) $49,000 
D) $51,000 
E) $20,000

Exam 10: Organizing Production

Which one of the following statements is not true?

A firm with a lower unit cost from producing a wider range of goods and services has economies of

In a monopoly, the four-firm concentration ratio is

The major factor determining whether a firm or a market coordinates a particular set of activities is

Use the table below to answer the following questions. Table 10.2.1 -Refer to Table 10.2.1, which shows three methods for making photon torpedoes. Which method is technologically efficient?

In general, (1) opportunity cost is greater than accounting cost. (2) opportunity cost is less than accounting cost. (3) economic profit is greater than accounting profit. (4) economic profit is less than accounting profit.

A firm that uses the latest technology ________ technologically efficient because ________.

Firms organize production by using

The possibility that an employee may not work hard is an example of the

Which of the following activities is most likely to be coordinated by a firm, instead of a market?

The four-firm concentration ratio measures the share of the largest four firms in total industry

What is the maximum value of the Herfindahl-Hirschman Index?

The purpose of calculating the concentration ratio is

Typical examples of a partnership would include which one of the following?

In a partnership, each partner is legally liable for

Susan invests $1,000 to buy shares of TooNew stock. The company declares bankruptcy, leaving many debts unpaid, including Susan's $1,000 investment. Susan has a personal net worth of $50,000. What will be Susan's final net worth if TooNew has total unpaid debts of $30,000?

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

A firm that uses the latest technology technologically efficient because .