Exam 10: Organizing Production

Economies of scope has to do with lowering production costs by increasing the quantity of a product produced, whereas economies of scale has to do with lowering production costs by producing several products within the same firm.

U.S. auto sales took a beating in September 2008 as the nation's worsening economy turned dealer showrooms into ghost towns. Automakers reported a sharp drop-off in sales in the last ten days of the month as news of bank failures and a stock market meltdown increased economic uncertainty. What type of constraint do the automakers face when there is increased economic uncertainty?

-The table above shows techniques that can be used to produce 100 shirts. If the price of an hour of labor is $10 and the price of a unit of capital is $12, then the economically efficient technique is

It was more than a century ago that an engineer named Frederick Taylor walked into factories and starting timing workers with a stop watch. He dissected their movements, and organized them more efficiently. He turned factory production into a science. Suppose work was completed in the factory based on what the floor manager decided and workers were paid a base daily wage plus a bonus when they produced more than expected. How does this firm organize production?

Among the opportunity costs of a firm are all of the following EXCEPT

Which market type has characteristics as follows: one firm, good or service produced has no close substitutes, barriers to entry prevent new firms from entering into the industry?

A company does not need to know the price of each resource it employs if it wants to determine whether or not it is achieving

Under oligopoly, there are ________ firms selling products that are ________.

The four largest firms in an industry account for the following value of industry sales: 12 percent, 8 percent, 5 percent and 4 percent. Calculate the four-firm concentration ratio. Would this industry be regarded as competitive or concentrated?

A firm with a sales department, a production department, and a marketing department provides an example of

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

A company needs to know the price of each resource it employs if it wants to determine whether or not it is achieving

In the principal-agent relationship between a bank manager and a bank teller, the manager is

In a corporation, the stockholders are the

A form of business whose profits are taxed twice is

-An industry has only four firms, who have market shares of 45 percent, 25 percent, 20 percent, and 10 percent. What is the Herfindahl-Hirschman Index?

Martha and Wendy start a cookie shop and the business is organized as a corporation. Because of poor planning the business goes bankrupt and the corporation's debt is $30,000. Martha has $30,000 in savings and Wendy has $80,000 in savings. Martha must pay ________ of the debt and Wendy must pay ________ of the debt.

-The table below shows four alternative techniques for assembling a car. The cost of labor is $20 per hour, and the cost of capital is $10 per hour. Which of the four techniques for assembling a car is not technologically efficient?

-Listed in the above table are the market shares for the firms in two different industries. Each industry has only eleven firms. Find the four-firm concentration ratio and the Herfindahl-Hirschman Index for each industry.

Sheila's Sports Shop is a very popular sporting goods store, which has a yearly revenue of $600,000. Sheila runs the business herself. Her alternative employment options are to be a college swimming coach for $50,000 per year or a construction worker for $40,000 per year. Sheila spends $230,000 purchasing goods for resale to her customers. She also has four employees, who each earn $25,000 per year. Sheila owns the building that her Sports Shop is housed in and she could have rented it out for $20,000 per year. Sheila's costs for the resources that she supplies to the business equal