Question 1

Firms organize production by using a mixture of two systems: (1) command systems and (2) incentive systems.

Accepted Answer

A) True 
 B)False

Question 2

Technological efficiency occurs when the firm produces a given output by using the least amount of inputs.

Accepted Answer

A) True 
 B)False

Question 3

Production Information for
Scully's Splendid Spacecrafts  
-In the above table, which technique is technologically inefficient?

Accepted Answer

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

Question 4

Which of the following pairs of market types are both characterized by having a large number of firms?

Accepted Answer

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

Question 5

Economic profit is the difference between total revenue and

Accepted Answer

A)  the normal profit. 
B)  interest costs of production. 
C)  opportunity costs of production. 
D)  the costs of resources bought in markets. 
A)  the normal profit. 
B)  interest costs of production. 
C)  opportunity costs of production. 
D)  the costs of resources bought in markets.

Question 6

Bill is working as the only employee at a local store. The relation between Bill and the owner of the store is such that Bill is ________ and the owner is ________ .

Accepted Answer

A)  the agent; the principal 
B)  both principal and agent; neither a principal nor an agent 
C)  neither a principal nor an agent; both principal and agent 
D)  the principal; the agent 
A)  the agent; the principal 
B)  both principal and agent; neither a principal nor an agent 
C)  neither a principal nor an agent; both principal and agent 
D)  the principal; the agent

Question 7

The largest share of the U.S. private economy is

Accepted Answer

A)  in manufacturing. 
B)  competitive or monopolistically competitive. 
C)  oligopolistic. 
D)  monopolistic. 
A)  in manufacturing. 
B)  competitive or monopolistically competitive. 
C)  oligopolistic. 
D)  monopolistic.

Question 8

The average return for supplying entrepreneurial ability is the entrepreneur's

Accepted Answer

A)  accounting profit. 
B)  normal profit. 
C)  explicit profit. 
D)  economic profit. 
A)  accounting profit. 
B)  normal profit. 
C)  explicit profit. 
D)  economic profit.

Question 9

Suppose Pippi buys an oven for her pizza parlor for $100,000. Pippi's pizza tasted so pitiful she went out of business 12 months later. She was able to sell the pizza oven for $75,000. This decrease in the value of the oven is

Accepted Answer

A)  the total implicit rental rate on the oven. 
B)  an economic loss. 
C)  economic depreciation. 
D)  interest forgone. 
A)  the total implicit rental rate on the oven. 
B)  an economic loss. 
C)  economic depreciation. 
D)  interest forgone.

Question 10

If more firms enter a market that initially had 20 firms in it, then the Herfindahl-Hirschman Index will ________.

Accepted Answer

A)  increase 
B)  decrease 
C)  not change 
D)  change in an unpredictable direction 
A)  increase 
B)  decrease 
C)  not change 
D)  change in an unpredictable direction

Question 11

When Acme, Inc. produces a certain amount of output at least cost, Acme, Inc. definitely

Accepted Answer

A)  achieves economic efficiency. 
B)  uses more capital than labor. 
C)  earns a normal profit. 
D)  None of the above is true. 
A)  achieves economic efficiency. 
B)  uses more capital than labor. 
C)  earns a normal profit. 
D)  None of the above is true.

Question 12

Techniques that produce 100 sweaters  
-In the above table, the technique that is not technologically efficient is

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
A)  A. 
B)  B. 
C)  C. 
D)  D.

Question 13

What is the difference between a four-firm concentration ratio and a Herfindahl-Hirschman Index?

Accepted Answer

A four-firm concentration rati

Question 14

Which of the following businesses have limited liability?

Accepted Answer

A)  Mainline Texaco, a gas station downtown with Frank Jones as proprietorship. 
B)  Fakker, Chayse, and Blaimm, partners in medical malpractice law. 
C)  StrideRite Shoe Company, Inc., a corporation that produces shoes. 
D)  Both answers B and C are correct. 
A)  Mainline Texaco, a gas station downtown with Frank Jones as proprietorship. 
B)  Fakker, Chayse, and Blaimm, partners in medical malpractice law. 
C)  StrideRite Shoe Company, Inc., a corporation that produces shoes. 
D)  Both answers B and C are correct.

