Economics 5315

Which of the following correctly differentiates between price-setting and price-taking firms? Multiple choice question. A price-taking firm can set the price of its product, while a price-setting firm has to accept the market price. A price-taking firm faces a horizontal demand curve at the price determined by market forces, while a price-setting firm can raise its price without losing all its sales due to product differentiation or limited competition. A price-taking firm can raise its price without losing sales, while a price-setting firm must accept the market price. Both price-taking and price-setting firms can manipulate prices according to their wishes and market position.

A price-taking firm faces a horizontal demand curve at the price determined by market forces, while a price-setting firm can raise its price without losing all its sales due to product differentiation or limited competition.

How does accounting profit differ from economic profit? Multiple choice question. Accounting profit includes implicit costs, while economic profit does not. Accounting profit does not consider total revenue, while economic profit does. Accounting profit is the difference between total revenue and explicit costs, whereas economic profit subtracts both explicit and implicit costs from total revenue. Accounting profit is always greater than economic profit.

Accounting profit is the difference between total revenue and explicit costs, whereas economic profit subtracts both explicit and implicit costs from total revenue.

Using economic theory can be compared to using a road map because: Both economic theory and a road map require a deep understanding of geography. Both economic theory and a road map abstract from nonessential items and focus on what is relevant for the task at hand. Both economic theory and a road map are outdated and not used anymore. Both economic theory and a road map are always 100% accurate.

Both economic theory and a road map abstract from nonessential items and focus on what is relevant for the task at hand.

Which of the following is NOT a type of market structure recognized by economists? Multiple choice question. Duopoly Monopolistic competition Monopoly Perfect competition

Duopoly

Which of the following best describes the types of inputs or resources utilized by businesses? Multiple choice question. Only owner-supplied resources, such as money provided by the business owners and their time. Only market-supplied resources, such as rented equipment and hired labor. Resources are neither market-supplied nor owner-supplied, but are always produced internally. Either market-supplied resources like hired labor and rented equipment, or owner-supplied resources such as owner's time and money.

Either market-supplied resources like hired labor and rented equipment, or owner-supplied resources such as owner's time and money.

True or false: Maximizing profit in each period will always result in the maximum value of the firm. True false question. True False

False

True or false: Maximizing profit in each period will always result in the maximum value of the firm. True false question.True False

False

Strategic decisions differ from routine business practices and tactics because unlike the latter, strategic decisions do not accept the existing conditions of competition as Blank______, but rather attempt to Blank______ or alter the circumstances under which a firm competes with its rivals.

Fixed, Shape

______ focuses on the behavior and structure of firms and industries.

Industrial organization

______ focuses on the behavior and structure of firms and industries. Multiple choice question. Market theory Macroeconomics Industrial organization correct Microeconomics

Industrial organization

Why is microeconomics essential for a firm's management team when making operating decisions? It gives insights into the macroeconomic factors like inflation and economic growth that directly affect the business. It helps to understand governmental economic policies and how they affect the firm. It provides understanding and tools for making decisions about business practices to maximize profits. It provides insights into global economic trends that directly impact the business.

It provides understanding and tools for making decisions about business practices to maximize profits.

Why is microeconomics essential for a firm's management team when making operating decisions? Multiple choice question. It provides insights into global economic trends that directly impact the business. It gives insights into the macroeconomic factors like inflation and economic growth that directly affect the business. It helps to understand governmental economic policies and how they affect the firm. It provides understanding and tools for making decisions about business practices to maximize profits.

It provides understanding and tools for making decisions about business practices to maximize profits.

What role does industrial organization, a specialized branch of microeconomics, play in business analysis? Multiple choice question. It focuses primarily on individual consumers and their consumption behaviors. It provides an overall view of the economy, explaining macroeconomic trends and policies. It serves as a complementary tool, offering specialized insights for business analysis.

It serves as a complementary tool, offering specialized insights for business analysis.

