Ch9Practice_Test_Questions - 9 C h a p t e r ORGANIZING...

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9 PRODUCTION The Firm and Its Economic  Problem Topic: The Firm's Goal Skill: Recognition 1) The most important goal of the firm is to A) maximize its revenues. B) maximize its sales volume. C) maximize its profits. D) minimize its costs. Answer: C Topic: The Firm's Goal Skill: Recognition 2) Profit maximization A) causes a firm to become as large as possible. B) causes a firm to remain small in the long run. C) increases the likelihood that a firm will sur- vive. D) causes a firm to become the target of a takeover. Answer: C Topic: The Firm's Goal Skill: Recognition 3) Firms use incentives to pursue their most fun- damental goal, which is to maximize A) profits. B) sales revenue. C) worker satisfaction. D) worker pay. Answer: A Topic: The Firm's Goal Skill: Recognition 4) The fundamental objective of a firm is A) making a quality product. B) increasing market share. C) achieving employee satisfaction. D) maximizing profits. Answer: D Topic: The Firm's Goal Skill: Recognition 5) Firms that survive in the long run are usually those that A) become as large as possible. B) remain small. C) use more capital rather than more labor. D) strive for the largest possible profit. Answer: D Topic: Opportunity Cost Skill: Recognition 6) To make the best predictions about the de- cisions made by a firm, we should take account of a firm’s A) accounting costs. B) explicit costs. C) opportunity costs. D) implicit costs. Answer: C Topic: Opportunity Cost Skill: Recognition 7) Typically a firm’s opportunity costs are A) only its explicit costs. B) only its implicit costs. C) the sum of its explicit costs and its implicit costs. D) neither its explicit costs nor its implicit costs. Answer: C 57  C h a p t e r
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5 8 C H A P T E R   9 Topic: Opportunity Cost Skill: Recognition 8) Opportunity costs include A) both implicit costs and explicit costs. B) implicit costs but not explicit costs. C) explicit costs but not implicit costs. D) neither explicit costs nor implicit costs. Answer: A Topic: Opportunity Cost Skill: Conceptual 9) Which of the following are part of a firm’s op- portunity costs? I. explicit costs II. implicit costs III. economic depreciation IV. wages A) I and II. B) I and IV. C) II and III. D) I, II, III and IV. Answer: D Topic: Opportunity Cost Skill: Recognition 10) A firm’s opportunity cost of producing a good equals the A) explicit cost. B) implicit cost. C) explicit cost minus the implicit cost. D) explicit cost plus the implicit cost. Answer: D Topic: Opportunity Cost Skill: Analytical 11) An electrician quits her current job, which pays $40,000 per year. She can take a job with an- other firm for $45,000 per year or work for her- self. The opportunity cost of working for her- self is A) $5,000. B) $40,000. C) $45,000. D) $85,000. Answer: C Topic: Explicit Costs Skill: Recognition 12) The costs of a firm that are paid directly in money are called its A) explicit costs.
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This note was uploaded on 06/15/2011 for the course ECON 221 taught by Professor Gordanier during the Spring '08 term at South Carolina.

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Ch9Practice_Test_Questions - 9 C h a p t e r ORGANIZING...

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