Question 1

The Hotelling Principle is the idea that the price of a ________ is expected to rise at a rate equal to the ________.

Accepted Answer

A) nonrenewable natural resource;inflation rate 
B) unit of capital;interest rate 
C) nonrenewable natural resource;interest rate 
D) unit of capital;inflation rate 
E) nonrenewable natural resource;percentage increase in demand 
A) nonrenewable natural resource;inflation rate 
B) unit of capital;interest rate 
C) nonrenewable natural resource;interest rate 
D) unit of capital;inflation rate 
E) nonrenewable natural resource;percentage increase in demand

Question 2

If a strike or lockout occurs in a bilateral monopoly situation,it is usually because

Accepted Answer

A) the demand for labour is relatively inelastic. 
B) the demand for labour is relatively elastic. 
C) the supply of labour is relatively inelastic. 
D) the supply of labour is relatively elastic. 
E) one party has misjudged the costs each party can inflict on the other. 
A) the demand for labour is relatively inelastic. 
B) the demand for labour is relatively elastic. 
C) the supply of labour is relatively inelastic. 
D) the supply of labour is relatively elastic. 
E) one party has misjudged the costs each party can inflict on the other.

Question 3

The present value of a future payment of money will be lower the

Accepted Answer

A) higher the interest rate or the further in the future the payment. 
B) lower the interest rate or the further in the future the payment. 
C) higher the interest rate or the nearer the date of the future payment. 
D) lower the interest rate or the nearer the date of the future payment. 
E) lower the interest rate,independent of the date of the future payment. 
A) higher the interest rate or the further in the future the payment. 
B) lower the interest rate or the further in the future the payment. 
C) higher the interest rate or the nearer the date of the future payment. 
D) lower the interest rate or the nearer the date of the future payment. 
E) lower the interest rate,independent of the date of the future payment.

Question 4

All of the following statements are correct except

Accepted Answer

A) the supply of capital is derived from the value of marginal product of capital. 
B) the lower the rental rate of capital,other things remaining the same,the greater is the quantity of capital demanded. 
C) the higher the rental rate,other things remaining the same,the greater is the quantity of capital supplied. 
D) profit-maximizing firms hire the quantity of capital services that makes the value of marginal product of capital equal to the rental rate of capital. 
E) if the present value of the future rental payments of an item of capital equipment is less than the cost of buying the capital,the firm will rent or lease the equipment. 
A) the supply of capital is derived from the value of marginal product of capital. 
B) the lower the rental rate of capital,other things remaining the same,the greater is the quantity of capital demanded. 
C) the higher the rental rate,other things remaining the same,the greater is the quantity of capital supplied. 
D) profit-maximizing firms hire the quantity of capital services that makes the value of marginal product of capital equal to the rental rate of capital. 
E) if the present value of the future rental payments of an item of capital equipment is less than the cost of buying the capital,the firm will rent or lease the equipment.

Question 5

Coal in an Alberta coal mine is a ________ natural resource.Algonquin Park is ________ natural resource.

Accepted Answer

A) nonrenewable;a nonrenewable 
B) renewable;a renewable 
C) nonrenewable;a renewable 
D) renewable;a nonrenewable 
E) nonrenewable;not a 
A) nonrenewable;a nonrenewable 
B) renewable;a renewable 
C) nonrenewable;a renewable 
D) renewable;a nonrenewable 
E) nonrenewable;not a

Question 6

Suppose a profit-maximizing firm hires labour in a competitive labour market.If the value of marginal product of labour is greater than the wage rate,the firm

Accepted Answer

A) increases the wage rate. 
B) decreases the wage rate. 
C) increases the quantity of labour it hires. 
D) decreases the quantity of labour it hires. 
E) shifts to a more labour-intensive production process. 
A) increases the wage rate. 
B) decreases the wage rate. 
C) increases the quantity of labour it hires. 
D) decreases the quantity of labour it hires. 
E) shifts to a more labour-intensive production process.

Question 7

Use the table below to answer the following questions.
Table 17.2.1
  
-Refer to Table 17.2.1.If the firm can sell all the output it wants for the price of $5 a unit,what is the value of marginal product of the 6th worker?

Accepted Answer

A) $20 
B) $0 
C) $25 
D) $40 
E) $185 
A) $20 
B) $0 
C) $25 
D) $40 
E) $185

Question 8

Use the figure below to answer the following questions.   Figure 17.3.2
-Refer to Figure 17.3.2.If the labour market illustrated in this figure is competitive,the equilibrium wage rate is ________ and the quantity of labour hired is ________.

Accepted Answer

A) $11 per hour;800 hours 
B) $11 per hour;400 hours 
C) $14 per hour;600 hours 
D) $17 per hour;400 hours 
E) $14 per hour;800 hours. 
A) $11 per hour;800 hours 
B) $11 per hour;400 hours 
C) $14 per hour;600 hours 
D) $17 per hour;400 hours 
E) $14 per hour;800 hours.