Question 15

The most prevalent market structures in the U.S. economy are perfect competition and monopolistic competition.

Accepted Answer

A) True 
 B)False

Question 16

A firm's basic goal is best described as

Accepted Answer

A)  maximizing total revenue. 
B)  maximizing sales. 
C)  maximizing profit. 
D)  minimizing total cost. 
A)  maximizing total revenue. 
B)  maximizing sales. 
C)  maximizing profit. 
D)  minimizing total cost.

Question 17

Joe's Pizza Shop only makes pizza. If each pizza requires five people, each of whom specializes in one task, this method of production is an example of

Accepted Answer

A)  economies of scope. 
B)  team production. 
C)  economies of monitoring. 
D)  economies of coordination. 
A)  economies of scope. 
B)  team production. 
C)  economies of monitoring. 
D)  economies of coordination.

Question 18

When Acme Inc. produces a certain amount of output by using the least amount of inputs, Acme Inc. definitely

Accepted Answer

A)  maximizes profits. 
B)  minimizes labor costs. 
C)  achieves technological efficiency. 
D)  achieves economic efficiency. 
A)  maximizes profits. 
B)  minimizes labor costs. 
C)  achieves technological efficiency. 
D)  achieves economic efficiency.

Question 19

Which of the following is NOT an advantage of firm coordination of economic activity?

Accepted Answer

A)  Firm coordination decreases transactions costs. 
B)  When firms coordinate economic activity, there are no opportunity costs. 
C)  Firms can take advantage of the economies of team production. 
D)  Economies of scope can be realized by firms that produce a range of goods and services that share specialized resources. 
A)  Firm coordination decreases transactions costs. 
B)  When firms coordinate economic activity, there are no opportunity costs. 
C)  Firms can take advantage of the economies of team production. 
D)  Economies of scope can be realized by firms that produce a range of goods and services that share specialized resources.

Question 20

Even though the market for bricks has a low concentration ratio nationally, the U.S. Justice Department might still scrutinize any mergers in this industry because the

Accepted Answer

A)  HHI is high nationally. 
B)  HHI is above 1800 nationally. 
C)  HHI is below 1800 nationally. 
D)  market is regional not national, and the regional concentration might be high. 
A)  HHI is high nationally. 
B)  HHI is above 1800 nationally. 
C)  HHI is below 1800 nationally. 
D)  market is regional not national, and the regional concentration might be high.

Exam 10: Organizing Production

Firms organize production by using a mixture of two systems: (1) command systems and (2) incentive systems.

Technological efficiency occurs when the firm produces a given output by using the least amount of inputs.

Production Information for Scully's Splendid Spacecrafts -In the above table, which technique is technologically inefficient?

Which of the following pairs of market types are both characterized by having a large number of firms?

Economic profit is the difference between total revenue and

Bill is working as the only employee at a local store. The relation between Bill and the owner of the store is such that Bill is ________ and the owner is ________ .

The largest share of the U.S. private economy is

The average return for supplying entrepreneurial ability is the entrepreneur's

Suppose Pippi buys an oven for her pizza parlor for $100,000. Pippi's pizza tasted so pitiful she went out of business 12 months later. She was able to sell the pizza oven for $75,000. This decrease in the value of the oven is

If more firms enter a market that initially had 20 firms in it, then the Herfindahl-Hirschman Index will ________.

When Acme, Inc. produces a certain amount of output at least cost, Acme, Inc. definitely

Techniques that produce 100 sweaters -In the above table, the technique that is not technologically efficient is

What is the difference between a four-firm concentration ratio and a Herfindahl-Hirschman Index?

Which of the following businesses have limited liability?

The most prevalent market structures in the U.S. economy are perfect competition and monopolistic competition.

A firm's basic goal is best described as

Joe's Pizza Shop only makes pizza. If each pizza requires five people, each of whom specializes in one task, this method of production is an example of

When Acme Inc. produces a certain amount of output by using the least amount of inputs, Acme Inc. definitely

Which of the following is NOT an advantage of firm coordination of economic activity?

Even though the market for bricks has a low concentration ratio nationally, the U.S. Justice Department might still scrutinize any mergers in this industry because the

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

Bill is working as the only employee at a local store. The relation between Bill and the owner of the store is such that Bill is and the owner is .