Chapter 7_1: Organizing Production

Chapter 7_1: Organizing Production; Time: 40 phút

Question 1: The most important goal of the firm is to
a. maximize its sales volume.
b. minimize its costs.
c. maximize its revenues.
d. maximize its profits.

Question 2: Profit maximization
a. causes a firm to become as large as possible.
b. causes a firm to become the target of a takeover.
c. increases the likelihood that a firm will survive.
d. causes a firm to remain small in the long run.

Question 3: Firms use incentives to pursue their most fundamental goal, which is to maximize
a. sales revenue.
b. profits.
c. worker pay.
d. worker satisfaction.

Question 4: The fundamental objective of a firm is
a. increasing market share.
b. making a quality product.
c. achieving employee satisfaction.
d. maximizing profits.

Question 5: Firms that survive in the long run are usually those that
a. become as large as possible.
b. use more capital rather than more labor.
c. remain small.
d. strive for the largest possible profit.

Question 6: To make the best predictions about the decisions made by a firm, we should take account of a firm's
a. implicit costs.
b. accounting costs.
c. explicit costs.
d. opportunity costs.

Question 7: Typically a firm's opportunity costs are
a. only its implicit costs.
b. the sum of its explicit costs and its implicit costs.
c. neither its explicit costs nor its implicit costs.
d. only its explicit costs.

Question 8: Opportunity costs include
a. both implicit costs and explicit costs.
b. neither explicit costs nor implicit costs.
c. implicit costs but not explicit costs.
d. explicit costs but not implicit costs.

Question 9: Which of the following are part of a firm's opportunity costs? 
I. explicit costs; II. implicit costs; III. economic depreciation; IV. wages
a. I and II
b. II and III
c. I and IV
d. I, II, III and IV

Question 10: A firm's opportunity cost of producing a good equals the
a. explicit cost.
b. implicit cost.
c. explicit cost plus the implicit cost.
d. explicit cost minus the implicit cost.

Question 11: An electrician quits her current job, which pays $40,000 per year. She can take a job with another firm for $45,000 per year or work for herself. The opportunity cost of working for herself is
a. 45000
b. 85000
c. 5000
d. 40000

Question 12: The costs of a firm that are paid directly in money are called its
a. implicit costs.
b. explicit costs.
c. money opportunity costs.
d. alternative costs.

Question 13: Which of the following is part of a firm's explicit costs? 
I. wages; II. utility costs; III. interest on a bank loan; IV. interest forgone on funds used to buy capital equipment
a. I, II and III
b. III and IV
c. I and II
d. I, III and IV

Question 14: Explicit costs are ________ and implicit costs are ________.
a. not measurable; measurable
b. paid in money; incurred when a firm gives up an alternate action
c. paid in money; paid in interest costs
d. used to maximize profits; used to minimize costs

Question 15: An implicit cost is an opportunity cost that
a. is actually part of the firm's normal profit.
b. is measured by the amount of cash the firm actually pays out.
c. is adjusted for the rate of inflation.
d. requires no actual payment of cash.

Question 16: Most typically, a firm incurs an implicit cost when it
a. uses its capital equipment.
b. uses labor.
c. pays for its utilities, such as electric power.
d. pays interest on a loan to a bank.

Question 17: An implicit rental rate is
a. an opportunity cost.
b. a cost that is irrelevant to the business.
c. an accounting cost.
d. an explicit cost.

Question 18: The implicit rental rate is the
a. amount paid for the use of a piece of capital equipment owned by someone else.
b. rental income forgone by not renting a piece of capital equipment to someone else.
c. depreciation on a piece of capital equipment.
d. total value of a piece of capital equipment.

Question 19: Over a given period, economic depreciation is the change in capital equipment's
a. market value.
b. rate of return.
c. output.
d. cost of maintenance.

Question 20: The difference between the market price of a new car used by a firm and the market price of the same car one year later is known as
a. economic deterioration.
b. economic depreciation.
c. physical deterioration.
d. physical depreciation.

Question 21: ________ is the change in market value of capital over a given period.
a. Implicit rental rate
b. Accounting implicit rental cost
c. Economic depreciation
d. Accounting depreciation

Question 22: The average return for supplying entrepreneurial ability is the firm's
a. normal profit.
b. explicit profit.
c. accounting profit.
d. actual profit.

Question 23: The return that an entrepreneur can expect to earn, on average, is called
a. accounting profit.
b. profit.
c. normal profit.
d. economic profit.

Question 24: Economic profit is the difference between total revenue and
a. opportunity costs of production.
b. explicit costs of production.
c. interest costs of production.
d. implicit costs of production.

Question 25: A firm's economic profit is its total revenue minus its
a. normal profit.
b. implicit costs.
c. opportunity costs.
d. explicit costs.


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