Question 1

A firm's total opportunity cost of production is the sum of the cost of using resources

Accepted Answer

A) bought in the market. 
B) owned by the firm. 
C) supplied by the firm's owner. 
D) bought in the market and supplied by the firm's owner. 
E) bought in the market, owned by the firm, and supplied by the firm's owner. 
A) bought in the market. 
B) owned by the firm. 
C) supplied by the firm's owner. 
D) bought in the market and supplied by the firm's owner. 
E) bought in the market, owned by the firm, and supplied by the firm's owner. E

Question 2

Marc bought a new car last year for $10,000.He can now sell the car for $8,500.To buy this year's model he would have to pay $11,000.Marc also had to take out a $9,000 loan to buy the car,which had to be paid back in yearly installments of $3,300 per year over three years.What is the implicit rental rate of the first year's use of the car?

Accepted Answer

A) $2,800 
B) $1,300 
C) $1,800 
D) $13,300 
E) $4,800 
A) $2,800 
B) $1,300 
C) $1,800 
D) $13,300 
E) $4,800 C

Question 3

A firm with a sales department,a production department,and a marketing department is an example of

Accepted Answer

A) team production. 
B) joint production. 
C) economies of scale. 
D) economies of scope. 
E) transactions costs. 
A) team production. 
B) joint production. 
C) economies of scale. 
D) economies of scope. 
E) transactions costs. A

Question 4

Susan invests $1,000 to buy shares of TooNew stock.The company declares bankruptcy,leaving many debts unpaid,including Susan's $1,000 investment.Susan has a personal net worth of $50,000.What will be Susan's final net worth if TooNew has total unpaid debts of $30,000?

Accepted Answer

A) $19,000 
B) $21,000 
C) $49,000 
D) $51,000 
E) $20,000 
A) $19,000 
B) $21,000 
C) $49,000 
D) $51,000 
E) $20,000

Question 5

The difference in the market value of a new car and the market value of the same car one year later is

Accepted Answer

A) economic depreciation. 
B) physical depreciation. 
C) economic deterioration. 
D) physical deterioration. 
E) conventional depreciation. 
A) economic depreciation. 
B) physical depreciation. 
C) economic deterioration. 
D) physical deterioration. 
E) conventional depreciation.

Question 6

The four-firm concentration ratio in an industry is 75 percent.
Total sales in the industry are $800 million and total economic profit in the industry is $500 million.Normal profit for each firm is zero.
From this information we know that

Accepted Answer

A) economic profit of any four firms is at least $667 million. 
B) total sales from the four largest firms is $600 million. 
C) economic profit of the four largest firms is $375 million. 
D) total sales from any four firms is at least $1,067 million. 
E) economic profit of the four largest firms is $500 million. 
A) economic profit of any four firms is at least $667 million. 
B) total sales from the four largest firms is $600 million. 
C) economic profit of the four largest firms is $375 million. 
D) total sales from any four firms is at least $1,067 million. 
E) economic profit of the four largest firms is $500 million.

Question 7

When the cost of producing a unit of a good falls as its output rate increases,

Accepted Answer

A) economies of scale exist. 
B) economies of scope exist. 
C) transactions costs are zero. 
D) market coordination is unnecessary. 
E) the firm is a partnership. 
A) economies of scale exist. 
B) economies of scope exist. 
C) transactions costs are zero. 
D) market coordination is unnecessary. 
E) the firm is a partnership.

Question 8

Typical examples of a partnership would include which one of the following?

Accepted Answer

A) a law firm 
B) a corner drugstore 
C) an automobile manufacturer 
D) a bank 
E) a freelance writer 
A) a law firm 
B) a corner drugstore 
C) an automobile manufacturer 
D) a bank 
E) a freelance writer

Question 9

A firm's goal is to

Accepted Answer

A) maximize revenue. 
B) maximize cost while minimizing revenue. 
C) maximize profit. 
D) minimize costs. 
E) minimize risk. 
A) maximize revenue. 
B) maximize cost while minimizing revenue. 
C) maximize profit. 
D) minimize costs. 
E) minimize risk.

Question 10

Which one of the following would not likely be a firm with economies of scale?

Accepted Answer

A) an electrical production plant 
B) a steel mill 
C) a telephone company 
D) a firm that produces handmade cabinetry 
E) a multi-store dry-cleaning firm 
A) an electrical production plant 
B) a steel mill 
C) a telephone company 
D) a firm that produces handmade cabinetry 
E) a multi-store dry-cleaning firm

Question 11

What is a disadvantage of a corporation relative to a sole proprietorship or partnership?

Accepted Answer

A) Owners have unlimited liability. 
B) Profits are taxed twice;as corporate profits and as dividend income and capital gains to stockholders. 
C) high cost of capital 
D) perpetual life 
E) None of the above. 
A) Owners have unlimited liability. 
B) Profits are taxed twice;as corporate profits and as dividend income and capital gains to stockholders. 
C) high cost of capital 
D) perpetual life 
E) None of the above.

Question 12

Use the table below to answer the following questions.
Table 10.2.2
Three methods of making one medical hologram
  
-Refer to Table 10.2.2.If the price of labour is $20 per unit and the price of capital is $10 per unit,which method is economically efficient?

Accepted Answer

A) 1 only 
B) 2 only 
C) 3 only 
D) 2 and 3 only 
E) 1 and 3 only 
A) 1 only 
B) 2 only 
C) 3 only 
D) 2 and 3 only 
E) 1 and 3 only

Question 13

Firm A can produce a unit of output with 10 hours of labour and 5 units of capital.Firm B can produce a unit of output with 5 hours of labour and 10 units of capital.Firm C can produce a unit of output with 10 hours of labour and 10 units of capital.If the prices of labour and material are $10 and $5,respectively which firm is technologically efficient?

