Question 1

A four-firm concentration ratio of less than 60 percent indicates

Accepted Answer

A) a monopoly. 
B) a market that is dominated by a few firms. 
C) a competitive market. 
D) an oligopoly. 
E) an absence of competition. 
A) a monopoly. 
B) a market that is dominated by a few firms. 
C) a competitive market. 
D) an oligopoly. 
E) an absence of competition.

Question 2

In general,
(1) opportunity cost is greater than accounting cost.
(2) opportunity cost is less than accounting cost.
(3) economic profit is greater than accounting profit.
(4) economic profit is less than accounting profit.

Accepted Answer

A) 1 only 
B) 1 and 3 
C) 1 and 4 
D) 2 and 3 
E) 2 and 4 
A) 1 only 
B) 1 and 3 
C) 1 and 4 
D) 2 and 3 
E) 2 and 4

Question 3

Which one of the following is an advantage of a corporation relative to a proprietorship or partnership?

Accepted Answer

A) Owners have limited liability. 
B) Profits are taxed once. 
C) difficult to raise money 
D) no principal-agent problems 
E) None of the above. 
A) Owners have limited liability. 
B) Profits are taxed once. 
C) difficult to raise money 
D) no principal-agent problems 
E) None of the above.

Question 4

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

Accepted Answer

A) a sole proprietorship. 
B) a partnership. 
C) a conglomerate. 
D) a corporation. 
E) a public company. 
A) a sole proprietorship. 
B) a partnership. 
C) a conglomerate. 
D) a corporation. 
E) a public company.

Question 5

The purpose of calculating the concentration ratio is

Accepted Answer

A) to obtain the firm's total profit. 
B) to obtain the firm's production cost. 
C) to measure the losses the firm incurred. 
D) to measure the extent to which the market is dominated by a small number of firms. 
E) to distinguish between the firm's total profit and production cost. 
A) to obtain the firm's total profit. 
B) to obtain the firm's production cost. 
C) to measure the losses the firm incurred. 
D) to measure the extent to which the market is dominated by a small number of firms. 
E) to distinguish between the firm's total profit and production cost.

Question 6

A sole proprietorship

Accepted Answer

A) dies with the owner. 
B) is the same as a partnership. 
C) always bring a higher return to its owner than a corporation brings to its owners. 
D) is a not-for-profit firm. 
E) has a complex management structure. 
A) dies with the owner. 
B) is the same as a partnership. 
C) always bring a higher return to its owner than a corporation brings to its owners. 
D) is a not-for-profit firm. 
E) has a complex management structure.

Question 7

The possibility that an employee may not work hard is an example of the

Accepted Answer

A) limited liability problem. 
B) principal-agent problem. 
C) transactions cost problem. 
D) technological efficiency problem. 
E) partnership problem. 
A) limited liability problem. 
B) principal-agent problem. 
C) transactions cost problem. 
D) technological efficiency problem. 
E) partnership problem.

Question 8

Which one of the following is not generally a transactions cost?

Accepted Answer

A) the fee to a broker for buying stocks 
B) the cost of a lawyer who drafts a contract 
C) the cost of hiring someone to find you a supplier of raw materials 
D) the cost of the owner's time in a sole proprietorship 
E) the cost of phone calls made to find a buyer 
A) the fee to a broker for buying stocks 
B) the cost of a lawyer who drafts a contract 
C) the cost of hiring someone to find you a supplier of raw materials 
D) the cost of the owner's time in a sole proprietorship 
E) the cost of phone calls made to find a buyer

Question 9

The correct ranking of the four basic market structures from low HHI (Herfindahl-Hirschaman Index)to high HHI is

Accepted Answer

A) monopolistic competition, perfect competition, oligopoly, monopoly. 
B) perfect competition, oligopoly, monopolistic competition, monopoly. 
C) monopoly, oligopoly, monopolistic competition, perfect competition. 
D) perfect competition, monopolistic competition, oligopoly, monopoly. 
E) monopoly, monopolistic competition, oligopoly, perfect competition. 
A) monopolistic competition, perfect competition, oligopoly, monopoly. 
B) perfect competition, oligopoly, monopolistic competition, monopoly. 
C) monopoly, oligopoly, monopolistic competition, perfect competition. 
D) perfect competition, monopolistic competition, oligopoly, monopoly. 
E) monopoly, monopolistic competition, oligopoly, perfect competition.

