Question 1

The internal organization of firms depends on:

Accepted Answer

A) owners' convenience. 
B) their objectives. 
C) state law. 
D) corporate charters. 
A) owners' convenience. 
B) their objectives. 
C) state law. 
D) corporate charters.

Question 2

In the case of farming,

Accepted Answer

A) the team production can play a significant role if nature can be removed from the equation. 
B) the role played by nature always outweighs that of team production. 
C) the role played by nature always outweighs that of specialization. 
D) the role of specialization and team production always outweigh that of nature. 
A) the team production can play a significant role if nature can be removed from the equation. 
B) the role played by nature always outweighs that of team production. 
C) the role played by nature always outweighs that of specialization. 
D) the role of specialization and team production always outweigh that of nature.

Question 3

What is the role of the firm? Is it possible for the economic activity to take place outside a firm?

Accepted Answer

The difficulty in answering this questio

Question 4

Efficient team production depends on:

Accepted Answer

A) good will by individual team members. 
B) careful selection and training. 
C) efficient resource use planning. 
D) monitoring individual activity. 
A) good will by individual team members. 
B) careful selection and training. 
C) efficient resource use planning. 
D) monitoring individual activity.

Question 5

Industries with large monitoring costs are likely to find that the Pareto- preferred structure is a:

Accepted Answer

A) mixture of corporate structures. 
B) one- person firm. 
C) multiperson firm. 
D) partnership. 
A) mixture of corporate structures. 
B) one- person firm. 
C) multiperson firm. 
D) partnership.

Question 6

It seems that the batting average in baseball has decreased since 1930s and 1940s. What is the explanation offered by economists?

Accepted Answer

The explanation is not that pl

Question 7

Leontief Associates has expanded to include n partners. Its new technology is B min(e1, e2, , en). The income
of each partner is Y/n. The utility functions are ui = yi - ei2.
i)Describe the Pareto efficient effort levels, the corresponding income levels, and the utility of a typical partner when everyone behaves efficiently.
ii)Suppose the firm is bought by a new owner. Describe an employment contract the new owner would use to get each employee to contribute the efficient effort level.

Accepted Answer

i)y = Be/n. The optimal effort level is

Question 8

The separation of control and ownership:

Accepted Answer

A) is minor issue in the study of organizations. 
B) sits rarely at the core of most corporate scandals. 
C) is not a big concern for Canadian firms. 
D) is a mixed blessing. 
A) is minor issue in the study of organizations. 
B) sits rarely at the core of most corporate scandals. 
C) is not a big concern for Canadian firms. 
D) is a mixed blessing.

Question 9

At the equilibrium of the one- person firm, the MRS of income for effort is:

Accepted Answer

A) zero. 
B) not defined. 
C) one. 
D) infinity. 
A) zero. 
B) not defined. 
C) one. 
D) infinity.

Question 10

Asymmetric information and uncertainty:

Accepted Answer

A) are key for the understanding of the firm as an organization. 
B) are important aspects in the neoclassical approach of the firm. 
C) are not as prevalent today compared to a few decades ago. 
D) indicate that transaction costs are not significant. 
A) are key for the understanding of the firm as an organization. 
B) are important aspects in the neoclassical approach of the firm. 
C) are not as prevalent today compared to a few decades ago. 
D) indicate that transaction costs are not significant.

Question 11

when monitoring costs are low and team productivity is high the Pareto preferred organizational form is

Accepted Answer

A) labor managed team 
B) partnership 
C) owner managed team 
D) one person firm 
A) labor managed team 
B) partnership 
C) owner managed team 
D) one person firm

Question 12

Compared to specific inputs, generic inputs are:

Accepted Answer

A) less likely to be purchased from other firms. 
B) less costly than specific inputs. 
C) more costly than specific inputs. 
D) more likely to be purchased from other firms. 
A) less likely to be purchased from other firms. 
B) less costly than specific inputs. 
C) more costly than specific inputs. 
D) more likely to be purchased from other firms.

Question 13

A residual claimant is:

Accepted Answer

A) a waste disposal expert. 
B) the last person to be paid. 
C) an owner- manager. 
D) a disgruntled employee. 
A) a waste disposal expert. 
B) the last person to be paid. 
C) an owner- manager. 
D) a disgruntled employee.

Question 14

Transaction costs are:

Accepted Answer

A) the costs associated with coordination inside the firm. 
B) the cost associated with coordination outside the firm. 
C) total costs plus production costs. 
D) total costs less production costs. 
A) the costs associated with coordination inside the firm. 
B) the cost associated with coordination outside the firm. 
C) total costs plus production costs. 
D) total costs less production costs.

Question 15

How can the firm secure the cooperation of its employees?