______ do not accept the existing business conditions as fixed, but seek to alter the circumstances of competition. Multiple choice question. Strategic decisions Business tactics Profit maximizations

Strategic decisions

Microeconomics is primarily concerned with the study and analysis of: Global economic trends and international trade. The economic policies of the government and central banks. The economy as a whole, including inflation, unemployment, and economic growth. The behavior of individual segments of the economy, such as consumers, workers, firms, industries, and markets.

The behavior of individual segments of the economy, such as consumers, workers, firms, industries, and markets.

Which of the following are the features characterizing market structures? Multiple select question. The degree of product differentiation. The corporate structure. The number and size of firms. The level of capital investment in research and development. The likelihood of new firms entering a market.

The degree of product differentiation. The number and size of firms. The likelihood of new firms entering a market.

What does the term 'globalization of markets' generally refer to? Multiple choice question. The isolation of economic markets due to geographical and political barriers. The increasing economic integration of markets located in nations throughout the world, where goods, services, and resources flow freely across national borders. The introduction of new technology to emerging markets around the world. The process of nationalizing industries and markets in a global context.

The increasing economic integration of markets located in nations throughout the world, where goods, services, and resources flow freely across national borders.

Which of the following is NOT one of the features characterizing market structures? Multiple choice question. The level of capital investment in research and development. The number and size of firms. The likelihood of new firms entering a market. The degree of product differentiation.

The level of capital investment in research and development.

Which of the following conditions must be present for a principal-agent problem to exist? Multiple choice question. The manager and the owner must have the same objectives and the owner must find it too costly to monitor the manager's decisions. The manager's objectives must align with those of the owner and the owner should be able to easily monitor the manager's decisions. The manager's objectives must be different from those of the owner and the owner must find it too costly or even impossible to monitor the manager's decisions. The manager and the owner must have different objectives and the owner must be able to monitor the manager's decisions without any costs.

The manager's objectives must be different from those of the owner and the owner must find it too costly or even impossible to monitor the manager's decisions.

Which of the following conditions must be present for a principal-agent problem to exist? Multiple choice question. The manager's objectives must be different from those of the owner and the owner must find it too costly or even impossible to monitor the manager's decisions. The manager's objectives must align with those of the owner and the owner should be able to easily monitor the manager's decisions. The manager and the owner must have different objectives and the owner must be able to monitor the manager's decisions without any costs. The manager and the owner must have the same objectives and the owner must find it too costly to monitor the manager's decisions.

The manager's objectives must be different from those of the owner and the owner must find it too costly or even impossible to monitor the manager's decisions.

What does the economic cost of using resources to produce a good or service represent? Multiple select question. The opportunity cost to the owners of the firm using those resources. The monetary cost of purchasing the resources. The cost of transforming the resources into a finished product. The cost of transporting the resources to the firm's location.

The opportunity cost to the owners of the firm using those resources.

In the context of business economics, explicit costs refer to: Multiple choice question. The time and labor services provided by the firm's owners. The costs associated with resources produced and used internally by the business. The out-of-pocket monetary payments made to the owners of market-supplied resources. The physical quantity of market-supplied resources used.

The out-of-pocket monetary payments made to the owners of market-supplied resources.

In the context of business economics, explicit costs refer to: Multiple choice question. The time and labor services provided by the firm's owners. The physical quantity of market-supplied resources used. The costs associated with resources produced and used internally by the business. The out-of-pocket monetary payments made to the owners of market-supplied resources.

The out-of-pocket monetary payments made to the owners of market-supplied resources.

The value of a firm is determined by: Multiple choice question. The present value of the expected future economic profits, taking into account a risk-adjusted discount rate. The total revenue of the firm. The sum of all past economic profits.

The present value of the expected future economic profits, taking into account a risk-adjusted discount rate.

The value of a firm is determined by: Multiple choice question. The sum of all past economic profits. The present value of the expected future economic profits, taking into account a risk-adjusted discount rate. The total revenue of the firm.

The present value of the expected future economic profits, taking into account a risk-adjusted discount rate.

