Question 1

A fixed input is one

Accepted Answer

A)  for which the quantity of which cannot change as output rises or falls in the short run. 
B)  that rises in importance as output rises. 
C)  that is technologically obsolete. 
D)  that has been repaired. 
E)  for which the average output of which falls over time. 
A)  for which the quantity of which cannot change as output rises or falls in the short run. 
B)  that rises in importance as output rises. 
C)  that is technologically obsolete. 
D)  that has been repaired. 
E)  for which the average output of which falls over time.

Question 2

A firm's total output divided by the amount of input used to produce it is the ________ of the input.

Accepted Answer

A)  cost 
B)  supply 
C)  average product 
D)  marginal product 
E)  combined product 
A)  cost 
B)  supply 
C)  average product 
D)  marginal product 
E)  combined product

Question 3

The law of diminishing returns requires the assumption that

Accepted Answer

A)  output is fixed. 
B)  factor proportions are fixed. 
C)  output increments are fixed. 
D)  returns are fixed. 
E)  at least one input must be fixed. 
A)  output is fixed. 
B)  factor proportions are fixed. 
C)  output increments are fixed. 
D)  returns are fixed. 
E)  at least one input must be fixed.

Question 4

If equal increments of an input are added,the quantities of other inputs being held constant,the resulting increments of product will decrease beyond some point.This sentence is a statement of the law of

Accepted Answer

A)  supply. 
B)  demand. 
C)  diminishing marginal returns. 
D)  optimal thermodynamics. 
E)  indifference. 
A)  supply. 
B)  demand. 
C)  diminishing marginal returns. 
D)  optimal thermodynamics. 
E)  indifference.

Question 5

Under diminishing marginal returns,as the amount of a variable input is reduced,the marginal product of a dollar's worth of the input will

Accepted Answer

A)  exceed total product. 
B)  exceed average cost. 
C)  rise. 
D)  fall. 
E)  remain the same, but total input cost will rise. 
A)  exceed total product. 
B)  exceed average cost. 
C)  rise. 
D)  fall. 
E)  remain the same, but total input cost will rise.

Question 6

What percentage of the nation's small businesses are proprietorships?

Accepted Answer

A)  less than 10 percent 
B)  between 10 and 25 percent 
C)  between 26 and 50 percent 
D)  between 51 and 75 percent 
E)  more than 75 percent 
A)  less than 10 percent 
B)  between 10 and 25 percent 
C)  between 26 and 50 percent 
D)  between 51 and 75 percent 
E)  more than 75 percent

Question 7

If the marginal products of the first five units of labor are 120,105,85,60,and 30,respectively,then five units of labor can produce ________ units of output.

Accepted Answer

A)  30 
B)  80 
C)  90 
D)  210 
E)  400 
A)  30 
B)  80 
C)  90 
D)  210 
E)  400

Question 8

A firm uses inputs A and B when the price of A is $3 per unit and the price of B is $5 per unit.The marginal product of A is 15 units.If the firm is making an optimal input decision,the marginal product of B must be

Accepted Answer

A)  1. 
B)  9. 
C)  15. 
D)  25. 
E)  45. 
A)  1. 
B)  9. 
C)  15. 
D)  25. 
E)  45.

Question 9

The following question are based on the following information:
A firm uses inputs of labor, fertilizer, and land to produce strawberries (which are sold to wholesalers and processors). The quantity of land used is fixed at eight acres per season and the production function implies the relationships in the following table:
  
-The average product of the fourth unit of labor is ________ bushels.

Accepted Answer

A)  1,000 
B)  2,000 
C)  3,100 
D)  3,500 
E)  4,000 
A)  1,000 
B)  2,000 
C)  3,100 
D)  3,500 
E)  4,000

Question 10

If inputs are combined so that their marginal product-price ratios are equal,________ minimized.

Accepted Answer

A)  costs are 
B)  profits are 
C)  production is 
D)  efficiency is 
E)  returns are 
A)  costs are 
B)  profits are 
C)  production is 
D)  efficiency is 
E)  returns are

Question 11

In a given year in the production function of a typical college or university,a tenured faculty member would be an example of a(n)________ input.

Accepted Answer

A)  fixed 
B)  variable 
C)  expendable 
D)  average 
E)  marginal 
A)  fixed 
B)  variable 
C)  expendable 
D)  average 
E)  marginal

Question 12

In order of their frequency,what are the three basic forms of business organization?

Accepted Answer

A)  proprietorships, corporations, partnerships 
B)  corporations, proprietorships, partnerships 
C)  partnerships, proprietorships, corporations 
D)  proprietorships, partnerships, corporations 
E)  corporations, partnerships, proprietorships 
A)  proprietorships, corporations, partnerships 
B)  corporations, proprietorships, partnerships 
C)  partnerships, proprietorships, corporations 
D)  proprietorships, partnerships, corporations 
E)  corporations, partnerships, proprietorships

Question 13

The Sarbanes-Oxley Act of 2002 was designed to increase

Accepted Answer

A)  investor confidence. 
B)  government ownership. 
C)  the number of firms. 
D)  executive salaries. 
E)  income equality. 
A)  investor confidence. 
B)  government ownership. 
C)  the number of firms. 
D)  executive salaries. 
E)  income equality.

