Question 1
A firm that owns a car rental agency, a modeling agency, a French bakery, and a pet store is
a conglomerate.
a perfect competitor.
inefficient.
vertically integrated.
horizontally integrated.
Question 2
When inputs are combined so that total production has the lowest possible cost, we are observing
technical efficiency.
optimal engineering.
economic efficiency.
average-cost production.
Question 3
The Southern Tree Trimming Corporation reported an accounting profit of $35,000 and a normal rate of return of 15 percent on capital and enterprise of $30,000. The opportunity cost of labor is $15,500. What is the economic profit?
$110,500
$19,500
$15,000
$5,000
Question 4
Accounting profit is defined as
total sales - (explicit costs + implicit costs).
total sales - explicit costs - implicit costs.
total opportunity costs.
total monetary costs.
total implicit costs.
Question 5
The long-run decision is to select
the plant size to go with the fixed quantity of labor.
the desired quantity of labor to go with fixed capital.
the desired long-run MC curve.
the desired short-run AC curve.
the desired long-run AC curve.
Question 6
Last spring, Coil Spring Co. reported that average fixed costs had increased, but average variable costs were unchanged. This indicates that
marginal costs are less than average variable cost but greater than average cost.
fixed costs have increased.
output is declining.
marginal costs have increased.
Question 7
Technical efficiency is
using the least-cost method of production.
the method of production that minimizes physical usage of inputs according to some specific rule.
the process of turning inputs into outputs.
the process of minimizing output with a given level of inputs.
the method of production that uses the least labor per unit of capital.
Question 8
A firm that owns a wheat farm, a grain elevator, a flour mill, a commercial bakery, and a grocery store chain is
a conglomerate.
an imperfect competitor.
a monopoly.
vertically integrated.
horizontally integrated.
Question 9
The cost of alternatives given up that do not carry dollar costs is
not of interest to a business enterprise.
assigned a dollar value and recorded as an explicit cost.
considered an implicit cost.
part of economic profits.
Question 10
Firms exist for all but which one of the following reasons?
To reduce transactions costs
To produce things
To organize teams
To monitor shirking
To reduce the costs of buying