Question 1

If a firm traded on the New York Stock Exchange posts an accounting profit of $10 million, then the firm is making a positive economic profit

Accepted Answer

A) only if the Securities and Exchange Commission (SE
C) approves the accounting report. 
B) only if the firm's opportunity cost is less than $10 million. 
C) only if the firm's opportunity benefit is more than $10 million. 
D) only if the firm's management receives stock compensation. 
A) only if the Securities and Exchange Commission (SE
C) approves the accounting report. 
B) only if the firm's opportunity cost is less than $10 million. 
C) only if the firm's opportunity benefit is more than $10 million. 
D) only if the firm's management receives stock compensation.

Question 2

Opportunistic behavior may occur when

Accepted Answer

A) a firm buys its inputs from multiple suppliers. 
B) firms incur significant transaction costs when negotiating contracts. 
C) a firm backwards vertically integrates. 
D) a firm can buy a key component from only one supplier. 
A) a firm buys its inputs from multiple suppliers. 
B) firms incur significant transaction costs when negotiating contracts. 
C) a firm backwards vertically integrates. 
D) a firm can buy a key component from only one supplier.

Question 3

If a manager is unsure what the entire profit function looks like, then she can

Accepted Answer

A) decrease output slightly to see if profits increase. 
B) increase output slightly to see if profits increase. 
C) Both A and B. 
D) None of the above. 
A) decrease output slightly to see if profits increase. 
B) increase output slightly to see if profits increase. 
C) Both A and B. 
D) None of the above.

Question 4

-The above figure shows the cost curves for a competitive firm. If the profit-maximizing level of output is 40, price is equal to

Accepted Answer

A) $0. 
B) $15. 
C) $10. 
D) $11. 
A) $0. 
B) $15. 
C) $10. 
D) $11.

Question 5

According to economists, competitive firms

Accepted Answer

A) compete for the same customers. 
B) are price takers. 
C) differentiate their products. 
D) are able to change output and affect the market price. 
A) compete for the same customers. 
B) are price takers. 
C) differentiate their products. 
D) are able to change output and affect the market price.

Question 6

If the market price in a competitive market is below the minimum of average variable cost the firm will shut down.

Accepted Answer

A) True 
 B)False

Question 7

An oligopoly

Accepted Answer

A) requires government licensing. 
B) has relatively few firms, but they are still price takers. 
C) always collude to keep prices high. 
D) has barriers to entry. 
A) requires government licensing. 
B) has relatively few firms, but they are still price takers. 
C) always collude to keep prices high. 
D) has barriers to entry.

Question 8

A mixed enterprise is one

Accepted Answer

A) where the government has significant ownership in a private company. 
B) in which the company has more than one legal structure, such as limited liability and sole proprietorship. 
C) that combines for-profit activities with education. 
D) that has both for-profit and non-profit operations. 
A) where the government has significant ownership in a private company. 
B) in which the company has more than one legal structure, such as limited liability and sole proprietorship. 
C) that combines for-profit activities with education. 
D) that has both for-profit and non-profit operations.

Question 9

If manager performance is easily observable then

Accepted Answer

A) profits will be maximized for the firm. 
B) the owner can directly reward the manager. 
C) the manager will attempt to manipulate the reported profit. 
D) the firm's stock price will go up. 
A) profits will be maximized for the firm. 
B) the owner can directly reward the manager. 
C) the manager will attempt to manipulate the reported profit. 
D) the firm's stock price will go up.

Question 10

-The above figure shows the cost curves for a competitive firm. The firm will incur economic losses if the price is less than

Accepted Answer

A) $0. 
B) $5. 
C) $10. 
D) $11. 
A) $0. 
B) $5. 
C) $10. 
D) $11.

Question 11

A firm's profit is

Accepted Answer

A) usually negative when opportunity costs are included. 
B) the difference between marginal revenue and marginal cost. 
C) the opportunity cost of the firm's shareholders. 
D) the difference between revenue and cost. 
A) usually negative when opportunity costs are included. 
B) the difference between marginal revenue and marginal cost. 
C) the opportunity cost of the firm's shareholders. 
D) the difference between revenue and cost.

Question 12

Monitoring is often used by firms in an attempt to decrease

Accepted Answer

A) shirking. 
B) piece rates. 
C) adverse selection. 
D) signaling. 
A) shirking. 
B) piece rates. 
C) adverse selection. 
D) signaling.

Question 13

What is one of the biggest differences between a sole proprietorship and a corporation?

Accepted Answer

A) Sole proprietorships offer stock. 
B) Corporation shareholders elect the managers of the firm. 
C) Sole proprietorships have limited liability. 
D) Corporations are the only profitable firms. 
A) Sole proprietorships offer stock. 
B) Corporation shareholders elect the managers of the firm. 
C) Sole proprietorships have limited liability. 
D) Corporations are the only profitable firms.

