An institution that hires productive resources and then organizes those resources to produce and sell goods and services is a ___________.

firm
profitable firm
wholesale firm
retail firm

Kay's Keyboarding company buys a new computer which Kay uses for word-processing. Kay pays _______ for its use.

an implicit rental rate
an amount equal to the present value
an amount equal to the purchase price
an explicit rental rate

An employee who does not work diligently unless constantly supervised and believes that he is underpaid is an example of __________________.

the principal-agent problem
the law of diminishing returns
marginal returns to work
inefficient hiring practices

Any method of producing a good or service is ________. It _______ the maximum profit that a firm can make.

a technology; limits
an information constraint; always increases
an information constraint; limits
a technology; always increases

When commands pass downward through a managerial hierarchy, _______ system exists.

a command
a free market
a communist
an incentive

An organization that has a large sales force most likely organizes production with ____________________.

an incentive system
threats of unemployment if quotas are not met
a market system
a command system

Owners of _______ have limited liability.

corporations
partnerships, proprietorships, and corporations
partnerships and corporations
proprietorships and partnerships

In perfect competition, there are _____________________.

many firms, each selling an identical product
many firms selling products for which no good substitutes exist
a small number of firms, each selling an identical product
many firms selling similar but slightly different products

The four-firm concentration ratio is the percentage of the _______ accounted for by _______ in an industry.

value of sales; the four largest firms
economic profit; any four firms
normal profit; any four firms
economic profit; the four largest firms

Economies of scale exist when the _____________ of a unit of a good _________________.

cost; falls as its output rate increases
price; rises as its output rate increases
cost; rises as its input rate increases
price; falls as its input rate decreases

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