Question 1

Which of the following is most likely to be a variable input in the transportation of crude oil?

Accepted Answer

A)  a 26-inch diameter pipeline 
B)  a large crude oil carrier under long-term contract to Exxon 
C)  electricity required to run the pumps used in the pipeline 
D)  oil unloading facilities at a refinery 
E)  an oil drilling platform in the Gulf of Mexico 
A)  a 26-inch diameter pipeline 
B)  a large crude oil carrier under long-term contract to Exxon 
C)  electricity required to run the pumps used in the pipeline 
D)  oil unloading facilities at a refinery 
E)  an oil drilling platform in the Gulf of Mexico C

Question 2

The decline in incremental output as equal increments of labor are added to a fixed amount of land is called the law of

Accepted Answer

A)  production. 
B)  diminishing marginal returns. 
C)  supply. 
D)  the land. 
E)  increasing numbers. 
A)  production. 
B)  diminishing marginal returns. 
C)  supply. 
D)  the land. 
E)  increasing numbers. B

Question 3

The following question are based on the following diagram illustrating the weekly average and marginal products for salespersons in the appliance department of a large department store:
  
-If the number of salespersons were increased from four to five,the number of appliances sold per week would

Accepted Answer

A)  increase. 
B)  decrease. 
C)  remain unchanged. 
D)  decrease at first and then increase. 
E)  most likely change but how is uncertain. 
A)  increase. 
B)  decrease. 
C)  remain unchanged. 
D)  decrease at first and then increase. 
E)  most likely change but how is uncertain. A

Question 4

According to government statistics,the number of business firms in the United States is

Accepted Answer

A)  under 5 million. 
B)  between 5 and 10 million. 
C)  between 10 and 15 million. 
D)  between 15 and 20 million. 
E)  over 20 million. 
A)  under 5 million. 
B)  between 5 and 10 million. 
C)  between 10 and 15 million. 
D)  between 15 and 20 million. 
E)  over 20 million.

Question 5

The following question are based on the following production function:
  
-Person-hours of labor would be considered a(n)________ input.

Accepted Answer

A)  fixed 
B)  variable 
C)  average 
D)  break-even 
E)  diminishing 
A)  fixed 
B)  variable 
C)  average 
D)  break-even 
E)  diminishing

Question 6

The technical relationship between inputs and outputs is called the

Accepted Answer

A)  balance sheet. 
B)  income statement. 
C)  production function. 
D)  technostructure. 
E)  net worth. 
A)  balance sheet. 
B)  income statement. 
C)  production function. 
D)  technostructure. 
E)  net worth.

Question 7

The following question are based on the following diagram illustrating the weekly average and marginal products for salespersons in the appliance department of a large department store:
  
-Diminishing marginal returns set in when adding the ________ salesperson.

Accepted Answer

A)  first 
B)  second 
C)  third 
D)  fourth 
E)  fifth 
A)  first 
B)  second 
C)  third 
D)  fourth 
E)  fifth

Question 8

Large capital accumulation is facilitated in a corporate form of business because of

Accepted Answer

A)  the separation of ownership and control. 
B)  the low tax rate on corporate profits. 
C)  the political power inherent in a large firm. 
D)  limited liability. 
E)  the high monopoly profits accruing to corporations. 
A)  the separation of ownership and control. 
B)  the low tax rate on corporate profits. 
C)  the political power inherent in a large firm. 
D)  limited liability. 
E)  the high monopoly profits accruing to corporations.

Question 9

If for a firm the price of input A is four times the price of input B,costs will be minimized for a given level of output when the

Accepted Answer

A)  firm uses four times as much input A as input B. 
B)  total product of input A is four times greater than the total product of input B. 
C)  average product of input A is four times greater than the average product of input B. 
D)  marginal product of input A is four times greater than the marginal product of input B. 
E)  total products of both A and B are equal to four times the marginal products of inputs A and B. 
A)  firm uses four times as much input A as input B. 
B)  total product of input A is four times greater than the total product of input B. 
C)  average product of input A is four times greater than the average product of input B. 
D)  marginal product of input A is four times greater than the marginal product of input B. 
E)  total products of both A and B are equal to four times the marginal products of inputs A and B.

Question 10

The following question are based on the following table, which illustrates for a given level of wheat production the ratio of marginal products for different combinations of land and labor:
  
-If the price of land is $5 per unit and the price of labor is $2 per unit,then the least-cost combination of land and wheat is

Accepted Answer

A)  1. 
B)  2. 
C)  3. 
D)  4. 
E)  5. 
A)  1. 
B)  2. 
C)  3. 
D)  4. 
E)  5.

Question 11

The easiest and most inexpensive form of business organization to establish is a

Accepted Answer

A)  firm. 
B)  corporation. 
C)  partnership. 
D)  foundation. 
E)  proprietorship. 
A)  firm. 
B)  corporation. 
C)  partnership. 
D)  foundation. 
E)  proprietorship.

Question 12

A business firm that is regarded as a fictitious legal person is called a

Accepted Answer

A)  front. 
B)  corporation. 
C)  silent partnership. 
D)  limited proprietorship. 
E)  special interest. 
A)  front. 
B)  corporation. 
C)  silent partnership. 
D)  limited proprietorship. 
E)  special interest.

Question 13

If the average product of labor falls from 5 to 4.5 when a sixth unit of labor is added,the marginal product of this sixth person is

Accepted Answer

A)  27. 
B)  9.5. 
C)  4.5. 
D)  2. 
E)  0.5. 
A)  27. 
B)  9.5. 
C)  4.5. 
D)  2. 
E)  0.5.

Question 14

The following question are based on the following information for an auto repair shop specializing in muffler installation.
  
-The relationship described in the table is called a ________ function.

