The Firm Quiz

Which of the following statements is MOST accurate: The bulk of the nation’s productive capacity is controlled by...

• just a few hundred of our largest firms.
• proprietorships.
• the nation’s four million agricultural firms.
• businesses in wholesale and retail trade.

The assumption that firms generally attempt to maximize profits is...

• wholly accurate, even though business managers won’t admit it.
• pretty much true, though it’s an oversimplification.
• true of large corporations, but often untrue about smaller firms.
• often false in real life.

In economic terms, current technology sets limits on the...

• total possible production achievable in a given time period.
• number of inputs that can be used for a given product.
• number of firms that can compete in one market.
• ratio of fixed inputs to variable inputs.

Studebaker Automobiles manufactured three styles of passenger cars and two models of trucks. During a given month in the life of Studebaker, which of the following would MOST LIKELY be classified as a fixed input?

• labor
• paint
• tooling equipment
• the two models of trucks

Whether an input is considered variable or fixed depends MAINLY on...

• its cost.
• its relative contribution to total production.
• the length of time under consideration.
• the nature of the firm using the input.

If the marginal product of a man-year of labor is 50 units of output, and the price of labor is $2,500 per man-year, then the marginal product of a dollar’s worth of labor is...

• $50.
• $500.
• 2 units of output.
• .02 units of output.