Exam 10: Organizing Production

-The table above shows techniques that can be used to produce 100 shirts. If the price of an hour of labor is $20 and the price of a unit of capital is $8, then the economically efficient technique is

There are 6 firms in a market and the market shares of the firms are 40 percent, 30 percent, 10 percent, 8 percent, 7 percent, and 5 percent. The Herfindahl-Hirschman index is

Costs as measured by accountants generally does not include

A low concentration ratio suggests

Describe the conditions under which monopoly exists. Give two examples.

If an industry has a four-firm concentration ratio equal to one hundred percent, then it is definitely the case that the industry is

Which of the following is part of a firm's opportunity costs? I. wages II) utility costs III) interest on a bank loan IV) interest forgone on funds used to buy capital equipment

Which of the following types of business organization have limited liability? I. proprietorship II) partnership III) corporation

A market with the characteristics of many firms selling an identical product, many buyers, and no restrictions on entry or exit to the market is

-Suppose there are ten firms that occupy the Odell, Oregon cherry pie market. The market share of each firm is listed in the above table. a) What is the four-firm concentration ratio in this market? b) What is the Herfindahl-Hirschman Index for this market? c) If Firm H and Firm A merge, what is the new Herfindahl-Hirschman Index for this market? d) A severe winter causes every firm except A, B, and E to close. With only these three firms operating, Firm A's market share is 71 percent, Firm B's market share is 23 percent, and Firm C's market share is 6 percent. What is the Herfindahl-Hirschman Index for this market now?

If a firm is achieving economic efficiency it must also be achieving technological efficiency.

The accountant for Muzhi's Sushi claims that Muzhi has accomplished "technological efficiency." This means that Muzhi's Sushi

Bud opened a flower shop. He rented a building for $9,000 a year. To buy equipment for the store, he withdrew $10,000 from his savings account, which earned an annual interest rate of 3 percent. During the first year of operation, Bud paid $4,000 for utilities and $12,000 to his suppliers. The store's total annual revenue was $55,000. The market value of the store's equipment at the end of the year was $8,000. If Bud had not started this business, he would have continued to work as an employee at another flower shop for $30,000 a year. During the first year of operation, Bud

-FasterChip, Inc. is considering five alternative techniques for assembling personal computers. The table shows the amounts of labor and capital required by each of these techniques to make 10 computers a day. Labor costs $15 an hour and capital costs $100 a unit. a) Which techniques are technologically efficient and which are not? Explain your answer. b) Which technique is economically efficient? Explain. c) If FasterChip uses its plant in Mexico, it can lower the labor cost to $10 an hour. Which technique will the company use in Mexico? Explain.

-The above table shows the market shares for all the landscaping services in a suburban area. The four-firm concentration ratio equals

-The table above lists the market shares of the twenty makers of personal computers. The four-firm concentration ratio tells us that

If the four-firm concentration ratio for an industry equals 100 percent, then definitely

Dell uses outsourcing, that is, Dell buys the components of the computers it produces from other firms. This is an example of

In September 2008, Toyota Motor's share of the U.S. auto sales market was 15 percent, Ford's market share was 12.1 percent, GM's was 29.1 percent, Honda's was 10 percent, Nissan's share was 6.2 percent, and Chrysler's market share was 11.1 percent. What is the Herfindahl-Hirschman Index for the firms mentioned?

The principal-agent problem suggests that