Accepted Answer

A) A only 
B) B only 
C) C only 
D) A and B 
E) A and C 
A) A only 
B) B only 
C) C only 
D) A and B 
E) A and C

Question 14

In a perfectly competitive market,the four-firm concentration ratio is

Accepted Answer

A) almost zero. 
B) 50 percent. 
C) 100 percent. 
D) 75 percent. 
E) 25 percent. 
A) almost zero. 
B) 50 percent. 
C) 100 percent. 
D) 75 percent. 
E) 25 percent.

Question 15

In a perfectly competitive market,the Herfindahl-Hirschman Index (HHI)

Accepted Answer

A) is small. 
B) is usually greater than 5,000. 
C) is greater than 1,000 but less than 2,000. 
D) lies between 1,200 and 1,500. 
E) is greater than 10,000. 
A) is small. 
B) is usually greater than 5,000. 
C) is greater than 1,000 but less than 2,000. 
D) lies between 1,200 and 1,500. 
E) is greater than 10,000.

Question 16

Use the information below to answer the following questions.
Fact 10.2.1
Consider the following three methods of preparing your tax return.Method A uses a personal computer (cost equal to $1,000)and 1 hour of your time.Method B uses a calculator (cost equal to $30)and 12 hours of your time.Method C uses pen and paper (cost equal to $1)and 2 days (16 hours)of your time.
-Consider Fact 10.2.1.Which production method is technologically inefficient?

Accepted Answer

A) A 
B) B 
C) C 
D) all of the above 
E) none of the above 
A) A 
B) B 
C) C 
D) all of the above 
E) none of the above

Question 17

Use the table below to answer the following questions.
Table 10.4.1
  
-Refer to Table 10.4.1.The four-firm concentration ratio for the pizza sellers is

Accepted Answer

A) 40 percent. 
B) 100 percent. 
C) 80 percent. 
D) 33 percent. 
E) 12.5 percent. 
A) 40 percent. 
B) 100 percent. 
C) 80 percent. 
D) 33 percent. 
E) 12.5 percent.

Question 18

An example of the principal-agent problem occurs when

Accepted Answer

A) an agent is more motivated than the principle to provide a high-quality good or service. 
B) managers try to cope with employees that are inefficient. 
C) sole proprietors don't receive any money payment for their entrepreneurial skills. 
D) managers devise penalties that eliminate employee waste. 
E) managers devise incentives that encourage employees to act in the owner's behalf. 
A) an agent is more motivated than the principle to provide a high-quality good or service. 
B) managers try to cope with employees that are inefficient. 
C) sole proprietors don't receive any money payment for their entrepreneurial skills. 
D) managers devise penalties that eliminate employee waste. 
E) managers devise incentives that encourage employees to act in the owner's behalf.

Question 19

A provincial phone company like SaskTel likely has

Accepted Answer

A) a high four-firm concentration ratio in the province, but a low one nationally. 
B) a low four-firm concentration ratio in the province, but a high one nationally. 
C) a low four-firm concentration ratio in the province and nationally. 
D) a high four-firm concentration ratio in the province and nationally. 
E) a four-firm concentration ratio of zero. 
A) a high four-firm concentration ratio in the province, but a low one nationally. 
B) a low four-firm concentration ratio in the province, but a high one nationally. 
C) a low four-firm concentration ratio in the province and nationally. 
D) a high four-firm concentration ratio in the province and nationally. 
E) a four-firm concentration ratio of zero.

Question 20

Use the table below to answer the following questions.
Table 10.2.2
Three methods of making one medical hologram
  
-In Table 10.2.2,which method of making a medical hologram is technologically efficient?

Accepted Answer

A) 1 only 
B) 2 only 
C) 3 only 
D) all of the above 
E) 1 and 3 only 
A) 1 only 
B) 2 only 
C) 3 only 
D) all of the above 
E) 1 and 3 only

Exam 10: Organizing Production

A firm's total opportunity cost of production is the sum of the cost of using resources

A firm with a sales department,a production department,and a marketing department is an example of

Susan invests $1,000 to buy shares of TooNew stock.The company declares bankruptcy,leaving many debts unpaid,including Susan's $1,000 investment.Susan has a personal net worth of $50,000.What will be Susan's final net worth if TooNew has total unpaid debts of $30,000?

The difference in the market value of a new car and the market value of the same car one year later is

The four-firm concentration ratio in an industry is 75 percent. Total sales in the industry are $800 million and total economic profit in the industry is $500 million.Normal profit for each firm is zero. From this information we know that

When the cost of producing a unit of a good falls as its output rate increases,

Typical examples of a partnership would include which one of the following?

A firm's goal is to

Which one of the following would not likely be a firm with economies of scale?

What is a disadvantage of a corporation relative to a sole proprietorship or partnership?

Use the table below to answer the following questions. Table 10.2.2 Three methods of making one medical hologram -Refer to Table 10.2.2.If the price of labour is $20 per unit and the price of capital is $10 per unit,which method is economically efficient?

In a perfectly competitive market,the four-firm concentration ratio is

In a perfectly competitive market,the Herfindahl-Hirschman Index (HHI)

Use the table below to answer the following questions. Table 10.4.1 -Refer to Table 10.4.1.The four-firm concentration ratio for the pizza sellers is

An example of the principal-agent problem occurs when

A provincial phone company like SaskTel likely has

Use the table below to answer the following questions. Table 10.2.2 Three methods of making one medical hologram -In Table 10.2.2,which method of making a medical hologram is technologically efficient?

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

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: The Keynesian Model

Canadian Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

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