Question 1

An advantage of proprietorship is that the owner is faced with

Accepted Answer

A)   complete control.
B)   easy-to-obtain financing.
C)   unlimited liability.
D)   limited liability.
E)   lower tax rates than those applicable to a partnership.F) B) and E)
G) A) and E)

Question 2

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 marginal product of the fourth unit of labor is ________ bushels.

Accepted Answer

A)   1,000
B)   2,000
C)   3,100
D)   3,500
E)   4,000F) All of the above
G) B) and E)

Question 3

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:
 
-It can be said that this firm experiences diminishing returns beyond the employment of the ________ unit of labor.

Accepted Answer

A)   first
B)   second
C)   third
D)   fourth
E)   fifthF) A) and B)
G) A) and C)

Question 4

If the ratio of the marginal product of labor to the marginal product of land is 1:3,a firm making an optimal input combination should

Accepted Answer

A)   employ three times as many workers as land units.
B)   employ one-third as many workers as land units.
C)   pay each worker three times as much as the price of a unit of land.
D)   pay each worker one-third as much as the price of a unit of land.
E)   use the same number of workers as units of land and pay each worker the same price as a unit of land.F) B) and E)
G) All of the above

Question 5

The following question are based on the following information for an auto repair shop specializing in muffler installation.
 
-The marginal product of the fourth worker is

Accepted Answer

A)   1.
B)   2.
C)   4.
D)   9.
E)   10.F) A) and D)
G) A) and C)

Question 6

An input whose quantity is unaffected as output rises or falls is a(n) ________ input.

Accepted Answer

A)   irrelevant
B)   dominant
C)   fixed
D)   independent
E)   superiorF) A) and E)
G) A) and D)

Question 7

The use of computerized photo composition methods allowed the Asbury Park Press to

Accepted Answer

A)   lay off reporters.
B)   reduce the number of pages in its paper.
C)   tailor its editions to target specific regions.
D)   more cheaply purchase the paper on which to print its newspaper.
E)   raise the price at the newsstand without reducing sales.F) A) and E)
G) A) and C)

Question 8

A legal form of business organization that is easily established and yet has improved opportunities for greater financial resources and specialized know-how without being subject to double taxation of its income is the

Accepted Answer

A)   corporation.
B)   cartel.
C)   simple proprietorship.
D)   consortium.
E)   partnership.F) A) and D)
G) A) and C)

Question 9

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:
 
-The number of appliances sold per week when four salespersons are employed is

Accepted Answer

A)   4.
B)   5.
C)   8.
D)   20.
E)   32.F) A) and E)
G) A) and B)

Question 10

In the short run

Accepted Answer

A)   all of the firm's inputs are fixed.
B)   at least one of the firm's inputs is fixed.
C)   none of the firm's inputs is fixed.
D)   the output of the firm is fixed.
E)   only things that are broken can be fixed.F) B) and C)
G) A) and B)

Question 11

The bulk of goods and services consumed in the United States is produced by

Accepted Answer

A)   foreign countries.
B)   the U.S. government.
C)   households.
D)   business firms.
E)   the stock market.F) B) and C)
G) A) and D)

Question 12

A business that requires a new agreement whenever an owner leaves or a new owner arrives is a

Accepted Answer

A)   firm.
B)   corporation.
C)   partnership.
D)   foundation.
E)   proprietorship.F) None of the above
G) D) and E)

Question 13

The following question are based on the following production function:
 
-In this production function

Accepted Answer

A)   total, average, and marginal products are all declining.
B)   total and average products are rising.
C)   total, average, and marginal products are all rising.
D)   total product is rising, while average and marginal products are declining.
E)   total product is rising, but the behavior of the average and marginal products cannot be determined.F) All of the above
G) B) and D)

Question 14

The law of diminishing marginal returns CANNOT predict the effect of an additional unit of input when

Accepted Answer

A)   all other inputs are fixed.
B)   it is possible to vary the proportion in which the various inputs are used.
C)   technology is changing.
D)   output rises.
E)   marginal product is falling.F) A) and B)
G) D) and E)

Question 15

A production technique is essentially a

Accepted Answer

A)   level of output.
B)   given combination of inputs.
C)   type of market structure.
D)   form of public regulation.
E)   length of time.F) C) and D)
G) C) and E)

Question 16

The standard assumption in economic analysis is that firms attempt to maximize

Accepted Answer

A)   sales.
B)   profits.
C)   costs.
D)   reliability.
E)   production.F) B) and E)
G) A) and B)

Question 17

A production function

Accepted Answer

A)   shows the functions of production such as income, welfare, and employment.
B)   reflects the technological constraints with which a firm must reckon.
C)   shows the output necessary to produce one unit of input.
D)   is a theoretical concept having no relevance to real-world production.
E)   quantifies the amounts of variable inputs needed to produce fixed inputs.F) A) and B)
G) All of the above

Question 18

If the marginal products of the first five units of labor are 120,105,85,60,and 30,respectively,the average product of five units of labor is ________ units of output.