Question 14

A manufacturing firm that decides to add enough people to its workforce to operate around the clock is

Accepted Answer

A)  making a short-run operating decision. 
B)  holding the proportion of labor to capital constant. 
C)  decreasing the average product of its fixed inputs. 
D)  making operating decisions along its planning horizon. 
E)  using its facilities inefficiently. 
A)  making a short-run operating decision. 
B)  holding the proportion of labor to capital constant. 
C)  decreasing the average product of its fixed inputs. 
D)  making operating decisions along its planning horizon. 
E)  using its facilities inefficiently.

Question 15

A variable input is one that

Accepted Answer

A)  is undependable. 
B)  will be used as a last resort. 
C)  is unnecessary in a production function. 
D)  can be increased or decreased as output rises or falls. 
E)  is unaffected by changes in production. 
A)  is undependable. 
B)  will be used as a last resort. 
C)  is unnecessary in a production function. 
D)  can be increased or decreased as output rises or falls. 
E)  is unaffected by changes in production.

Question 16

For the firm mentioned in question 68,if the marginal product of B changes to 20,the firm should

Accepted Answer

A)  increase the amount of B relative to A. 
B)  decrease the amount of B relative to A. 
C)  leave the relative amounts of A and B unchanged. 
D)  increase both A and B but leave the relative proportions of each unchanged. 
E)  decrease both A and B but leave the relative proportions of each unchanged. 
A)  increase the amount of B relative to A. 
B)  decrease the amount of B relative to A. 
C)  leave the relative amounts of A and B unchanged. 
D)  increase both A and B but leave the relative proportions of each unchanged. 
E)  decrease both A and B but leave the relative proportions of each unchanged.

Question 17

An important distinction between corporate and unincorporated businesses is that

Accepted Answer

A)  corporations are able to borrow money; unincorporated businesses must be financed from internal sources. 
B)  corporation owners have unlimited liability; unincorporated businesses are limited in their liability. 
C)  income earned by corporations may be subject to double taxation; income of unincorporated businesses is taxed only once. 
D)  corporations have a limited life; unincorporated businesses have an unlimited life. 
E)  it is impossible for the income of unincorporated businesses to be taxed at a higher rate than the income of corporations. 
A)  corporations are able to borrow money; unincorporated businesses must be financed from internal sources. 
B)  corporation owners have unlimited liability; unincorporated businesses are limited in their liability. 
C)  income earned by corporations may be subject to double taxation; income of unincorporated businesses is taxed only once. 
D)  corporations have a limited life; unincorporated businesses have an unlimited life. 
E)  it is impossible for the income of unincorporated businesses to be taxed at a higher rate than the income of corporations.

Question 18

A business firm owned by a single individual is called a

Accepted Answer

A)  monopoly. 
B)  closed shop. 
C)  proprietorship. 
D)  plant. 
E)  trust. 
A)  monopoly. 
B)  closed shop. 
C)  proprietorship. 
D)  plant. 
E)  trust.

Question 19

The term that best denotes anything a firm uses in its production process is

Accepted Answer

A)  machine. 
B)  plant. 
C)  asset. 
D)  output. 
E)  input. 
A)  machine. 
B)  plant. 
C)  asset. 
D)  output. 
E)  input.

Question 20

Which of the following was NOT used by firms in the soft drink,automobile,and newspaper industries shown in The Business Firm video as a way to reduce costs in a competitive environment?

Accepted Answer

A)  substituting inputs 
B)  producing their products in a foreign country 
C)  adopting new technology 
D)  achieving economies of scale 
E)  colluding with one another 
A)  substituting inputs 
B)  producing their products in a foreign country 
C)  adopting new technology 
D)  achieving economies of scale 
E)  colluding with one another

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

A fixed input is one

A firm's total output divided by the amount of input used to produce it is the ________ of the input.

The law of diminishing returns requires the assumption that

If equal increments of an input are added,the quantities of other inputs being held constant,the resulting increments of product will decrease beyond some point.This sentence is a statement of the law of

Under diminishing marginal returns,as the amount of a variable input is reduced,the marginal product of a dollar's worth of the input will

What percentage of the nation's small businesses are proprietorships?

If the marginal products of the first five units of labor are 120,105,85,60,and 30,respectively,then five units of labor can produce ________ units of output.

A firm uses inputs A and B when the price of A is $3 per unit and the price of B is $5 per unit.The marginal product of A is 15 units.If the firm is making an optimal input decision,the marginal product of B must be

If inputs are combined so that their marginal product-price ratios are equal,________ minimized.

In a given year in the production function of a typical college or university,a tenured faculty member would be an example of a(n)________ input.

In order of their frequency,what are the three basic forms of business organization?

The Sarbanes-Oxley Act of 2002 was designed to increase

A manufacturing firm that decides to add enough people to its workforce to operate around the clock is

A variable input is one that

For the firm mentioned in question 68,if the marginal product of B changes to 20,the firm should

An important distinction between corporate and unincorporated businesses is that

A business firm owned by a single individual is called a

The term that best denotes anything a firm uses in its production process is

Which of the following was NOT used by firms in the soft drink,automobile,and newspaper industries shown in The Business Firm video as a way to reduce costs in a competitive environment?

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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