• 1
  • An institution that hires productive resources and then organizes those resources to produce and sell goods and services is a ___________.

    profitable firm
    wholesale firm
    retail firm

  • 2
  • Kay's Keyboarding company buys a new computer which Kay uses for word-processing. Kay pays _______ for its use.

    an implicit rental rate
    an amount equal to the present value
    an amount equal to the purchase price
    an explicit rental rate

  • 3
  • An employee who does not work diligently unless constantly supervised and believes that he is underpaid is an example of __________________.

    the principal-agent problem
    the law of diminishing returns
    marginal returns to work
    inefficient hiring practices

  • 4
  • Any method of producing a good or service is ________. It _______ the maximum profit that a firm can make.

    a technology; limits
    an information constraint; always increases
    an information constraint; limits
    a technology; always increases

  • 5
  • When commands pass downward through a managerial hierarchy, _______ system exists.

    a command
    a free market
    a communist
    an incentive

  • 6
  • An organization that has a large sales force most likely organizes production with ____________________.

    an incentive system
    threats of unemployment if quotas are not met
    a market system
    a command system

  • 7
  • Owners of _______ have limited liability.

    partnerships, proprietorships, and corporations
    partnerships and corporations
    proprietorships and partnerships

  • 8
  • In perfect competition, there are _____________________.

    many firms, each selling an identical product
    many firms selling products for which no good substitutes exist
    a small number of firms, each selling an identical product
    many firms selling similar but slightly different products

  • 9
  • The four-firm concentration ratio is the percentage of the _______ accounted for by _______ in an industry.

    value of sales; the four largest firms
    economic profit; any four firms
    normal profit; any four firms
    economic profit; the four largest firms

  • 10
  • Economies of scale exist when the _____________ of a unit of a good _________________.

    cost; falls as its output rate increases
    price; rises as its output rate increases
    cost; rises as its input rate increases
    price; falls as its input rate decreases

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