Question 1

Which one of the following statements is true?

Accepted Answer

A) Firms are markets in and of themselves. 
B) Firms do not organize factors of production to produce goods and services. 
C) Firms are buyers of consumer goods and services. 
D) Efficient firms can eliminate scarcity. 
E) Firms are often more efficient than markets as coordinators of economic activity. 
A) Firms are markets in and of themselves. 
B) Firms do not organize factors of production to produce goods and services. 
C) Firms are buyers of consumer goods and services. 
D) Efficient firms can eliminate scarcity. 
E) Firms are often more efficient than markets as coordinators of economic activity.

Question 2

Flora's Flowers bought a new van last year for $10,000. It can now sell the van for $8,500. To buy this year's model of the same van it would have to pay $11,000. What is the implicit rental rate using the car for one year at a zero percent interest rate?

Accepted Answer

A) $2,500 
B) $3,500 
C) $1,000 
D) $10,000 
E) $1,500 
A) $2,500 
B) $3,500 
C) $1,000 
D) $10,000 
E) $1,500

Question 3

Mr. Brown opens his restaurant as a sole proprietorship. After a year of disastrous reviews, he has gone deeply into debt. His liability is

Accepted Answer

A) zero; he has already lost all his money. 
B) the amount of his original investment. 
C) limited only by his entire wealth. 
D) limited to assets owned by the restaurant. 
E) depends upon how much money he has in his savings account. 
A) zero; he has already lost all his money. 
B) the amount of his original investment. 
C) limited only by his entire wealth. 
D) limited to assets owned by the restaurant. 
E) depends upon how much money he has in his savings account.

Question 4

Firm A can produce a unit of output with 10 hours of labour and 5 units of capital. Firm B can produce a unit of output with 5 hours of labour and 10 units of capital. Firm C can produce a unit of output with 10 hours of labour and 10 units of capital. If the prices of labour and material are $10 and $5, respectively which firm is technologically efficient?

Accepted Answer

A) A only 
B) B only 
C) C only 
D) A and B 
E) A and C 
A) A only 
B) B only 
C) C only 
D) A and B 
E) A and C

Question 5

Some firms use large amounts of capital and small amounts of labour, while others use small amounts of capital and large amounts of labour to

Accepted Answer

A) use surpluses of labour and capital and eliminate unemployment of these resources. 
B) use the best available technology. 
C) use the resources that are most readily available. 
D) maximize profit. 
E) maximize production. 
A) use surpluses of labour and capital and eliminate unemployment of these resources. 
B) use the best available technology. 
C) use the resources that are most readily available. 
D) maximize profit. 
E) maximize production.

Question 6

The implicit rental rate

Accepted Answer

A) is the firm's opportunity cost of using the capital it owns. 
B) is paid with cash. 
C) has two components: economic depreciation and foregone interest. 
D) both A and C are correct. 
E) both B and C are correct. 
A) is the firm's opportunity cost of using the capital it owns. 
B) is paid with cash. 
C) has two components: economic depreciation and foregone interest. 
D) both A and C are correct. 
E) both B and C are correct.

Question 7

The North American economy is ________ and is becoming ________ competitive.

Accepted Answer

A) uncompetitive; less 
B) competitive; more 
C) competitive; less 
D) uncompetitive; more 
E) currently an oligopolistic market; more 
A) uncompetitive; less 
B) competitive; more 
C) competitive; less 
D) uncompetitive; more 
E) currently an oligopolistic market; more

Question 8

Which one of the following statements is true?

Accepted Answer

A) All technologically efficient methods are also economically efficient. 
B) All economically efficient methods are also technologically efficient. 
C) Technological efficiency changes with changes in relative input prices. 
D) Technologically efficient firms will be more likely to survive than economically efficient firms. 
E) Technological efficiency is more important than economical efficiency. 
A) All technologically efficient methods are also economically efficient. 
B) All economically efficient methods are also technologically efficient. 
C) Technological efficiency changes with changes in relative input prices. 
D) Technologically efficient firms will be more likely to survive than economically efficient firms. 
E) Technological efficiency is more important than economical efficiency.

Question 9

Federal Express enters into contracts with independent truck operators who offer FedEx service and who are rewarded by the volume (cubic feet)of packages they carry. FedEx does not hire more independent drivers because

Accepted Answer

A) it is concerned about a possible downturn in the economy and the effects of overexpansion. 
B) it cannot afford more trucks and more drivers. 
C) of the principal-agent problem. 
D) it is a corporation, so it wants to have a limited number of independent truck owners operating as proprietorships. 
E) trucks are not a technologically efficient method of transporting parcels. 
A) it is concerned about a possible downturn in the economy and the effects of overexpansion. 
B) it cannot afford more trucks and more drivers. 
C) of the principal-agent problem. 
D) it is a corporation, so it wants to have a limited number of independent truck owners operating as proprietorships. 
E) trucks are not a technologically efficient method of transporting parcels.

Question 10

Which one of the following statements about the implicit rental rate of capital is true?

Accepted Answer

A) It is the market value of capital. 
B) It is the opportunity cost to a firm of using its own capital. 
C) It includes normal profit. 
D) It is the amount paid for the use of land or buildings. 
E) It is the depreciated value of capital. 
A) It is the market value of capital. 
B) It is the opportunity cost to a firm of using its own capital. 
C) It includes normal profit. 
D) It is the amount paid for the use of land or buildings. 
E) It is the depreciated value of capital.

