Chapter 7_2: Organizing Production

Chapter 7_2: Organizing Production; Time: 40 phút

Question 1: Among the opportunity costs of a firm are all of the following EXCEPT
a. the owner's forgone wage.
b. explicit costs of inputs such as labor.
c. economic profits.
d. normal profits.

Question 2: Ed is a freelance writer who could work for a newspaper at $25,000 a year but instead works for himself for $41,000 a year. His only business expenses are $1,000 for writing materials and $12,000 for rent. Ed's normal profit is $1,000. Ed's economic profit from working as a freelance writer is
a. 25000
b. 2000
c. 1000
d. 15000

Question 3: Which of the following constrain (that is, limit) a firm's profits? I. its technology; II. its information; III. the market in which it operates
a. I, II and III
b. I only
c. II and III
d. I and II

Question 4: A firm's market constraints include the conditions under which it can
a. buy its inputs and sell its outputs.
b. convert inputs into outputs.
c. issue stock.
d. produce the inputs to production.

Question 5: When Acme Inc. produces a certain amount of output by using the least amount of inputs, Acme Inc. definitely
a. maximizes profits.
b. achieves technological efficiency.
c. achieves economic efficiency.
d. minimizes labor costs.

Question 6: When Acme, Inc. produces a certain amount of output at least cost, Acme, Inc. definitely
a. uses more capital than labor.
b. earns a normal profit.
c. achieves economic efficiency.
d. None of the above is true.

Question 7: A firm that is maximizing its profits
a. is technologically efficient but might not be economically efficient.
b. might be neither economically efficient nor technologically efficient.
c. is economically efficient but might not be technologically efficient.
d. is economically efficient and technologically efficient.

Question 8: Profits can be maximized only by firms that achieve
a. technological efficiency but not necessarily those that achieve economic efficiency.
b. technological efficiency and economic efficiency.
c. neither economic nor technological efficiency.
d. None of the above answers are correct because the achievement of technological efficiency and economic efficiency has nothing to do with profit maximization.

Question 9: A firm that is technologically efficient
a. is not always economically efficient, but a firm that is economically efficient must always be technologically efficient.
b. must be economically efficient, and a firm that is economically efficient must always be technologically efficient.
c. must be economically efficient, but a firm that is economically efficient is not always technologically efficient.
d. is not always economically efficient, and a firm that is economically efficient is not always technologically efficient.

Question 10: A method that is technologically inefficient
a. results from failure to calculate the ratio of the cost of labor to the cost of capital.
b. can never be economically efficient.
c. might or might not be economically efficient.
d. means that it uses too much labor and too little capital.

Question 11: Technological efficiency occurs when the firm produces a given output
a. by using the maximum amount of inputs.
b. at the greatest cost.
c. at the least cost.
d. by using the least amount of inputs.

Question 12: A firm uses labor and capital. To tell if the firm is technologically efficient, you
a. do not need to know the cost of labor or the cost of capital.
b. need to know the cost of capital but not the cost of labor.
c. need to know the cost of labor but not the cost of capital.
d. need to know the cost of labor and the cost of capital.

Question 13: Firm A can produce a unit of output with 10 hours of labor and 5 units of material. Firm B can produce a unit of output with 5 hours of labor and 10 units of material. Firm C can produce a unit of output with 10 hours of labor and 10 units of material. If the prices of labor and material are $10 per hour and $5 per unit, respectively, which of these firms is the most technologically efficient?
a. firm A only
b. firm B only
c. firm C only
d. Firms A and B could both be technologically efficient.

Question 14: The accountant for Muzhi's Sushi claims that Muzhi has accomplished “technological efficiency”. This means that Muhzi's Sushi
a. produces a given output using the least inputs.
b. has a normal profit greater than a economic profit.
c. produces a given output at the lowest cost.
d. has an economic profit greater than a normal profit.

Question 15: Economic efficiency occurs when the firm produces a given output
a. by using the least amount of inputs.
b. at the greatest cost.
c. by using the maximum amount of inputs.
d. at the least cost.

Question 16: The accountant for Muzhi's Sushi claims that Muzhi has accomplished “economic efficiency”. This means that Muhzi's Sushi
a. produces a given output using the least inputs.
b. has a normal profit greater than a economic profit.
c. has an economic profit greater than a normal profit.
d. produces a given output at the lowest cost.

Question 17: Firm A can produce a unit of output with 10 hours of labor and 5 units of material. Firm B can produce a unit of output with 5 hours of labor and 10 units of material. Firm C can produce a unit of output with 10 hours of labor and 10 units of material. If the prices of labor and material are $10 per hour and $5 per unit, respectively, which of these firms is economically efficient?
a. firm A only
b. firm B only
c. firm C only
d. Firms A and B could both be economically efficient.

Question 18 - 21

Question 18: In the above table, the technique that is not technologically efficient is
a. A.
b. B.
c. C.
d. D.

Question 19: In the above table, the technique that is never economically efficient is
a. A.
b. B.
c. C.
d. D.

Question 20: Using the data in the above table, if the price of an hour of labor is $10 and the price of a unit of capital is $20, then the most economically efficient technique for producing 100 sweaters is
a. A.
b. B.
c. C.
d. D.

Question 21: Using the data in the above table, if the price of an hour of labor is $20 and the price of a unit of capital is $10, then the most economically efficient technique for producing 100 sweaters is
a. A.
b. B.
c. C.
d. D.

Question 22: Firms organize production by using a mix of
a. command and market systems.
b. command and incentive systems.
c. market and agency systems.
d. incentive and agency systems.

Question 23: In order to maximize profits, firms organize their production using
a. a combination of command and incentive systems.
b. only a command system.
c. only an incentive system.
d. neither a command nor an incentive system.

Question 24: A golf club manufacturer pays its telemarketers based on the number of golf clubs they sell. This firm
a. organizes production based on a command system.
b. does not have any implicit costs.
c. organizes production based on an incentive system.
d. does not have explicit costs.

Question 25: Gilda's Art Gallery rewards its employees with stock each year the gallery makes profits. This stock allows the employees to own part of the gallery. This practice is known as
a. minimizing explicit costs.
b. minimizing implicit costs.
c. the principle-agent problem.
d. incentive pay.

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