Question 1

Limited liability is a benefit to

Accepted Answer

A)  sole proprietorships. 
B)  partnerships. 
C)  corporations. 
D)  All of the above. 
A)  sole proprietorships. 
B)  partnerships. 
C)  corporations. 
D)  All of the above. C

Question 2

All of the following are characteristics of an oligopolistic market EXCEPT

Accepted Answer

A)  firms must consider the actions of their rivals. 
B)  cartels eventually form to keep prices high. 
C)  firms have the ability to influence prices. 
D)  firms earn lower profits than a monopoly. 
A)  firms must consider the actions of their rivals. 
B)  cartels eventually form to keep prices high. 
C)  firms have the ability to influence prices. 
D)  firms earn lower profits than a monopoly. B

Question 3

If a firm cannot earn profits in the short run,it will shut down.

Accepted Answer

A) True 
 B)False  False

Question 4

If the present value of all future profit is positive,then

Accepted Answer

A)  the firm should remain operating, even if it earns negative profit in the short run. 
B)  the firm should shut down if it is earning a negative profit in the short run. 
C)  the firm should shut down if it cannot cover its fixed costs in the short run. 
D)  None of the above. 
A)  the firm should remain operating, even if it earns negative profit in the short run. 
B)  the firm should shut down if it is earning a negative profit in the short run. 
C)  the firm should shut down if it cannot cover its fixed costs in the short run. 
D)  None of the above.

Question 5

If marginal revenue equals marginal cost,the firm is maximizing profits as long as

Accepted Answer

A)  the resulting profits are positive. 
B)  marginal cost exceeds marginal revenue for greater levels of output. 
C)  the average cost curve lies above the demand curve. 
D)  All of the above are required. 
A)  the resulting profits are positive. 
B)  marginal cost exceeds marginal revenue for greater levels of output. 
C)  the average cost curve lies above the demand curve. 
D)  All of the above are required.

Question 6

Which of the following generally does NOT seek to maximize profit?

Accepted Answer

A)  public sector companies 
B)  state-owned enterprises 
C)  partnerships 
D)  sole proprietorships 
A)  public sector companies 
B)  state-owned enterprises 
C)  partnerships 
D)  sole proprietorships

Question 7

Under perfect competition

Accepted Answer

A)  information about prices is hard to obtain. 
B)  there is a maximum number of firms that can enter the market. 
C)  if a firm exits the market, price will rise. 
D)  transaction costs are low. 
A)  information about prices is hard to obtain. 
B)  there is a maximum number of firms that can enter the market. 
C)  if a firm exits the market, price will rise. 
D)  transaction costs are low.

Question 8

In a monopolistically competitive market

Accepted Answer

A)  firms are price setters. 
B)  barriers to entry are high. 
C)  earn positive economic profit in the long run. 
D)  products are undifferentiated. 
A)  firms are price setters. 
B)  barriers to entry are high. 
C)  earn positive economic profit in the long run. 
D)  products are undifferentiated.

Question 9

Which entity produces the greatest proportion of U.S.gross national product?

Accepted Answer

A)  government 
B)  non-profit organizations such as hospitals 
C)  firms 
D)  universities 
A)  government 
B)  non-profit organizations such as hospitals 
C)  firms 
D)  universities

Question 10

According to the survivor principle

Accepted Answer

A)  firms will get taken over by their larger rivals over time. 
B)  only firms that maximize profits survive in highly competitive markets. 
C)  managers only work hard if they are threatened with their survival at the firm. 
D)  eventually all firms merge to become one large monopoly. 
A)  firms will get taken over by their larger rivals over time. 
B)  only firms that maximize profits survive in highly competitive markets. 
C)  managers only work hard if they are threatened with their survival at the firm. 
D)  eventually all firms merge to become one large monopoly.

Question 11

If a manager is unsure what the entire profit function looks like,then she can

Accepted Answer

A)  decrease output slightly to see if profits increase. 
B)  increase output slightly to see if profits increase. 
C)  Both A and B. 
D)  None of the above. 
A)  decrease output slightly to see if profits increase. 
B)  increase output slightly to see if profits increase. 
C)  Both A and B. 
D)  None of the above.

Question 12

Economists typically assume that the owners of firms wish to

Accepted Answer

A)  produce efficiently. 
B)  maximize sales revenues. 
C)  maximize profits. 
D)  All of the above. 
A)  produce efficiently. 
B)  maximize sales revenues. 
C)  maximize profits. 
D)  All of the above.