Question 11

The four-firm concentration ratio in an industry is 75 percent. Total sales in the industry are $800 million and total economic profit in the industry is $500 million. Normal profit for each firm is zero.
From this information we know that

Accepted Answer

A) economic profit of any four firms is at least $667 million. 
B) total sales from the four largest firms is $600 million. 
C) economic profit of the four largest firms is $375 million. 
D) total sales from any four firms is at least $1,067 million. 
E) economic profit of the four largest firms is $500 million. 
A) economic profit of any four firms is at least $667 million. 
B) total sales from the four largest firms is $600 million. 
C) economic profit of the four largest firms is $375 million. 
D) total sales from any four firms is at least $1,067 million. 
E) economic profit of the four largest firms is $500 million.

Question 12

A firm with a single owner who has unlimited liability is

Accepted Answer

A) a corporation. 
B) a sole proprietorship. 
C) a limited partnership. 
D) an unlimited partnership. 
E) a cooperative. 
A) a corporation. 
B) a sole proprietorship. 
C) a limited partnership. 
D) an unlimited partnership. 
E) a cooperative.

Question 13

A firm's total opportunity cost of production is the sum of the cost of using resources

Accepted Answer

A) bought in the market. 
B) owned by the firm. 
C) supplied by the firm's owner. 
D) bought in the market and supplied by the firm's owner. 
E) bought in the market, owned by the firm, and supplied by the firm's owner. 
A) bought in the market. 
B) owned by the firm. 
C) supplied by the firm's owner. 
D) bought in the market and supplied by the firm's owner. 
E) bought in the market, owned by the firm, and supplied by the firm's owner.

Question 14

If a market is shared equally by 100 firms, the Herfindahl-Hirschman Index is

Accepted Answer

A) 1/100. 
B) 1/50. 
C) 1. 
D) 50. 
E) 100. 
A) 1/100. 
B) 1/50. 
C) 1. 
D) 50. 
E) 100.

Question 15

Choose the statement that is incorrect.

Accepted Answer

A) A firm coordinates a particular set of activities if it can do so at a lower cost than a market. 
B) Firms can achieve economies of scale. 
C) Firms can achieve economies of scope. 
D) Firms can eliminate transactions costs. 
E) Firms do not practice outsourcing. 
A) A firm coordinates a particular set of activities if it can do so at a lower cost than a market. 
B) Firms can achieve economies of scale. 
C) Firms can achieve economies of scope. 
D) Firms can eliminate transactions costs. 
E) Firms do not practice outsourcing.

Question 16

If a market is shared equally by four firms, the Herfindahl-Hirschman Index is

Accepted Answer

A) 1/4. 
B) 4. 
C) 25. 
D) 100. 
E) 2,500. 
A) 1/4. 
B) 4. 
C) 25. 
D) 100. 
E) 2,500.

Question 17

A four-firm concentration ratio of less than 60 percent indicates

Accepted Answer

A) a monopoly. 
B) a market that is dominated by a few firms. 
C) a competitive market. 
D) an oligopoly. 
E) an absence of competition. 
A) a monopoly. 
B) a market that is dominated by a few firms. 
C) a competitive market. 
D) an oligopoly. 
E) an absence of competition.

Question 18

Use the table below to answer the following questions.
Table 10.4.1
  
-Refer to Table 10.4.1. The four-firm concentration ratio for taco stands is

Accepted Answer

A) 15 percent. 
B) 100 percent. 
C) 80 percent. 
D) 33 percent. 
E) 30 percent. 
A) 15 percent. 
B) 100 percent. 
C) 80 percent. 
D) 33 percent. 
E) 30 percent.

Question 19

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

Accepted Answer

A) tires 
B) soft drinks and ice 
C) textiles 
D) sugar 
E) wooden windows and doors 
A) tires 
B) soft drinks and ice 
C) textiles 
D) sugar 
E) wooden windows and doors

Question 20

Economic depreciation is

Accepted Answer

A) the same as depreciation calculated by an accountant. 
B) equal to economic profit minus normal profit. 
C) the change in the market value of capital over a given period. 
D) the deterioration of the physical appearance of a capital. 
E) paid in cash. 
A) the same as depreciation calculated by an accountant. 
B) equal to economic profit minus normal profit. 
C) the change in the market value of capital over a given period. 
D) the deterioration of the physical appearance of a capital. 
E) paid in cash.

Exam 10: Organizing Production

Which one of the following statements is true?

Flora's Flowers bought a new van last year for $10,000. It can now sell the van for $8,500. To buy this year's model of the same van it would have to pay $11,000. What is the implicit rental rate using the car for one year at a zero percent interest rate?

Mr. Brown opens his restaurant as a sole proprietorship. After a year of disastrous reviews, he has gone deeply into debt. His liability is

Some firms use large amounts of capital and small amounts of labour, while others use small amounts of capital and large amounts of labour to

The implicit rental rate

The North American economy is ________ and is becoming ________ competitive.

Which one of the following statements is true?

Federal Express enters into contracts with independent truck operators who offer FedEx service and who are rewarded by the volume (cubic feet)of packages they carry. FedEx does not hire more independent drivers because

Which one of the following statements about the implicit rental rate of capital is true?

The four-firm concentration ratio in an industry is 75 percent. Total sales in the industry are $800 million and total economic profit in the industry is $500 million. Normal profit for each firm is zero. From this information we know that

A firm with a single owner who has unlimited liability is

A firm's total opportunity cost of production is the sum of the cost of using resources

If a market is shared equally by 100 firms, the Herfindahl-Hirschman Index is

Choose the statement that is incorrect.

If a market is shared equally by four firms, the Herfindahl-Hirschman Index is

A four-firm concentration ratio of less than 60 percent indicates

Use the table below to answer the following questions. Table 10.4.1 -Refer to Table 10.4.1. The four-firm concentration ratio for taco stands is

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

Economic depreciation is

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

The North American economy is and is becoming competitive.