Exam 10: Organizing Production

-The table above shows sales of the firms in the broomstick industry: a) Calculate the four-firm concentration ratio. b) Calculate the Herfindahl-Hirschman Index. c) Based on your calculations, what is the structure of the industry?

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 economic profit for the year?

A firm uses labor and capital. To tell if the firm is technologically efficient, you

Quick Auto Service will do oil changes. If each oil change is done by five people, each of whom specializes in one task, this is an example of

What is a firm?

Much of the outcry in the 2008 fight over a fat bailout for Wall Street focused on the size of Wall Street's fat paychecks. The real problem, according to corporate governance researchers, isn't the amount executives receive, it's how companies pay them. Most companies link compensation to quarterly performance, encouraging short-term gambles. One way to align pay with long-term incentives and discourage risky bets would be to stretch compensation over more years. What is a suggested solution to the principal-agent problem?

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

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

If there are five firms in an industry, each with a market share of 20 percent, the Herfindahl-Hirschman Index (HHI) of concentration is

Economies of scale exist when the

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

Owners of a proprietorship have ________ liability and stockholders in a corporation have ________.

A low concentration ratio suggests

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

A manager in a corporation is likely to be

In a market where firms are successful in convincing their customers that their product is different from their competitors' product but otherwise have no barriers to entry would be best characterized by

A firm with two or more owners who have unlimited liability is known as

-Based on the above table, which shows the firms and sales in an industry, what is the approximate value of the Herfindahl-Hirschman Index?

Which of the following are characteristics of a proprietorship? I. Single owner II) Limited liability

During the twentieth century, the market structure of the U.S. economy has