Which of the following statements correctly interprets the discussion on the principal-agent problem? Multiple choice question. The principal-agent problem implies that managers always disregard the expectations of the owners or shareholders. Owners or shareholders of corporations are completely helpless when faced with managers who aren't meeting expectations. The principal-agent problem occurs only when managers consistently meet the expectations of the owners or shareholders. The principal-agent problem does not imply that owners or shareholders are completely helpless when managers aren't meeting their expectations.

The principal-agent problem does not imply that owners or shareholders are completely helpless when managers aren't meeting their expectations.

The total economic cost of resources used in production is determined by: Multiple choice question. The sum of the opportunity costs of market-supplied resources and owner-supplied resources. The total of fixed costs associated with production. The physical quantity of resources used in production. The market price of all resources used.

The sum of the opportunity costs of market-supplied resources and owner-supplied resources.

Identify the reasons why markets exist. Select all that apply: Multiple select question. To facilitate the exchange of goods, services, and resources. To provide a setting in which supply and demand can interact to determine price. To allow competition, which can lead to improved products and services. To consolidate all the world's wealth into a single location.

To facilitate the exchange of goods, services, and resources. To allow competition, which can lead to improved products and services.

dentify the reasons why markets exist. Select all that apply: Multiple select question. To facilitate the exchange of goods, services, and resources. To allow competition, which can lead to improved products and services. To consolidate all the world's wealth into a single location. To provide a setting in which supply and demand can interact to determine price.

To facilitate the exchange of goods, services, and resources. To allow competition, which can lead to improved products and services.

Using economic theory requires that one Blank______ nonessential items and Blank______ what is relevant.

abstract from; concentrate on

Business owners should maximize economic profits because Multiple choice question. accounting profit ignores explicit cost. economic profit ignores implicit cost. accounting profit ignores implicit cost. economic profit includes all revenues.

accounting profit ignores implicit cost.

Businesses utilize Multiple choice question. only resources they possess. both market-supplied resources and owner-supplied resources. only resources they must purchase. resources provided voluntarily.

both market-supplied resources and owner-supplied resources.

Microeconomics studies consumers unemployment workers industries government spending inflation firms

consumers, workers, industries, and firm

Business owners should seek to maximize Multiple choice question. output. total revenue. economic profit. accounting profit.

economic profit.

Examples of ways principals can control agent behavior include

linking directors' compensation to the value of the firm tying managers' compensation to fulfilling the goals of shareholders

A(n) Blank______ is any arrangement through which buyers and sellers exchange final goods or services, resources used for production or anything of value. Multiple choice question. store market auction contract

market

What is given up to use a resource in a business is called Blank______. Multiple choice question. opportunity cost wages economic cost resource cost

opportunity cost

A Blank______ firm has many competitors, while a Blank______ firm has a product that is different from other products. Multiple choice question. unprofitable; profitable price-taking; price-setting price-setting; price-taking profitable; unprofitable

price-taking; price-setting

Because businesses seek to maximize Blank______, understanding Blank______ is helpful. Multiple choice question. profits; microeconomics stock prices; macroeconomics salaries; microeconomics market share; microeconomics

profits; microeconomics

Globalization of markets implies Multiple choice question. firms will have higher costs. firms will sell fewer products. the integration of markets around the world. firms will have less competition.

the integration of markets around the world.

The value of the firm is calculated as Multiple choice question. the value of all assets. the present value of future economic profits. the sum of all expected future profits. the present value of future accounting profits.

the present value of future economic profits.

Total economic costs is Blank______ owner-supplied resources and market-supplied resources. Multiple choice question. the sum of the wages paid to both the sum of the opportunity costs of both the difference between the costs of

the sum of the opportunity costs of both

Markets exist Multiple choice question. to benefit sellers. to benefit buyers. to reduce transaction costs. to reduce efficiency.

to reduce transaction costs.

Markets exist Multiple choice question. to benefit sellers. to reduce efficiency. to benefit buyers. to reduce transaction costs.

to reduce transaction costs.

Accounting profit is Multiple choice question. total revenue minus opportunity cost total revenue minus implicit cost total revenue minus explicit cost total revenue minus total economic cost

total revenue minus explicit cost