Question 14

If a profit-maximizing firm finds that, at its current level of production, MR < MC, it will

Accepted Answer

A) decrease output. 
B) increase output. 
C) shut down. 
D) operate at a loss. 
A) decrease output. 
B) increase output. 
C) shut down. 
D) operate at a loss.

Question 15

According to the survivor principle

Accepted Answer

A) firms will get taken over by their larger rivals over time. 
B) only firms that maximize profits survive in highly competitive markets. 
C) managers only work hard if they are threatened with their survival at the firm. 
D) eventually all firms merge to become one large monopoly. 
A) firms will get taken over by their larger rivals over time. 
B) only firms that maximize profits survive in highly competitive markets. 
C) managers only work hard if they are threatened with their survival at the firm. 
D) eventually all firms merge to become one large monopoly.

Question 16

All of the following are characteristics of an oligopolistic market EXCEPT

Accepted Answer

A) firms must consider the actions of their rivals. 
B) cartels eventually form to keep prices high. 
C) firms have the ability to influence prices. 
D) firms earn lower profits than a monopoly. 
A) firms must consider the actions of their rivals. 
B) cartels eventually form to keep prices high. 
C) firms have the ability to influence prices. 
D) firms earn lower profits than a monopoly.

Question 17

If marginal revenue equals marginal cost, the firm is maximizing profits as long as

Accepted Answer

A) the resulting profits are positive. 
B) marginal cost exceeds marginal revenue for greater levels of output. 
C) the average cost curve lies above the demand curve. 
D) All of the above are required. 
A) the resulting profits are positive. 
B) marginal cost exceeds marginal revenue for greater levels of output. 
C) the average cost curve lies above the demand curve. 
D) All of the above are required.

Question 18

A firm will shut down in the short run if

Accepted Answer

A) total fixed costs are too high. 
B) total revenue from operating would not cover all costs. 
C) total revenue from operating would not cover variable costs. 
D) total revenue from operating would not cover fixed costs. 
A) total fixed costs are too high. 
B) total revenue from operating would not cover all costs. 
C) total revenue from operating would not cover variable costs. 
D) total revenue from operating would not cover fixed costs.

Question 19

An organization that converts inputs (like Labor, Capital etc.)into output can be a

Accepted Answer

A) firm. 
B) sole proprietorship. 
C) corporation. 
D) All of the above. 
A) firm. 
B) sole proprietorship. 
C) corporation. 
D) All of the above.

Question 20

If a firm is operating at an output level where losses are minimized the firm

Accepted Answer

A) has no incentive to stay in the industry. 
B) is better of exiting the industry. 
C) is maximizing profits. 
D) will shut down 
A) has no incentive to stay in the industry. 
B) is better of exiting the industry. 
C) is maximizing profits. 
D) will shut down

If a firm traded on the New York Stock Exchange posts an accounting profit of $10 million, then the firm is making a positive economic profit

Opportunistic behavior may occur when

If a manager is unsure what the entire profit function looks like, then she can

-The above figure shows the cost curves for a competitive firm. If the profit-maximizing level of output is 40, price is equal to

According to economists, competitive firms

If the market price in a competitive market is below the minimum of average variable cost the firm will shut down.

An oligopoly

A mixed enterprise is one

If manager performance is easily observable then

-The above figure shows the cost curves for a competitive firm. The firm will incur economic losses if the price is less than

A firm's profit is

Monitoring is often used by firms in an attempt to decrease

What is one of the biggest differences between a sole proprietorship and a corporation?

If a profit-maximizing firm finds that, at its current level of production, MR < MC, it will

According to the survivor principle

All of the following are characteristics of an oligopolistic market EXCEPT

If marginal revenue equals marginal cost, the firm is maximizing profits as long as

A firm will shut down in the short run if

An organization that converts inputs (like Labor, Capital etc.)into output can be a

If a firm is operating at an output level where losses are minimized the firm

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

Exam 7: Firm Organization and Market Structure

If a firm traded on the New York Stock Exchange posts an accounting profit of $10 million, then the firm is making a positive economic profit

Opportunistic behavior may occur when

If a manager is unsure what the entire profit function looks like, then she can

-The above figure shows the cost curves for a competitive firm. If the profit-maximizing level of output is 40, price is equal to

According to economists, competitive firms

If the market price in a competitive market is below the minimum of average variable cost the firm will shut down.

An oligopoly

A mixed enterprise is one

If manager performance is easily observable then

-The above figure shows the cost curves for a competitive firm. The firm will incur economic losses if the price is less than

A firm's profit is

Monitoring is often used by firms in an attempt to decrease

What is one of the biggest differences between a sole proprietorship and a corporation?

If a profit-maximizing firm finds that, at its current level of production, MR < MC, it will

According to the survivor principle

All of the following are characteristics of an oligopolistic market EXCEPT

If marginal revenue equals marginal cost, the firm is maximizing profits as long as

A firm will shut down in the short run if

An organization that converts inputs (like Labor, Capital etc.)into output can be a

If a firm is operating at an output level where losses are minimized the firm

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters