A single proprietorship is a form of business organization which correct answers has one owner-manager who is personally responsible for the firm's actions and debts
A firm that has two or more owners who share decision-making power as well as the firm's
profits is called correct answers a part...
ECON 208 Chapter 7, ECON 208 Chapter 8, ECON 208 Chapter
9, ECON 208 Chapter 10 || QUESTIONS AND ANSWERS
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A single proprietorship is a form of business organization which correct answers has one
owner-manager who is personally responsible for the firm's actions and debts
A firm that has two or more owners who share decision-making power as well as the firm's
profits is called correct answers a partnership
A limited partnership differs from an ordinary partnership by correct answers including some
partners whose liability is restricted to the amount that they invested in the
firm
A firm can raise financial capital without incurring debt by correct answers issuing new
shares
Churches, the YMCA, the Salvation Army, and the Nature Conservancy are examples of
correct answers non-profit organizations
An example of "real" capital is correct answers a firm's computer systems
Real capital includes correct answers a firm's physical assets.
Undistributed profits of a firm are correct answers profits that are available to be reinvested
in the firm's operations.
When a corporation issues a bond correct answers it is making a promise to pay interest each
year and to repay the principal at a stated time in
the future
An example of debt financing for any form of business organization is correct answers
borrowing from a bank
It is assumed in standard economic theory that a firm makes decisions in an effort to correct
answers maximize its profits
"An objective of firms is to maximize profits." This statement correct answers is an
assumption used by economists to predict the behaviour of firms
The theory of the firm is based on the following two key assumptions: correct answers Firms
seek to maximize profits, and the firm is a single, consistent decision-making unit
The relationship between factors of production used in the production process and the
resulting output is called a(n) correct answers production function
Economists use the notation Q = f(L,K) to describe correct answers the technological
relationship between the inputs that a firm uses and the outputs that it
produces
,The equation Q = 0.5KL - (0.4)L + 2L2 is an example of correct answers a production
function
Suppose a production function for a firm takes the following algebraic form: Q = 2KL -
(0.2)L2, where Q is the output of sweaters per day. Now suppose the firm is operating with 8
units of capital (K=8) and 10 units of labour (L=10). What is the output of sweaters? correct
answers 140 sweaters per day
Suppose a production function for a firm takes the following algebraic form: Q = (0.5)KL -
40L, where Q is the output of paintbrushes per week. Now suppose the firm is operating with
100 units of capital (K = 100) and 30 000 units of labour (L = 30 000). What is the output of
paintbrushes per week? correct answers 300 000
The opportunity cost of any factor of production is correct answers the benefit forgone by not
using it in its best alternative
The opportunity cost to a firm of using an asset is zero if correct answers the asset has no
alternative uses
The opportunity cost of money that a firm's owner has invested in the firm is an example of
correct answers implicit costs
If a firm uses factor inputs that are personally owned by the firm's owner, then economists
refer to the opportunity cost of these inputs as correct answers implicit costs
Economic profits are less than accounting profits because the calculation of economic profit
correct answers includes the implicit charges for the use of capital owned by the firm and for
risk taking
We can predict that resources will move into an industry whenever correct answers economic
profits for firms in that industry are greater than zero
If Michelle used $1000 from her savings account, which was paying 6% interest annually, to
invest in her brother's new sporting-goods store, the opportunity cost of her investment on an
annual basis would be correct answers $60
Consider the production costs for a firm, one of which is the cost of depreciation.
Depreciation costs are correct answers an estimate of the loss of value of the firm's physical
capital
With regard to economic decision making for firms, the short run is correct answers a period
over which the quantity of at least one significant factor of production is fixed
With regard to economic decision making for firms, the long run is a period in which correct
answers all factors of production are variable but technology is fixed
The period of time over which at least one factor of production is fixed is called the correct
answers short run
, The period of time over which the firm can vary any of its inputs for a given production
technology is called the correct answers long run
The period of time over which all factors of production and technology are variable is known
as the correct answers very-long run
Consider a firm in the short run. Average product is at its maximum when correct answers
average product equals marginal product and marginal product is falling
Consider a firm in the short run. If total product is at its maximum, then correct answers
marginal product must be falling and be equal to zero
Consider a firm in the short run. If the AP curve is rising, then the MP curve correct answers
must lie above the average-product curve over this range
Consider a firm in the short run. If AP = MP and both are positive, then total product correct
answers is increasing as extra units of the variable factor are employed
Consider a firm in the short run. When the total-product curve is increasing at an increasing
rate correct answers marginal product is positive and increasing
In the short run, the firm's product curves show correct answers TP is at its maximum when
MP = 0
In the short run, the firm's product curves show correct answers when the MP curve cuts the
AP curve from above, the AP curve begins to fall
Suppose that when a firm hires one additional unit of labour, total product increases from
100 to 110 units of output per month. Marginal product must therefore be correct answers
positive
Suppose NHL hockey player Jarome Iginla is averaging three points per game going into the
last game of the season in which he collects four points, thereby changing his average for the
season. To use an analogy in economics, it could be said that average product increases
correct answers when marginal product exceeds average product
If increasing quantities of a variable factor are applied to a given quantity of fixed factors,
then the law of diminishing returns tells us that correct answers the marginal product and the
average product of the variable factor will eventually decrease
When a firm's total-product curve is increasing at a decreasing rate correct answers marginal
product is positive but declining
Diminishing marginal product of labour is said to exist when there is correct answers a
successively smaller increase in output with each successive unit increase in labour input
The law of diminishing returns states that if increasing quantities of a variable factor are
applied to a given quantity of fixed factors, then correct answers the MP and the AP of the
variable factor will eventually decrease
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