NEW
Font size
WorksheetsMicro Econs_Chap 10
Total questions: 15
Worksheet time: 8mins
The most important goal of the firm is to
maximize its revenues.
maximize its sales volume.
minimize its costs.
maximize its profits.
Firms that survive in the long run are usually those that
earn the largest possible profit.
use more capital rather than more labor.
remain small.
become as large as possible.
A firm's opportunity costs ________.
equal the costs of resources it buys from others in the market
include the cost of using resources owned by the firm
increase when economies of scope exist
do not include any opportunity costs for resources the owner suppliers
If instead of working on his own as a consultant making $25,000, Joe takes a job at a bank, the $25,000 is
an opportunity cost.
a depreciation.
a loss.
an accounting profit.
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
$5,000.
$40,000.
$45,000
$85,000.
The implicit rental rate for capital includes the
total value of a piece of capital equipment.
interest income forgone by purchasing the piece of capital equipment.
firm's normal profit.
amount paid for the use of a piece of capital equipment owned by someone else.
________ is the change in market value of capital over a given period.
Accounting depreciation
Implicit rental rate
Economic depreciation
Accounting implicit rental cost
A normal profit is
the revenue remaining after all opportunity costs have been paid.
the profit a firm makes each year.
the average return for entrepreneurship.
part of the implicit rental rate of capital.
A firm has achieved technological efficiency whenever it has
fully depreciated all its assets.
produced the given output using the fewest inputs.
produced the given output at the lowest cost.
all of the above.
When a firm links its employees' compensation to the performance of the firm, the firm is using
an incentive system.
a command system.
a cooperative system.
an agency system.
A command system is a
method of organizing production that uses a market-like mechanism inside the firm.
method of organizing production that uses a managerial hierarchy.
set of rules that induce an agent to act in the best interest of a principal.
method of production that implements an assembly-line process.
A large part of the principal-agent problem stems from the desire of
agents to work hard.
agents to avoid working.
principals to work hard.
principals to avoid working.
A principal-agent problem occurs when hiring workers to work for a firm because
workers' interests are not always the same as the interests of the owners of the firm.
workers do not respond to incentives.
the owners of a firm are always in a position to exploit the workers.
workers' interests are not important in the managerial decisions of the firm.
Mr. Adams owns a textile business. In order to deal with the principal-agent problem, Mr. Adams might offer his employees
incentive pay.
long-term contracts.
part- ownership.
all of the above.
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 incentive pay.
TRUE
FALSE
