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Focused topic practice

alternative theories of the firm MCQs

Practise focused alternative theories of the firm questions with marked answers for exam preparation and subject revision.

alternative theories of the firm Mcqs

1. A sale maximizing firm will produce where ?
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A. sales revenue is maximized

B. MC = MR

C. AR minus AC is maximized

D. quantity sold is maximized

2. Identify below those who are not stakeholders in a company ?
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A. Customers

B. None of the above

C. Employees

D. Owners

3. The traditional profit-maximizing theory of the firm has been criticized by some economists because ?
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A. firms do not know how to maximize profits.

B. firms have other aims

C. it does not explain monopolistic competition

D. Both the first and second option

4. The merger of fiber producer and a clothing firm would be _____ merger?
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A. conglomerate

B. homogeneous

C. horizontal

D. vertical

5. The divorce of ownership and control tends to occur in ?
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A. sole proprietors

B. public limited companies

C. partnerships

D. monopolies

6. The merger of a clothing firm and a software producer would be a _______ merger?
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A. homogeneous

B. horizontal

C. vertical

D. conglomerate

7. When firm build in Organizational slack they do this in order to ?
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A. cope with unforeseen changes

B. maximize growth.

C. minimize conflict within the firm

D. both options one and three

8. Galbraiths idea that firms are controlled by a technostructure supports _________ theories?
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A. classical economic

B. Williamsons

C. monetarist

D. Marxist

9. Firms that engage in satisficing behavior are likely to be ?
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A. Like other firms in their industry.

B. growth maximisers.

C. leading firms in their industry

D. unlike other firms in their industry

10. If firms satisfice this means that ?
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A. long-run profits are maximized

B. objectives such as profit are not maximized

C. managers need to be paid enough to stop them leaving the company

D. short-run profits are maximized

11. A firm may be unable to maximize profits because it ?
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A. has too much information

B. has too little information

C. The first and third option

D. does not know its MC and MR

12. Behavioral theories of the firm concentrate on the _______ interests of _______?
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A. common; different parts of the firm

B. conflicting; managers

C. common; mangers

D. conflicting; different parts of the firm

13. The divorce of owner ship and control causes a problem usually referred to by economists as ?
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A. moral hazard

B. profit myopia

C. principal-agent problem.

D. merger mania.

14. Williamson suggests that managers might NOT try to achieve ?
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A. a large number of subordinates

B. maximum profits.

C. job security

D. respect of other managers.

15. Fear to take-overs will lead firms to maximize ?
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A. profits.

B. sales revenue

C. managers utility

D. growth.

16. Public limited companies may not maximize their profits because ?
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A. they are afraid of encouraging takeovers.

B. shareholders have little control over managers.

C. shareholders want higher dividends.

D. both the first and third option.

17. Sales maximization is likely to take place in markets that are ?
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A. contestable

B. perfectly competitive

C. export-oriented

D. oligopolistic

18. Which of the following is NOT a common reason for a merger?
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A. To achieve economies of scale

B. To achieve faster growth

C. To increase competition

D. To reduce uncertainty

19. Growth maximization is the same as ?
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A. Sales maximization

B. maximization the growth of sales revenue.

C. long-run profit maximization.

D. sales revenue maximization

20. The merger of two clothing firms would be a ____ merger?
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A. vertical

B. homogeneous

C. conglomerate

D. horizontal

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