Question 1

-The above table shows the market shares for all the landscaping services in a suburban area. The Herfindahl-Hirschman Index (HHI) equals

Accepted Answer

A)  65. 
B)  900. 
C)  1400. 
D)  1600. 
A)  65. 
B)  900. 
C)  1400. 
D)  1600.

Question 2

Gilda's Art Gallery rewards its employees with stock each year the gallery makes profits. This stock allows the employees to own part of the gallery. This practice is known as

Accepted Answer

A)  the principle-agent problem. 
B)  incentive pay. 
C)  minimizing implicit costs. 
D)  minimizing explicit costs. 
A)  the principle-agent problem. 
B)  incentive pay. 
C)  minimizing implicit costs. 
D)  minimizing explicit costs.

Question 3

-The above table shows the percent of sales held by the four largest firms in an industry.
a) Calculate this industry's four-firm concentration ratio.
b) Is this industry competitive?
c) What market type does it most likely represent?

Accepted Answer

a) The four-firm concentration rate is 3

Question 4

Suppose the four-firm concentration ratio for an industry is 10 percent. This value indicates ________. If the four-firm concentration ratio for another industry is 95 percent, this value indicates ________.

Accepted Answer

A)  the industry is competitive; the industry has very little competition 
B)  the industry has very little competition; the industry is very competitive 
C)  the industry has firms worldwide; the industry is concentrated in one country 
D)  the HHI will be high; the HHI will be low 
A)  the industry is competitive; the industry has very little competition 
B)  the industry has very little competition; the industry is very competitive 
C)  the industry has firms worldwide; the industry is concentrated in one country 
D)  the HHI will be high; the HHI will be low

Question 5

Technological efficiency necessarily means producing

Accepted Answer

A)  at minimum cost. 
B)  with the highest level technology available. 
C)  without using more inputs than necessary. 
D)  technology itself. 
A)  at minimum cost. 
B)  with the highest level technology available. 
C)  without using more inputs than necessary. 
D)  technology itself.

Question 6

If a market is shared equally by 200 firms the Herfindahl-Hirschman Index is

Accepted Answer

A)  12.5. 
B)  25. 
C)  50. 
D)  200. 
A)  12.5. 
B)  25. 
C)  50. 
D)  200.

Question 7

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 economically efficient?

Accepted Answer

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

Question 8

The profits of a proprietorship are

Accepted Answer

A)  taxed at the same rate as the owner's other personal income. 
B)  subject to a corporate tax. 
C)  taxed as capital gains indexed for inflation. 
D)  exempt from taxation. 
A)  taxed at the same rate as the owner's other personal income. 
B)  subject to a corporate tax. 
C)  taxed as capital gains indexed for inflation. 
D)  exempt from taxation.

Question 9

A method that is technologically inefficient

Accepted Answer

A)  might or might not be economically efficient. 
B)  can never be economically efficient. 
C)  results from failure to calculate the ratio of the cost of labor to the cost of capital. 
D)  means that it uses too much labor and too little capital. 
A)  might or might not be economically efficient. 
B)  can never be economically efficient. 
C)  results from failure to calculate the ratio of the cost of labor to the cost of capital. 
D)  means that it uses too much labor and too little capital.

Question 10

________ is the change in market value of capital over a given period.

Accepted Answer

A)  Accounting depreciation 
B)  Implicit rental rate 
C)  Economic depreciation 
D)  Accounting implicit rental cost 
A)  Accounting depreciation 
B)  Implicit rental rate 
C)  Economic depreciation 
D)  Accounting implicit rental cost

Question 11

The only two ways of dealing with the principal agent problem are the use of long-term contracts and monitoring.

Accepted Answer

A) True 
 B)False

Question 12

The Roomba 570 is a robotic vacuum cleaner made and sold by iRobot. It can vacuum 4 rooms on a single battery charge and it costs $10 worth of electricity to charge the Roomba. Lynn is a house cleaner and can vacuum 4 rooms in 1/2 hour with a traditional vacuum. Suppose you want the 4 rooms in your house vacuumed once a week for one year. Ignoring the cost of any electricity Lynn uses, which method is economically efficient if Lynn charges $20 per hour? $30 per hour?