Accepted Answer

A)   6
B)   30
C)   80
D)   90
E)   150F) A) and B)
G) All of the above

Question 19

Any production function embodies a

Accepted Answer

A)   predetermined rate of return.
B)   statement of the firm's goals and objectives.
C)   rate of depreciation.
D)   given state of technology.
E)   financial commitment to common stockholders.F) B) and E)
G) C) and D)

Question 20

The distinction between the short run and the long run is

Accepted Answer

A)   strictly a calendar matter; the long run is over 10 years.
B)   dependent solely on the time period necessary to vary all relevant inputs.
C)   that in the short run neither input nor output can be changed.
D)   that the law of diminishing marginal returns is operational in the long run but not in the short run.
E)   operationally meaningless since the firm is continually planning for the future in the short run.F) A) and B)
G) B) and D)

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

An advantage of proprietorship is that the owner is faced with

Correct Answer
verified

A production function

Correct Answer
verified

A business that requires a new agreement whenever an owner leaves or a new owner arrives is a

Correct Answer
verified

If the ratio of the marginal product of labor to the marginal product of land is 1:3,a firm making an optimal input combination should

Correct Answer
verified

The distinction between the short run and the long run is

Correct Answer
verified

The use of computerized photo composition methods allowed the Asbury Park Press to

Correct Answer
verified

A legal form of business organization that is easily established and yet has improved opportunities for greater financial resources and specialized know-how without being subject to double taxation of its income is the

Correct Answer
verified

The following question are based on the following information for an auto repair shop specializing in muffler installation. -The marginal product of the fourth worker is

Correct Answer
verified

An input whose quantity is unaffected as output rises or falls is a(n) ________ input.

Correct Answer
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In the short run

Correct Answer
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The bulk of goods and services consumed in the United States is produced by

Correct Answer
verified

A production technique is essentially a

Correct Answer
verified

Any production function embodies a

Correct Answer
verified

The standard assumption in economic analysis is that firms attempt to maximize

Correct Answer
verified

The law of diminishing marginal returns CANNOT predict the effect of an additional unit of input when

Correct Answer
verified

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: -The number of appliances sold per week when four salespersons are employed is

Correct Answer
verified

The following question are based on the following production function: -In this production function

Correct Answer
verified

If the marginal products of the first five units of labor are 120,105,85,60,and 30,respectively,the average product of five units of labor is ________ units of output.

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

An advantage of proprietorship is that the owner is faced with

Correct AnswerverifiedShow Answer

A production function

Correct AnswerverifiedShow Answer

A business that requires a new agreement whenever an owner leaves or a new owner arrives is a

Correct AnswerverifiedShow Answer

If the ratio of the marginal product of labor to the marginal product of land is 1:3,a firm making an optimal input combination should

Correct AnswerverifiedShow Answer

The distinction between the short run and the long run is

Correct AnswerverifiedShow Answer

The use of computerized photo composition methods allowed the Asbury Park Press to

Correct AnswerverifiedShow Answer

A legal form of business organization that is easily established and yet has improved opportunities for greater financial resources and specialized know-how without being subject to double taxation of its income is the

Correct AnswerverifiedShow Answer

The following question are based on the following information for an auto repair shop specializing in muffler installation. -The marginal product of the fourth worker is

Correct AnswerverifiedShow Answer

An input whose quantity is unaffected as output rises or falls is a(n) ________ input.

Correct AnswerverifiedShow Answer

In the short run

Correct AnswerverifiedShow Answer

The bulk of goods and services consumed in the United States is produced by

Correct AnswerverifiedShow Answer

A production technique is essentially a

Correct AnswerverifiedShow Answer

Any production function embodies a

Correct AnswerverifiedShow Answer

The standard assumption in economic analysis is that firms attempt to maximize

Correct AnswerverifiedShow Answer

The law of diminishing marginal returns CANNOT predict the effect of an additional unit of input when

Correct AnswerverifiedShow Answer

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: -The number of appliances sold per week when four salespersons are employed is

Correct AnswerverifiedShow Answer

The following question are based on the following production function: -In this production function

Correct AnswerverifiedShow Answer

If the marginal products of the first five units of labor are 120,105,85,60,and 30,respectively,the average product of five units of labor is ________ units of output.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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