Question 9

Suppose the interest rate is 5 percent per year.What is the present value of the $210 that will be received two years from today?

Accepted Answer

A) $210 
B) $190.48 
C) $231.53 
D) $200 
E) $42 
A) $210 
B) $190.48 
C) $231.53 
D) $200 
E) $42

Question 10

Use the information below to answer the following questions.
Fact 17.5.1
The Burning Belly Taco Stand is considering buying some new special ovens.Each oven will cost $1,000,and will last for 2 years before it wears out.The ovens will be used to make the Taco Stands famous "Burning Ring of Fire" tacos,and will generate a value of marginal product of $600 for the first oven,$570 for the second oven,and $530 for the third oven.(Assume all revenues are earned at the end of the year. )
-Refer to Fact 17.5.1.If the rate of interest is 5 percent,how many ovens will the Burning Belly Taco Stand buy?

Accepted Answer

A) zero 
B) 1 
C) 2 
D) 3 
E) as many as it can afford 
A) zero 
B) 1 
C) 2 
D) 3 
E) as many as it can afford

Question 11

Use the figure below to answer the following questions.   Figure 17.3.2
-Refer to Figure 17.3.2.This figure illustrates a monopsonist in the labour market.The profit-maximizing wage rate is ________ and the quantity of labour hired is ________.

Accepted Answer

A) $11 per hour;800 hours 
B) $11 per hour;400 hours 
C) $14 per hour;600 hours 
D) $17 per hour;400 hours 
E) $14 per hour;400 hours. 
A) $11 per hour;800 hours 
B) $11 per hour;400 hours 
C) $14 per hour;600 hours 
D) $17 per hour;400 hours 
E) $14 per hour;400 hours.

Question 12

The value of marginal product of labour is the revenue

Accepted Answer

A) generated by selling an additional unit of output. 
B) needed to hire an additional unit of labour. 
C) generated by employing an additional unit of labour. 
D) needed to cover the cost of producing an additional unit of output. 
E) generated to cover the cost of hiring an extra unit of labour. 
A) generated by selling an additional unit of output. 
B) needed to hire an additional unit of labour. 
C) generated by employing an additional unit of labour. 
D) needed to cover the cost of producing an additional unit of output. 
E) generated to cover the cost of hiring an extra unit of labour.

Question 13

A firm's demand curve for labour shifts for all of the following reasons except a change in

Accepted Answer

A) the prices of other factors of production. 
B) technology. 
C) the price of the firm's output. 
D) wage rate. 
E) marginal product of labour. 
A) the prices of other factors of production. 
B) technology. 
C) the price of the firm's output. 
D) wage rate. 
E) marginal product of labour.

Question 14

If the wage rate decreases,the income effect gives a household the incentive to

Accepted Answer

A) raise its reservation wage. 
B) increase leisure and decrease work. 
C) increase work and decrease leisure. 
D) increase both work and leisure. 
E) decrease both work and leisure. 
A) raise its reservation wage. 
B) increase leisure and decrease work. 
C) increase work and decrease leisure. 
D) increase both work and leisure. 
E) decrease both work and leisure.

Question 15

The demand for the services of labour ________ a derived demand and the demand for the services of land ________ a derived demand.

Accepted Answer

A) is not;is not 
B) is not;is 
C) is;is not 
D) is;is 
E) sometimes is and sometimes is not;sometimes is and sometimes is not 
A) is not;is not 
B) is not;is 
C) is;is not 
D) is;is 
E) sometimes is and sometimes is not;sometimes is and sometimes is not

Question 16

Choose the statement that is incorrect.

Accepted Answer

A) Capital consists of the tools,instruments,machines,buildings,and other constructions that have been produced in the past and that businesses now use to produce goods and services. 
B) A market for capital services is a rental market. 
C) The services of the capital that a firm owns and operates have an implicit price that arises from depreciation and interest costs. 
D) Capital is a factor of production. 
E) Most capital services are traded in a market. 
A) Capital consists of the tools,instruments,machines,buildings,and other constructions that have been produced in the past and that businesses now use to produce goods and services. 
B) A market for capital services is a rental market. 
C) The services of the capital that a firm owns and operates have an implicit price that arises from depreciation and interest costs. 
D) Capital is a factor of production. 
E) Most capital services are traded in a market.

Question 17

Natural resources that are depleted as they are used

Accepted Answer

A) should not be used. 
B) are called nonrenewable natural resources. 
C) should be used for only highly valued purposes. 
D) should be conserved for future generations. 
E) are called renewable natural resources. 
A) should not be used. 
B) are called nonrenewable natural resources. 
C) should be used for only highly valued purposes. 
D) should be conserved for future generations. 
E) are called renewable natural resources.

Question 18

The value of marginal product of oil is the ________ influence on demand.The greater the quantity of oil used,the ________ is the value of marginal product of oil.