Accepted Answer

A)  Lynn if she charges $20 or $30 per hour 
B)  Lynn if she charges $20 per hour and Roomba if Lynn charges $30 per hour 
C)  Roomba if Lynn charges $20 per hour and Lynn if she charges $30 per hour 
D)  Roomba if Lynn charges $20 or $30 per hour 
A)  Lynn if she charges $20 or $30 per hour 
B)  Lynn if she charges $20 per hour and Roomba if Lynn charges $30 per hour 
C)  Roomba if Lynn charges $20 per hour and Lynn if she charges $30 per hour 
D)  Roomba if Lynn charges $20 or $30 per hour

Question 13

Giving managers an ownership stake in a company is an example of

Accepted Answer

A)  a command system. 
B)  an incentive system. 
C)  a system that encourages managers to become agents that monitor their principals. 
D)  economies of scope. 
A)  a command system. 
B)  an incentive system. 
C)  a system that encourages managers to become agents that monitor their principals. 
D)  economies of scope.

Question 14

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 type of market structure would the market for autos represent?

Accepted Answer

A)  Monopolistic competition 
B)  Monopoly 
C)  Oligopoly 
D)  Markets and Competitive Environment 
A)  Monopolistic competition 
B)  Monopoly 
C)  Oligopoly 
D)  Markets and Competitive Environment

Question 15

When Fatz confectionery can lower the cost of manufacturing and packaging a pound of candy by doubling the quantity manufactured and packaged each day, it will achieve

Accepted Answer

A)  economies of scope. 
B)  economies of scale. 
C)  economies of team production. 
D)  all of the above 
A)  economies of scope. 
B)  economies of scale. 
C)  economies of team production. 
D)  all of the above

Question 16

A market structure in which a small number of firms compete is called

Accepted Answer

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

Question 17

Which types of firms have limited liability?

Accepted Answer

A)  corporations 
B)  corporations and partnerships 
C)  partnerships 
D)  proprietorships 
A)  corporations 
B)  corporations and partnerships 
C)  partnerships 
D)  proprietorships

Question 18

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

Accepted Answer

A)  many; either identical or different 
B)  a few; either identical or different 
C)  many; different 
D)  a few; identical 
A)  many; either identical or different 
B)  a few; either identical or different 
C)  many; different 
D)  a few; identical

Question 19

The implicit rental rate for capital is

Accepted Answer

A)  an accounting cost. 
B)  part of the firm's normal profit. 
C)  an opportunity cost. 
D)  a cost that is irrelevant to the business. 
A)  an accounting cost. 
B)  part of the firm's normal profit. 
C)  an opportunity cost. 
D)  a cost that is irrelevant to the business.

Question 20

-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

Accepted Answer

A)  W. 
B)  X. 
C)  Y. 
D)  Z. 
A)  W. 
B)  X. 
C)  Y. 
D)  Z.

Exam 10: Organizing Production

-The above table shows the market shares for all the landscaping services in a suburban area. The Herfindahl-Hirschman Index (HHI) equals

Gilda's Art Gallery rewards its employees with stock each year the gallery makes profits. This stock allows the employees to own part of the gallery. This practice is known as

-The above table shows the percent of sales held by the four largest firms in an industry. a) Calculate this industry's four-firm concentration ratio. b) Is this industry competitive? c) What market type does it most likely represent?

Suppose the four-firm concentration ratio for an industry is 10 percent. This value indicates ________. If the four-firm concentration ratio for another industry is 95 percent, this value indicates ________.

Technological efficiency necessarily means producing

If a market is shared equally by 200 firms the Herfindahl-Hirschman Index is

The profits of a proprietorship are

A method that is technologically inefficient

________ is the change in market value of capital over a given period.

The only two ways of dealing with the principal agent problem are the use of long-term contracts and monitoring.

Giving managers an ownership stake in a company is an example of

When Fatz confectionery can lower the cost of manufacturing and packaging a pound of candy by doubling the quantity manufactured and packaged each day, it will achieve

A market structure in which a small number of firms compete is called

Which types of firms have limited liability?

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

The implicit rental rate for capital is

-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

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 and Public Goods

Externalities and the Environment

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Extension A: Review

Extension B: Review

Extension C: Review

Extension D: Review

Extension E: Review

Extension F: Review

Filters

Suppose the four-firm concentration ratio for an industry is 10 percent. This value indicates . If the four-firm concentration ratio for another industry is 95 percent, this value indicates .

Under oligopoly, there are firms selling products that are .