Question 13

According to economists,competitive firms

Accepted Answer

A)  compete for the same customers. 
B)  are price takers. 
C)  differentiate their products. 
D)  are able to change output and affect the market price. 
A)  compete for the same customers. 
B)  are price takers. 
C)  differentiate their products. 
D)  are able to change output and affect the market price.

Question 14

If the market price in a competitive market is below the minimum of average variable cost the firm will shut down.

Accepted Answer

A) True 
 B)False

Question 15

If a competitive firm maximizes short-run profits by producing some quantity of output,which of the following must be true at that level of output?

Accepted Answer

A)  p > MC 
B)  MR > MC 
C)  p ≥ AVC 
D)  All of the above 
A)  p > MC 
B)  MR > MC 
C)  p ≥ AVC 
D)  All of the above

Question 16

If a profit-maximizing firm finds that,at its current level of production,MR < MC,it will

Accepted Answer

A)  decrease output. 
B)  increase output. 
C)  shut down. 
D)  operate at a loss. 
A)  decrease output. 
B)  increase output. 
C)  shut down. 
D)  operate at a loss.

Question 17

A firm's vertical dimension refers to

Accepted Answer

A)  its ability to grow its profits. 
B)  the size of its headquarters building. 
C)  the degree to which it participates in the various stages of producing the products and services it sells. 
D)  the downstream stages of production. 
A)  its ability to grow its profits. 
B)  the size of its headquarters building. 
C)  the degree to which it participates in the various stages of producing the products and services it sells. 
D)  the downstream stages of production.

Question 18

A firm's profit is

Accepted Answer

A)  usually negative when opportunity costs are included. 
B)  the difference between marginal revenue and marginal cost. 
C)  the opportunity cost of the firm's shareholders. 
D)  the difference between revenue and cost. 
A)  usually negative when opportunity costs are included. 
B)  the difference between marginal revenue and marginal cost. 
C)  the opportunity cost of the firm's shareholders. 
D)  the difference between revenue and cost.

Question 19

If a firm sets marginal revenue equal to marginal cost it will make an economic profit.

Accepted Answer

A) True 
 B)False

Question 20

If the present value of all future revenue is positive,then

Accepted Answer

A)  the firm should remain operating, even if it earns negative profit in the short run. 
B)  the firm should shut down if it is earning a negative profit in the short run. 
C)  the firm should shut down if it cannot cover its fixed costs in the short run. 
D)  Unable to determine with the information given. 
A)  the firm should remain operating, even if it earns negative profit in the short run. 
B)  the firm should shut down if it is earning a negative profit in the short run. 
C)  the firm should shut down if it cannot cover its fixed costs in the short run. 
D)  Unable to determine with the information given.

Limited liability is a benefit to

All of the following are characteristics of an oligopolistic market EXCEPT

If a firm cannot earn profits in the short run,it will shut down.

If the present value of all future profit is positive,then

If marginal revenue equals marginal cost,the firm is maximizing profits as long as

Which of the following generally does NOT seek to maximize profit?

Under perfect competition

In a monopolistically competitive market

Which entity produces the greatest proportion of U.S.gross national product?

According to the survivor principle

If a manager is unsure what the entire profit function looks like,then she can

Economists typically assume that the owners of firms wish to

According to economists,competitive firms

If the market price in a competitive market is below the minimum of average variable cost the firm will shut down.

If a competitive firm maximizes short-run profits by producing some quantity of output,which of the following must be true at that level of output?

If a profit-maximizing firm finds that,at its current level of production,MR < MC,it will

A firm's vertical dimension refers to

A firm's profit is

If a firm sets marginal revenue equal to marginal cost it will make an economic profit.

If the present value of all future revenue is positive,then

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

Exam 7: Firm Organization and Market Structure

Limited liability is a benefit to

All of the following are characteristics of an oligopolistic market EXCEPT

If a firm cannot earn profits in the short run,it will shut down.

If the present value of all future profit is positive,then

If marginal revenue equals marginal cost,the firm is maximizing profits as long as

Which of the following generally does NOT seek to maximize profit?

Under perfect competition

In a monopolistically competitive market

Which entity produces the greatest proportion of U.S.gross national product?

According to the survivor principle

If a manager is unsure what the entire profit function looks like,then she can

Economists typically assume that the owners of firms wish to

According to economists,competitive firms

If the market price in a competitive market is below the minimum of average variable cost the firm will shut down.

If a competitive firm maximizes short-run profits by producing some quantity of output,which of the following must be true at that level of output?

If a profit-maximizing firm finds that,at its current level of production,MR < MC,it will

A firm's vertical dimension refers to

A firm's profit is

If a firm sets marginal revenue equal to marginal cost it will make an economic profit.

If the present value of all future revenue is positive,then

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters