Question 1

Which of the following statements is CORRECT?

Accepted Answer

A)  Technological efficiency depends on the relative costs of resources. 
B)  Economic efficiency occurs when the firm produces a given output at the least cost. 
C)  A firm can be economically efficient without being technologically efficient. 
D)  Economic efficiency depends only on production methods. 
A)  Technological efficiency depends on the relative costs of resources. 
B)  Economic efficiency occurs when the firm produces a given output at the least cost. 
C)  A firm can be economically efficient without being technologically efficient. 
D)  Economic efficiency depends only on production methods.

Question 2

The difference between the market price of a new car used by a firm and the market price of the same car one year later is known as

Accepted Answer

A)  economic depreciation. 
B)  physical depreciation. 
C)  economic deterioration. 
D)  physical deterioration. 
A)  economic depreciation. 
B)  physical depreciation. 
C)  economic deterioration. 
D)  physical deterioration.

Question 3

-The table above shows sales of the firms in the pet food industry. The four-firm concentration ratio in the industry is

Accepted Answer

A)  59 percent. 
B)  80 percent. 
C)  70 percent. 
D)  40 percent. 
A)  59 percent. 
B)  80 percent. 
C)  70 percent. 
D)  40 percent.

Question 4

Which of the following constrain (that is, limit) a firm's profits? I. its technology
II) its information
III) the market in which it operates

Accepted Answer

A)  I only 
B)  I and II 
C)  II and III 
D)  I, II and III 
A)  I only 
B)  I and II 
C)  II and III 
D)  I, II and III

Question 5

________ account for the largest portion of all firms; ________ account for most of the total revenue received by businesses.

Accepted Answer

A)  Proprietorships; partnerships 
B)  Proprietorships; corporations 
C)  Partnerships; corporations 
D)  Corporations; proprietorships 
A)  Proprietorships; partnerships 
B)  Proprietorships; corporations 
C)  Partnerships; corporations 
D)  Corporations; proprietorships

Question 6

-The table above shows sales of the firms in the pet food industry. What type of market is this?

Accepted Answer

A)  perfect competition 
B)  monopolistic competition 
C)  oligopoly 
D)  monopoly 
A)  perfect competition 
B)  monopolistic competition 
C)  oligopoly 
D)  monopoly

Question 7

In the personal computer (PC) market in the first half of 2008, Hewlett-Packard maintained its worldwide No. 1 ranking at a market share of 19.1 percent. Dell's market share was 16 percent and Acer held onto third place with a 9.5 percent share, and Lenovo maintained fourth place, with a 7.9 percent share. What is the four-firm concentration ratio in the PC market?

Accepted Answer

A)  60.3 
B)  52.5 
C)  45 
D)  36.5 
A)  60.3 
B)  52.5 
C)  45 
D)  36.5

Question 8

A chief purpose of long-term contracts is to improve agents'

Accepted Answer

A)  information. 
B)  incentives. 
C)  control over principals. 
D)  security. 
A)  information. 
B)  incentives. 
C)  control over principals. 
D)  security.

Question 9

Heidi quit her job as a chef making $40,000 per year to start her own restaurant. The first year, Heidi's restaurant earned $100,000 in revenue. Heidi pays $50,000 per year in wages to the waitresses and hostess and $20,000 per year to buy food. What is Heidi's profit as measured by an accountant for the year?

Accepted Answer

A)  $80,000 
B)  $50,000 
C)  $30,000 
D)  -$10,000 
A)  $80,000 
B)  $50,000 
C)  $30,000 
D)  -$10,000

Question 10

The principal-agent problem refers to the fact that firms must

Accepted Answer

A)  choose between economic efficiency and technological efficiency. 
B)  choose between a managerial and an incentive system. 
C)  devise incentives to get employees to work in the best interest of the firm's owners. 
D)  choose between operating as a partnership or corporation. 
A)  choose between economic efficiency and technological efficiency. 
B)  choose between a managerial and an incentive system. 
C)  devise incentives to get employees to work in the best interest of the firm's owners. 
D)  choose between operating as a partnership or corporation.

Question 11

-The cookie industry in Eatsweetland consists of 15 firms. The industry sales are $80 million per month. The sales of the largest 5 firms are shown in the table below. The rest 10 firms have sales of $3 million each. What is the four-firm concentration ratio in Eatsweetland's cookie industry?

Accepted Answer

A)  63 percent 
B)  44 percent 
C)  87 percent 
D)  56 percent 
A)  63 percent 
B)  44 percent 
C)  87 percent 
D)  56 percent

Question 12

Firm A can produce a unit of output with 10 hours of labor and 5 units of material. Firm B can produce a unit of output with 5 hours of labor and 10 units of material. Firm C can produce a unit of output with 10 hours of labor and 10 units of material. If the prices of labor and material are $10 per hour and $5 per unit, respectively, which of these firms is the most technologically efficient?

Accepted Answer

A)  firm A only 
B)  firm B only 
C)  firm C only 
D)  Firms A and B could both be technologically efficient. 
A)  firm A only 
B)  firm B only 
C)  firm C only 
D)  Firms A and B could both be technologically efficient.

Question 13

When a firm links its employees' compensation to the performance of the firm, the firm is using

Accepted Answer

A)  an incentive system. 
B)  a command system. 
C)  a cooperative system. 
D)  an agency system. 
A)  an incentive system. 
B)  a command system. 
C)  a cooperative system. 
D)  an agency system.

Question 14

Under ________, there are many firms selling slightly different products.

Accepted Answer

A)  perfect competition 
B)  monopolistic competition 
C)  oligopoly 
D)  monopoly 
A)  perfect competition 
B)  monopolistic competition 
C)  oligopoly 
D)  monopoly

Question 15

Joe quits his job as an insurance agent and opens his own sporting goods store. If his profits as measured by his accountant are greater than zero, then

Accepted Answer

A)  he made a good move because he is earning above normal profits. 
B)  his economic profit must be greater than zero. 
C)  his opportunity costs must be zero. 
D)  There is not enough information to determine his economic profit, if any. 
A)  he made a good move because he is earning above normal profits. 
B)  his economic profit must be greater than zero. 
C)  his opportunity costs must be zero. 
D)  There is not enough information to determine his economic profit, if any.

Question 16

Firms that survive in the long run are usually those that

Accepted Answer

A)  become as large as possible. 
B)  remain small. 
C)  use more capital rather than more labor. 
D)  earn the largest possible profit. 
A)  become as large as possible. 
B)  remain small. 
C)  use more capital rather than more labor. 
D)  earn the largest possible profit.

Question 17

-The table above shows sales of the firms in the pet food industry. The Herfindahl-Hirschman Index in the industry is

Accepted Answer

A)  1260. 
B)  1443. 
C)  1100. 
D)  1588. 
A)  1260. 
B)  1443. 
C)  1100. 
D)  1588.

Question 18

Which of the following can lead to a firm being more efficient that a market? A firm can have I. economies of scale.
II) economies of scope.
III) lower transactions costs.

Accepted Answer

A)  III only 
B)  I and II 
C)  II and III 
D)  I, II and III 
A)  III only 
B)  I and II 
C)  II and III 
D)  I, II and III

Question 19

What is the principal-agent problem as applied to corporations?

Accepted Answer

The principals are the owners of the cor

Question 20

If an industry's Herfindahl-Hirschman Index is less than 1, the industry is likely to be

Accepted Answer

A)  competitive. 
B)  an oligopoly. 
C)  a monopoly. 
D)  technologically inefficient. 
A)  competitive. 
B)  an oligopoly. 
C)  a monopoly. 
D)  technologically inefficient.

Which of the following statements is CORRECT?

The difference between the market price of a new car used by a firm and the market price of the same car one year later is known as

-The table above shows sales of the firms in the pet food industry. The four-firm concentration ratio in the industry is

Which of the following constrain (that is, limit) a firm's profits? I. its technology II) its information III) the market in which it operates

account for the largest portion of all firms; account for most of the total revenue received by businesses.

-The table above shows sales of the firms in the pet food industry. What type of market is this?

A chief purpose of long-term contracts is to improve agents'

The principal-agent problem refers to the fact that firms must

-The cookie industry in Eatsweetland consists of 15 firms. The industry sales are $80 million per month. The sales of the largest 5 firms are shown in the table below. The rest 10 firms have sales of $3 million each. What is the four-firm concentration ratio in Eatsweetland's cookie industry?

When a firm links its employees' compensation to the performance of the firm, the firm is using

Under ________, there are many firms selling slightly different products.

Joe quits his job as an insurance agent and opens his own sporting goods store. If his profits as measured by his accountant are greater than zero, then

Firms that survive in the long run are usually those that

-The table above shows sales of the firms in the pet food industry. The Herfindahl-Hirschman Index in the industry is

Which of the following can lead to a firm being more efficient that a market? A firm can have I. economies of scale. II) economies of scope. III) lower transactions costs.

What is the principal-agent problem as applied to corporations?

If an industry's Herfindahl-Hirschman Index is less than 1, the industry is likely to be

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 10: Organizing Production

Which of the following statements is CORRECT?

The difference between the market price of a new car used by a firm and the market price of the same car one year later is known as

-The table above shows sales of the firms in the pet food industry. The four-firm concentration ratio in the industry is

Which of the following constrain (that is, limit) a firm's profits? I. its technology II) its information III) the market in which it operates

________ account for the largest portion of all firms; ________ account for most of the total revenue received by businesses.

-The table above shows sales of the firms in the pet food industry. What type of market is this?

A chief purpose of long-term contracts is to improve agents'

The principal-agent problem refers to the fact that firms must

-The cookie industry in Eatsweetland consists of 15 firms. The industry sales are $80 million per month. The sales of the largest 5 firms are shown in the table below. The rest 10 firms have sales of $3 million each. What is the four-firm concentration ratio in Eatsweetland's cookie industry?

When a firm links its employees' compensation to the performance of the firm, the firm is using

Under ________, there are many firms selling slightly different products.

Joe quits his job as an insurance agent and opens his own sporting goods store. If his profits as measured by his accountant are greater than zero, then

Firms that survive in the long run are usually those that

-The table above shows sales of the firms in the pet food industry. The Herfindahl-Hirschman Index in the industry is

Which of the following can lead to a firm being more efficient that a market? A firm can have I. economies of scale. II) economies of scope. III) lower transactions costs.

What is the principal-agent problem as applied to corporations?

If an industry's Herfindahl-Hirschman Index is less than 1, the industry is likely to be

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

account for the largest portion of all firms; account for most of the total revenue received by businesses.