Accepted Answer

A)  production 
B)  consumption 
C)  marginal 
D)  cost 
E)  bodily 
A)  production 
B)  consumption 
C)  marginal 
D)  cost 
E)  bodily

Question 15

General Motors was formed in 1908 by

Accepted Answer

A)  David Rothermel. 
B)  Walter Chrysler. 
C)  William Durant. 
D)  Henry Ford. 
E)  Alfred Sloan. 
A)  David Rothermel. 
B)  Walter Chrysler. 
C)  William Durant. 
D)  Henry Ford. 
E)  Alfred Sloan.

Question 16

Costs are clearly minimized for a given level of output as long as the firm

Accepted Answer

A)  uses inputs that do not exhibit declining productivity. 
B)  pays the same price for all of its inputs. 
C)  is not able to increase output by substituting a dollar's worth of input A for a dollar's worth of input B, or vice versa. 
D)  can increase output without increasing its cost. 
E)  equates the marginal products of both inputs A and B. 
A)  uses inputs that do not exhibit declining productivity. 
B)  pays the same price for all of its inputs. 
C)  is not able to increase output by substituting a dollar's worth of input A for a dollar's worth of input B, or vice versa. 
D)  can increase output without increasing its cost. 
E)  equates the marginal products of both inputs A and B.

Question 17

The system of checks and balances that guides the decisions of corporate managers is known as

Accepted Answer

A)  implicit contracts. 
B)  corporate governance. 
C)  the production function. 
D)  profit maximization. 
E)  collective bargaining. 
A)  implicit contracts. 
B)  corporate governance. 
C)  the production function. 
D)  profit maximization. 
E)  collective bargaining.

Question 18

An important element of the Sarbanes-Oxley Act of 2002 is that it

Accepted Answer

A)  sets limits on the market shares of large corporations. 
B)  enables the Fed to actively intervene in the stock market by buying corporate securities during times of falling stock prices. 
C)  tightens the standards of accountability for the top corporate officers. 
D)  requires corporate boards of directors to have at least one elected public official as a member. 
E)  prevents corporations from declaring profits that are higher than they originally estimated. 
A)  sets limits on the market shares of large corporations. 
B)  enables the Fed to actively intervene in the stock market by buying corporate securities during times of falling stock prices. 
C)  tightens the standards of accountability for the top corporate officers. 
D)  requires corporate boards of directors to have at least one elected public official as a member. 
E)  prevents corporations from declaring profits that are higher than they originally estimated.

Question 19

The law of diminishing marginal returns means that as you increase the number of units of a variable input,after some point ________ will fall.

Accepted Answer

A)  total output 
B)  costs of production 
C)  demand 
D)  marginal output 
E)  employment 
A)  total output 
B)  costs of production 
C)  demand 
D)  marginal output 
E)  employment

Question 20

The following question are based on the following information for an auto repair shop specializing in muffler installation.
  
-In this example,the variable input is the

Accepted Answer

A)  muffler installation service. 
B)  muffler shop. 
C)  autos repaired. 
D)  labor. 
E)  price of the installed mufflers. 
A)  muffler installation service. 
B)  muffler shop. 
C)  autos repaired. 
D)  labor. 
E)  price of the installed mufflers.

Exam 3: The Business Firm: Organization,motivation,and Optimal Input Decisions

Which of the following is most likely to be a variable input in the transportation of crude oil?

The decline in incremental output as equal increments of labor are added to a fixed amount of land is called the law of

The following question are based on the following diagram illustrating the weekly average and marginal products for salespersons in the appliance department of a large department store: -If the number of salespersons were increased from four to five,the number of appliances sold per week would

According to government statistics,the number of business firms in the United States is

The following question are based on the following production function: -Person-hours of labor would be considered a(n)________ input.

The technical relationship between inputs and outputs is called the

The following question are based on the following diagram illustrating the weekly average and marginal products for salespersons in the appliance department of a large department store: -Diminishing marginal returns set in when adding the ________ salesperson.

Large capital accumulation is facilitated in a corporate form of business because of

If for a firm the price of input A is four times the price of input B,costs will be minimized for a given level of output when the

The easiest and most inexpensive form of business organization to establish is a

A business firm that is regarded as a fictitious legal person is called a

If the average product of labor falls from 5 to 4.5 when a sixth unit of labor is added,the marginal product of this sixth person is

The following question are based on the following information for an auto repair shop specializing in muffler installation. -The relationship described in the table is called a ________ function.

General Motors was formed in 1908 by

Costs are clearly minimized for a given level of output as long as the firm

The system of checks and balances that guides the decisions of corporate managers is known as

An important element of the Sarbanes-Oxley Act of 2002 is that it

The law of diminishing marginal returns means that as you increase the number of units of a variable input,after some point ________ will fall.

The following question are based on the following information for an auto repair shop specializing in muffler installation. -In this example,the variable input is the

What is Economics

Markets and Prices

Getting Behind the Demand and Supply Curves

Market Demand and Price Elasticity

Economic Efficiency,market Supply,and Perfect Competition

Monopoly and Its Regulation

Monopolistic Competition,oligopoly,and Antitrust Policy

Pollution and the Environment

The Supply and Demand for Labor

Interest,rent,and Profit

Poverty,income Inequality,and Discrimination

Economic Growth

Public Goods and the Role of the Government

National Income and Product

Business Fluctuations and Unemployment

The Determination of National Output and the Keynesian Multiplier

Fiscal Policy and National Output

Inflation

Money and the Banking System

The Federal Reserve and Monetary Policy

Supply Shocks and Inflation

Productivity,growth,and Technology Policy

Surpluses,deficits,public Debt,and the Federal Budget

Monetary Policy,interest Rates,and Economic Activity

Controversies Over Stabilization Policy

International Trade

Exchange Rates and the Balance of Payments

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