Question 1

-The above figure shows the cost curves for a competitive firm.If the firm is to operate in the short run,price must exceed

Accepted Answer

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

Question 2

Firms might vertically disintegrate when

Accepted Answer

A)  it becomes more profitable for a firm to specialize. 
B)  the IRS cracks down on transfer pricing. 
C)  the industry becomes too large to support itself. 
D)  the industry shrinks in size. 
A)  it becomes more profitable for a firm to specialize. 
B)  the IRS cracks down on transfer pricing. 
C)  the industry becomes too large to support itself. 
D)  the industry shrinks in size.

Question 3

If a competitive firm cannot earn profit at any level of output during a given short-run period,then which of the following FALSE?

Accepted Answer

A)  It will shut down in the short run and wait until the price increases sufficiently. 
B)  It will exit the industry in the long run. 
C)  It will operate at a loss in the short run. 
D)  It will minimize its loss by decreasing output so that price exceeds marginal cost. 
A)  It will shut down in the short run and wait until the price increases sufficiently. 
B)  It will exit the industry in the long run. 
C)  It will operate at a loss in the short run. 
D)  It will minimize its loss by decreasing output so that price exceeds marginal cost.

Question 4

American Apparel is an example of

Accepted Answer

A)  a firm with a highly decentralized supply chain. 
B)  extreme vertical integration. 
C)  a successful U.S. garment maker that outsources much of it sewing. 
D)  a firm that makes extensive use of contracts with vertical restraints. 
A)  a firm with a highly decentralized supply chain. 
B)  extreme vertical integration. 
C)  a successful U.S. garment maker that outsources much of it sewing. 
D)  a firm that makes extensive use of contracts with vertical restraints.

Question 5

Vertical integration can

Accepted Answer

A)  lower transaction costs due to lower costs of writing and enforcing contracts. 
B)  increase management costs and complexity. 
C)  reduce problems between owners and managers. 
D)  All of the above. 
A)  lower transaction costs due to lower costs of writing and enforcing contracts. 
B)  increase management costs and complexity. 
C)  reduce problems between owners and managers. 
D)  All of the above.

Question 6

If a short-run fixed cost is sunk,then

Accepted Answer

A)  losses can be minimized by shutting down. 
B)  the firm should keep producing to cover the sunk cost. 
C)  the cost cannot be avoided by shutting down. 
D)  Both B and C. 
A)  losses can be minimized by shutting down. 
B)  the firm should keep producing to cover the sunk cost. 
C)  the cost cannot be avoided by shutting down. 
D)  Both B and C.

Question 7

Vertical restraints in a contract

Accepted Answer

A)  are generally illegal in the U.S. 
B)  usually benefit the firm that produces the raw inputs to the production process. 
C)  are used in vertical mergers. 
D)  can approximate the outcome of a vertical merger. 
A)  are generally illegal in the U.S. 
B)  usually benefit the firm that produces the raw inputs to the production process. 
C)  are used in vertical mergers. 
D)  can approximate the outcome of a vertical merger.

Question 8

If a firm goes out of business because of negative economic profits,its books

Accepted Answer

A)  might indicate a positive accounting profit. 
B)  might indicate that opportunity costs were zero. 
C)  might indicate that taxes are too high. 
D)  might suggest a mistaken value of explicit costs. 
A)  might indicate a positive accounting profit. 
B)  might indicate that opportunity costs were zero. 
C)  might indicate that taxes are too high. 
D)  might suggest a mistaken value of explicit costs.

Question 9

If a competitive firm maximizes short-run profits by producing some quantity of output,which of the following must be true at that level of output?

Accepted Answer

A)  p = MC 
B)  MR = MC 
C)  p ≥ AVC 
D)  All of the above 
A)  p = MC 
B)  MR = MC 
C)  p ≥ AVC 
D)  All of the above

Question 10

Supply chain management refers to

Accepted Answer

A)  the contracts put in place to manage a firm's suppliers. 
B)  the decisions around which stages of production to handle internally and which to buy from others. 
C)  how the firm compensates the employees who work on the firm's internal stages of production. 
D)  the 19th century practice of having barges move downstream with the flow of the river. 
A)  the contracts put in place to manage a firm's suppliers. 
B)  the decisions around which stages of production to handle internally and which to buy from others. 
C)  how the firm compensates the employees who work on the firm's internal stages of production. 
D)  the 19th century practice of having barges move downstream with the flow of the river.