Question 10

Firm strategies for coping with the principal-agent problem are

Accepted Answer

A) ownership, incentive pay, and long-term contracts. 
B) sole proprietorship, partnership, and the corporation. 
C) economies of scale, scope, and team production. 
D) technology, information, and the market. 
E) ownership, scope, and the market. 
A) ownership, incentive pay, and long-term contracts. 
B) sole proprietorship, partnership, and the corporation. 
C) economies of scale, scope, and team production. 
D) technology, information, and the market. 
E) ownership, scope, and the market.

Question 11

If a market is shared equally by 100 firms,the Herfindahl-Hirschman Index is

Accepted Answer

A) 1/100. 
B) 1/50. 
C) 1. 
D) 50. 
E) 100. 
A) 1/100. 
B) 1/50. 
C) 1. 
D) 50. 
E) 100.

Question 12

Emma owns a firm that produces umbrellas.Currently,Emma produces 2,500 umbrellas a day.Emma cannot produce more umbrellas in a day unless she purchases another machine or else hires more workers.Emma is ________ efficient.

Accepted Answer

A) economically 
B) economically and technologically 
C) technologically 
D) not 
E) capital and labour 
A) economically 
B) economically and technologically 
C) technologically 
D) not 
E) capital and labour

Question 13

Which of the following activities is most likely to be coordinated by a firm,instead of a market?

Accepted Answer

A) a large rock concert in Vancouver 
B) producing paperclips 
C) running a golf course 
D) selling groceries 
E) all of the above except A 
A) a large rock concert in Vancouver 
B) producing paperclips 
C) running a golf course 
D) selling groceries 
E) all of the above except A

Question 14

A firm that is technologically efficient

Accepted Answer

A) always makes an economic profit. 
B) must be economically efficient, but a firm that is economically efficient is not always technologically efficient. 
C) must be economically efficient, and a firm that is economically efficient must always be technologically efficient. 
D) is not always economically efficient, and a firm that is economically efficient is not always technologically efficient. 
E) is not always economically efficient, but a firm that is economically efficient must always be technologically efficient. 
A) always makes an economic profit. 
B) must be economically efficient, but a firm that is economically efficient is not always technologically efficient. 
C) must be economically efficient, and a firm that is economically efficient must always be technologically efficient. 
D) is not always economically efficient, and a firm that is economically efficient is not always technologically efficient. 
E) is not always economically efficient, but a firm that is economically efficient must always be technologically efficient.

Question 15

A firm with a lower unit cost from producing a wider range of goods and services has economies of

Accepted Answer

A) transactions costs. 
B) scale. 
C) scope. 
D) team production. 
E) market coordination. 
A) transactions costs. 
B) scale. 
C) scope. 
D) team production. 
E) market coordination.

Question 16

Which one of the following statements is true?

Accepted Answer

A) Firms are markets in and of themselves. 
B) Firms do not organize factors of production to produce goods and services. 
C) Firms are buyers of consumer goods and services. 
D) Efficient firms can eliminate scarcity. 
E) Firms are often more efficient than markets as coordinators of economic activity. 
A) Firms are markets in and of themselves. 
B) Firms do not organize factors of production to produce goods and services. 
C) Firms are buyers of consumer goods and services. 
D) Efficient firms can eliminate scarcity. 
E) Firms are often more efficient than markets as coordinators of economic activity.

