Exam 10: Organizing Production

Techniques that produce 100 sweaters -In the above table, the technique that is never economically efficient is

According to Nobel laureate Ronald Coase, firms exist in order to

One year ago, Ms. Case and Mr. Bond opened a jewelry store called T & J. They invested $1,000,000 of their savings into the partnership to buy equipment and initial inventory. They rented a building for $90,000 a year, and hired two employees for an annual wage of $40,000 each. Case and Bond believed that the best alternative investment of their money would be government bonds, which could yield an annual return of 8 percent. To run the store, Case quit her previous job, at which she earned $100,000, but her former boss told her that she was welcome to return anytime. Bond kept his job with the government, but gave up 6 hours of leisure each week (for 50 weeks), the time he used to spend playing golf. Bond used to say: "I'd only give up my golf time if someone paid me $100 an hour." During the first year of operation, T & J paid $20,000 for utilities and the firm's total revenue was $350,000. The market value of T & J's equipment was $200,000 at the beginning of the year and $170,000 at the end of the year. a) What is the economic depreciation of their capital? b) What are T & J's opportunity costs? c) What is the firm's economic profit in the first year of operation?

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?

Economies of scope exist when

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

Economies of team production exist when the

Which of the following is correct?

How would a merger between Coca-Cola and Pepsi Cola affect the four-firm concentration ratio for the soft drink market? How would it affect the Herfindahl-Hirschman Index for the soft drink market?

The owner of a proprietorship has ________ liability and ________ required to use all of his or her entire wealth to pay for the firm's losses.

-The table above gives the market share of sales of firms in the retail clothing market. What is the four-firm concentration ratio?

A command system is a method of coordinating a firm's productive resources that uses

Techniques for making 100 pizzas -Labor costs $20 per worker and capital costs $100 per unit. Then, according to the above table, which of the following options for pizza production is technologically efficient?

Compared to corporations, businesses that are proprietorships

Owners of ________ have unlimited liability.

Suppose Angelo Sessa, owner of Sezz Medi Brick Oven Pizza in NYC, earns $350,000 in revenue per year. He spends $800 a month on ash wood for his stove, $2000 a month on rent, and $1500 a month on ingredients. He used to be a lawyer and earned $240,000 a year before he opened up Sezz Medi. Normal profit for a pizza business is $30,000. If Angelo switches to oak wood to fire his stove and oak costs an extra $2500 each month, but this change causes his revenues to increase to $351,000. What is Angelo's opportunity cost of production?

-The above table gives techniques Jitters Coffee Company can use to package 5,000 pounds of coffee. Which technique(s) is (are) technologically inefficient?

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

A firm that is technologically efficient

Profit maximization