Exam 10: Organizing Production

A command system is a

Which of the following is part of a firm's opportunity costs? I. wages II) utility costs III) interest on a bank loan IV) interest forgone on funds used to buy capital equipment

Suppose that Tracy and Pat start a business. Because of a series of bad decisions by Tracy, the company goes bankrupt, owing a total of $50,000. Tracy is penniless and Pat is a millionaire. If the company were organized as a partnership, Pat would be responsible for

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

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 flat daily wage. How does this firm organize production?

In a given market, a large number of firms sell a similar product. Consumers think that each firm's product is somewhat different from that of its competitors. This market is

Under ________ there are many firms selling identical products.

If a firm chooses to produce 100 units of output for $150 with 10 units of labor and 12 units of capital, when they could produce the same 100 units for $120 with 10 units of labor and 8 units of capital, the firm is technologically ________ and economically ________.

Mr. Blowfish opened a seafood store in December . He borrowed $60,000 from a bank at an annual interest rate of 8 percent. He used the funds he borrowed to purchase $60,000 of capital equipment. Over the year, he rented a building for $50,000 a year. During the first year of operation, Blowfish paid $45,000 to his employees, $20,000 for utilities, and $25,000 for raw fish he bought from other firms. In December of the next year, the market value of his capital was $50,000. Blowfish's best alternative to running the seafood store is to work for a grocery store as a sales clerk for $20,000 a year. a) What is the economic depreciation of Blowfish's capital? b) What are Blowfish's total opportunity costs? c) What is Blowfish's economic profit?

Martha and Wendy start a cookie shop and the business is organized as a corporation. Because of poor planning the business goes bankrupt and the corporation's debt is $30,000. Martha has $30,000 in savings and Wendy has $80,000 in savings. Martha must pay ________ of the debt and Wendy must pay ________ of the debt.

In an oligopoly with two firms, one firm's share of the market is 70 percent. The Herfindahl-Hirschman Index is ________.

-The table above shows four methods for producing 10 computer desks a day. Of the four methods, ________ technologically inefficient.

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

There are 6 firms in a market and the market shares of the firms are 40 percent, 30 percent, 10 percent, 8 percent, 7 percent, and 5 percent. The four-firm concentration ratio is equal to

A normal profit is

A firm's opportunity costs ________.

Professor Rush decides to quit teaching economics and opens a shoe store out at the mall. He gave up an annual income of $50,000 to open the store. A year after opening the shoe store, the total revenue for the year was $200,000. Rush's expenses were $30,000 for labor, rent was $18,000, and utilities were $1,200. He also had to purchase new shoes from manufacturers, at a cost of $60,000, which was financed by cashing in his savings of $60,000 that had been in a bank earning 8 percent per year. The normal profit from operating a shoe store in the mall is $20,000. Determine Professor Rush's total cost and economic profit.

-Which of the following statements about the Herfindahl-Hirschman Index is correct? I. It is the square of the percentage market share of each firm summed over the largest 50 firms (or summed over all the firms if there are fewer than 50) in a market. II) A small index is indicative of a high degree of competition. III) The index is used to measure the degree of competition.

The return that an entrepreneur can expect to earn, on average, is called

A firm has achieved technological efficiency whenever it has