Accepted Answer

A) by providing them with incentives to advance the interests of the firm 
B) by employing the "carrot and stick" approach 
C) by offering them Christmas bonuses and annual cruises 
D) by threatening them 
A) by providing them with incentives to advance the interests of the firm 
B) by employing the "carrot and stick" approach 
C) by offering them Christmas bonuses and annual cruises 
D) by threatening them

Question 16

A partnership is Pareto preferred to a proprietorship if

Accepted Answer

A) there are increasing returns to scale 
B) the law of diminishing returns is weak 
C) the productivity gain associated with teen production is large enough 
D) the partners are married 
A) there are increasing returns to scale 
B) the law of diminishing returns is weak 
C) the productivity gain associated with teen production is large enough 
D) the partners are married

Question 17

A firm is best thought of as:

Accepted Answer

A) a group of individuals pursuing their own self- interest in a coordinated fashion. 
B) a group of individuals pursuing their own self- interest. 
C) a group of individuals pursuing the public interest. 
D) a group of individuals pursuing the interest of the firm. 
A) a group of individuals pursuing their own self- interest in a coordinated fashion. 
B) a group of individuals pursuing their own self- interest. 
C) a group of individuals pursuing the public interest. 
D) a group of individuals pursuing the interest of the firm.

Question 18

Public corporations:

Accepted Answer

A) are characterized by dispersed ownership. 
B) are own by the public through the government. 
C) are characterized by concentrated ownership. 
D) are subject to public scrutiny. 
A) are characterized by dispersed ownership. 
B) are own by the public through the government. 
C) are characterized by concentrated ownership. 
D) are subject to public scrutiny.

Question 19

If our theory of the firm suggests that joint production is more efficient than individual production and that firms exist as a solution to the maximization problem, which of the following is inconsistent with that theory?

Accepted Answer

A) specialization and division of labor 
B) shirking 
C) decreasing returns to scale 
D) transaction costs 
A) specialization and division of labor 
B) shirking 
C) decreasing returns to scale 
D) transaction costs

Question 20

It is not true that specific inputs are:

Accepted Answer

A) common in the manufacture of consumer goods. 
B) useful to a small number of firms. 
C) often produced by the firm which uses them. 
D) never produced by the firm which uses them. 
A) common in the manufacture of consumer goods. 
B) useful to a small number of firms. 
C) often produced by the firm which uses them. 
D) never produced by the firm which uses them.

The internal organization of firms depends on:

In the case of farming,

What is the role of the firm? Is it possible for the economic activity to take place outside a firm?

Efficient team production depends on:

Industries with large monitoring costs are likely to find that the Pareto- preferred structure is a:

It seems that the batting average in baseball has decreased since 1930s and 1940s. What is the explanation offered by economists?

The separation of control and ownership:

At the equilibrium of the one- person firm, the MRS of income for effort is:

Asymmetric information and uncertainty:

when monitoring costs are low and team productivity is high the Pareto preferred organizational form is

Compared to specific inputs, generic inputs are:

A residual claimant is:

Transaction costs are:

How can the firm secure the cooperation of its employees?

A partnership is Pareto preferred to a proprietorship if

A firm is best thought of as:

Public corporations:

If our theory of the firm suggests that joint production is more efficient than individual production and that firms exist as a solution to the maximization problem, which of the following is inconsistent with that theory?

It is not true that specific inputs are:

Microeconomics: a Working Methodology

A Theory of Preferences

Demand Theory

More Demand Theory

Intertemporal Decision Making and Capital Values

Production Cost: One Variable Input

Production Cost: Many Variable Inputs

The Theory of Perfect Competition

Applications of the Competitive Model

Monopoly

Input Markets and the Allocation of Resources

Labour Market Applications

Competitive General Equilibrium

Price Discrimination Monopoly Practices

Introduction to Game Theory

Game Theory and Oligopoly

Choice Making Under Uncertainty

Assymmetric Information, the Rules of the Game, and Externalities

Assymetric Information and Market Behaviour

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Exam 19: The Theory of the Firm

The internal organization of firms depends on:

In the case of farming,

What is the role of the firm? Is it possible for the economic activity to take place outside a firm?

Efficient team production depends on:

Industries with large monitoring costs are likely to find that the Pareto- preferred structure is a:

It seems that the batting average in baseball has decreased since 1930s and 1940s. What is the explanation offered by economists?

The separation of control and ownership:

At the equilibrium of the one- person firm, the MRS of income for effort is:

Asymmetric information and uncertainty:

when monitoring costs are low and team productivity is high the Pareto preferred organizational form is

Compared to specific inputs, generic inputs are:

A residual claimant is:

Transaction costs are:

How can the firm secure the cooperation of its employees?

A partnership is Pareto preferred to a proprietorship if

A firm is best thought of as:

Public corporations:

If our theory of the firm suggests that joint production is more efficient than individual production and that firms exist as a solution to the maximization problem, which of the following is inconsistent with that theory?

It is not true that specific inputs are:

Microeconomics: a Working Methodology

A Theory of Preferences

Demand Theory

More Demand Theory

Intertemporal Decision Making and Capital Values

Production Cost: One Variable Input

Production Cost: Many Variable Inputs

The Theory of Perfect Competition

Applications of the Competitive Model

Monopoly

Input Markets and the Allocation of Resources

Labour Market Applications

Competitive General Equilibrium

Price Discrimination Monopoly Practices

Introduction to Game Theory

Game Theory and Oligopoly

Choice Making Under Uncertainty

Assymmetric Information, the Rules of the Game, and Externalities

Assymetric Information and Market Behaviour

Filters