Question 11

-The above figure shows the cost curves for a competitive firm.If the firm is to earn economic profit,price must exceed

Accepted Answer

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

Question 12

Market structure depends upon

Accepted Answer

A)  the ease of entry and exit. 
B)  the ability of firms to differentiate their goods and services. 
C)  the number of firms in the market. 
D)  All of the above. 
A)  the ease of entry and exit. 
B)  the ability of firms to differentiate their goods and services. 
C)  the number of firms in the market. 
D)  All of the above.

Question 13

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 14

Toyota's just-in-time system is an example of

Accepted Answer

A)  backward (upstream) integration. 
B)  quasi-vertical integration. 
C)  using transfer pricing to avoid price controls. 
D)  horizontal, downstream integration. 
A)  backward (upstream) integration. 
B)  quasi-vertical integration. 
C)  using transfer pricing to avoid price controls. 
D)  horizontal, downstream integration.

Question 15

A monopoly

Accepted Answer

A)  must have a patent to protect its products. 
B)  is a price taker. 
C)  produces the market output. 
D)  doesn't lose any sales when it raises its price. 
A)  must have a patent to protect its products. 
B)  is a price taker. 
C)  produces the market output. 
D)  doesn't lose any sales when it raises its price.

Question 16

Vertical integration

Accepted Answer

A)  is always driven by profitability concerns. 
B)  results in lower transaction costs. 
C)  may be undertaken to avoid government regulations. 
D)  hampers timely delivery of inputs into the production process. 
A)  is always driven by profitability concerns. 
B)  results in lower transaction costs. 
C)  may be undertaken to avoid government regulations. 
D)  hampers timely delivery of inputs into the production process.

Question 17

A firm bought a pizza over for $13,500 and if it shut down now,could sell the oven for $9,500.Which of the following statements is TRUE?

Accepted Answer

A)  The relevant cost of the oven when considering shutting down is $13,500. 
B)  The relevant cost of the oven when considering shutting down is $9,500. 
C)  The relevant cost of the oven when considering shutting down is $4,000. 
D)  The cost oven does not matter when deciding whether or not to shut down. 
A)  The relevant cost of the oven when considering shutting down is $13,500. 
B)  The relevant cost of the oven when considering shutting down is $9,500. 
C)  The relevant cost of the oven when considering shutting down is $4,000. 
D)  The cost oven does not matter when deciding whether or not to shut down.

Question 18

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

Question 19

Even though fixed costs do not affect the output decision,an increase in fixed costs results in a wider range of prices for which the firm operates at a loss.

Accepted Answer

A) True 
 B)False

Question 20

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.

-The above figure shows the cost curves for a competitive firm.If the firm is to operate in the short run,price must exceed

Firms might vertically disintegrate when

If a competitive firm cannot earn profit at any level of output during a given short-run period,then which of the following FALSE?

American Apparel is an example of

Vertical integration can

If a short-run fixed cost is sunk,then

Vertical restraints in a contract

If a firm goes out of business because of negative economic profits,its books

If a competitive firm maximizes short-run profits by producing some quantity of output,which of the following must be true at that level of output?

Supply chain management refers to

-The above figure shows the cost curves for a competitive firm.If the firm is to earn economic profit,price must exceed

Market structure depends upon

A firm will shut down in the short run if

Toyota's just-in-time system is an example of

A monopoly

Vertical integration

A firm bought a pizza over for $13,500 and if it shut down now,could sell the oven for $9,500.Which of the following statements is TRUE?

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

Even though fixed costs do not affect the output decision,an increase in fixed costs results in a wider range of prices for which the firm operates at a loss.

An oligopoly

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

-The above figure shows the cost curves for a competitive firm.If the firm is to operate in the short run,price must exceed

Firms might vertically disintegrate when

If a competitive firm cannot earn profit at any level of output during a given short-run period,then which of the following FALSE?

American Apparel is an example of

Vertical integration can

If a short-run fixed cost is sunk,then

Vertical restraints in a contract

If a firm goes out of business because of negative economic profits,its books

If a competitive firm maximizes short-run profits by producing some quantity of output,which of the following must be true at that level of output?

Supply chain management refers to

-The above figure shows the cost curves for a competitive firm.If the firm is to earn economic profit,price must exceed

Market structure depends upon

A firm will shut down in the short run if

Toyota's just-in-time system is an example of

A monopoly

Vertical integration

A firm bought a pizza over for $13,500 and if it shut down now,could sell the oven for $9,500.Which of the following statements is TRUE?

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

Even though fixed costs do not affect the output decision,an increase in fixed costs results in a wider range of prices for which the firm operates at a loss.

An oligopoly

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