Question 17

All of the following statements are correct except

Accepted Answer

A) firms coordinate economic activity when they can perform a task more efficiently than markets can. 
B) Nobel Laureate Ronald Coase stated that firms cannot be more efficient than markets. 
C) markets can coordinate production. 
D) firms are often more efficient than markets as coordinators of economic activity because they can achieve lower transactions costs, economies of scale, economies of scope, and economies of team production. 
E) outsourcing is an example of market coordination. 
A) firms coordinate economic activity when they can perform a task more efficiently than markets can. 
B) Nobel Laureate Ronald Coase stated that firms cannot be more efficient than markets. 
C) markets can coordinate production. 
D) firms are often more efficient than markets as coordinators of economic activity because they can achieve lower transactions costs, economies of scale, economies of scope, and economies of team production. 
E) outsourcing is an example of market coordination.

Question 18

Firms coordinate economic activity more efficiently than markets when firms have

Accepted Answer

A) lower transactions costs. 
B) economies of scale. 
C) economies of scope. 
D) economies of team production. 
E) all of the above. 
A) lower transactions costs. 
B) economies of scale. 
C) economies of scope. 
D) economies of team production. 
E) all of the above.

Question 19

A firm with one or more owners of limited liability is

Accepted Answer

A) a sole proprietorship. 
B) a partnership. 
C) a conglomerate. 
D) a corporation. 
E) a public company. 
A) a sole proprietorship. 
B) a partnership. 
C) a conglomerate. 
D) a corporation. 
E) a public company.

Question 20

A group of business people are having coffee.Which of the following quotations describes transactions costs?

Accepted Answer

A) "The new production process we've installed uses less capital and labour than the old one." 
B) "The new assembly line has higher capital costs, but the fall in workers' hours has lowered overall costs." 
C) "The costs of per-unit production have fallen dramatically as we have increased the length of the production runs." 
D) "Despite the higher costs of negotiating the contracts, hiring the cleaning firm is much cheaper than using our own staff." 
E) "The computer servicing people we have hired work very well as an integrated problem-solving group." 
A) "The new production process we've installed uses less capital and labour than the old one." 
B) "The new assembly line has higher capital costs, but the fall in workers' hours has lowered overall costs." 
C) "The costs of per-unit production have fallen dramatically as we have increased the length of the production runs." 
D) "Despite the higher costs of negotiating the contracts, hiring the cleaning firm is much cheaper than using our own staff." 
E) "The computer servicing people we have hired work very well as an integrated problem-solving group."

Exam 10: Organizing Production

A four-firm concentration ratio of less than 60 percent indicates

In general, (1) opportunity cost is greater than accounting cost. (2) opportunity cost is less than accounting cost. (3) economic profit is greater than accounting profit. (4) economic profit is less than accounting profit.

Which one of the following is an advantage of a corporation relative to a proprietorship or partnership?

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

The purpose of calculating the concentration ratio is

A sole proprietorship

The possibility that an employee may not work hard is an example of the

Which one of the following is not generally a transactions cost?

The correct ranking of the four basic market structures from low HHI (Herfindahl-Hirschaman Index)to high HHI is

Firm strategies for coping with the principal-agent problem are

If a market is shared equally by 100 firms,the Herfindahl-Hirschman Index is

Emma owns a firm that produces umbrellas.Currently,Emma produces 2,500 umbrellas a day.Emma cannot produce more umbrellas in a day unless she purchases another machine or else hires more workers.Emma is ________ efficient.

Which of the following activities is most likely to be coordinated by a firm,instead of a market?

A firm that is technologically efficient

A firm with a lower unit cost from producing a wider range of goods and services has economies of

Which one of the following statements is true?

All of the following statements are correct except

Firms coordinate economic activity more efficiently than markets when firms have

A firm with one or more owners of limited liability is

A group of business people are having coffee.Which of the following quotations describes transactions costs?

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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