Accepted Answer

A) speculative;greater 
B) fundamental;greater 
C) fundamental;smaller 
D) speculative;smaller 
E) none of the above 
A) speculative;greater 
B) fundamental;greater 
C) fundamental;smaller 
D) speculative;smaller 
E) none of the above

Question 19

The income effect on labour supply refers to

Accepted Answer

A) the fact that at higher wages the worker earns more income. 
B) the fact that as the wage rate increases and income increases,labourers demand more of all normal goods,including leisure activities. 
C) the increase in the income of firms that is necessary to pay higher wages. 
D) the fact that as workers become more productive,they earn more income. 
E) the fact that as the wage rate increases and income increases,labourers demand more of all normal goods,including labour. 
A) the fact that at higher wages the worker earns more income. 
B) the fact that as the wage rate increases and income increases,labourers demand more of all normal goods,including leisure activities. 
C) the increase in the income of firms that is necessary to pay higher wages. 
D) the fact that as workers become more productive,they earn more income. 
E) the fact that as the wage rate increases and income increases,labourers demand more of all normal goods,including labour.

Question 20

Use the table below to answer the following questions.
Table 17.2.2
Wendy owns an apple orchard and she employs students to pick the apples.In an hour they can pick the following amounts:  
-Refer to Table 17.2.2.If the price of apples is $0.50 per kilogram,the value of marginal product of the 5th student is

Accepted Answer

A) $0.50 an hour. 
B) $72.50 an hour. 
C) $14.50 an hour. 
D) $12.50 an hour. 
E) $10 an hour. 
A) $0.50 an hour. 
B) $72.50 an hour. 
C) $14.50 an hour. 
D) $12.50 an hour. 
E) $10 an hour.

The Hotelling Principle is the idea that the price of a is expected to rise at a rate equal to the .

If a strike or lockout occurs in a bilateral monopoly situation,it is usually because

The present value of a future payment of money will be lower the

All of the following statements are correct except

Coal in an Alberta coal mine is a natural resource.Algonquin Park is natural resource.

Suppose a profit-maximizing firm hires labour in a competitive labour market.If the value of marginal product of labour is greater than the wage rate,the firm

Use the table below to answer the following questions. Table 17.2.1 -Refer to Table 17.2.1.If the firm can sell all the output it wants for the price of $5 a unit,what is the value of marginal product of the 6th worker?

Use the figure below to answer the following questions. Figure 17.3.2 -Refer to Figure 17.3.2.If the labour market illustrated in this figure is competitive,the equilibrium wage rate is and the quantity of labour hired is .

Suppose the interest rate is 5 percent per year.What is the present value of the $210 that will be received two years from today?

Use the figure below to answer the following questions. Figure 17.3.2 -Refer to Figure 17.3.2.This figure illustrates a monopsonist in the labour market.The profit-maximizing wage rate is and the quantity of labour hired is .

The value of marginal product of labour is the revenue

A firm's demand curve for labour shifts for all of the following reasons except a change in

If the wage rate decreases,the income effect gives a household the incentive to

The demand for the services of labour a derived demand and the demand for the services of land a derived demand.

Choose the statement that is incorrect.

Natural resources that are depleted as they are used

The value of marginal product of oil is the influence on demand.The greater the quantity of oil used,the is the value of marginal product of oil.

The income effect on labour supply refers to

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, preferences, and Choices

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Economic Inequality

Filters

Exam 17: Markets for Factors of Production

The Hotelling Principle is the idea that the price of a ________ is expected to rise at a rate equal to the ________.

If a strike or lockout occurs in a bilateral monopoly situation,it is usually because

The present value of a future payment of money will be lower the

All of the following statements are correct except

Coal in an Alberta coal mine is a ________ natural resource.Algonquin Park is ________ natural resource.

Suppose a profit-maximizing firm hires labour in a competitive labour market.If the value of marginal product of labour is greater than the wage rate,the firm

Use the table below to answer the following questions. Table 17.2.1 -Refer to Table 17.2.1.If the firm can sell all the output it wants for the price of $5 a unit,what is the value of marginal product of the 6th worker?

Use the figure below to answer the following questions. Figure 17.3.2 -Refer to Figure 17.3.2.If the labour market illustrated in this figure is competitive,the equilibrium wage rate is ________ and the quantity of labour hired is ________.

Suppose the interest rate is 5 percent per year.What is the present value of the $210 that will be received two years from today?

Use the figure below to answer the following questions. Figure 17.3.2 -Refer to Figure 17.3.2.This figure illustrates a monopsonist in the labour market.The profit-maximizing wage rate is ________ and the quantity of labour hired is ________.

The value of marginal product of labour is the revenue

A firm's demand curve for labour shifts for all of the following reasons except a change in

If the wage rate decreases,the income effect gives a household the incentive to

The demand for the services of labour ________ a derived demand and the demand for the services of land ________ a derived demand.

Choose the statement that is incorrect.

Natural resources that are depleted as they are used

The value of marginal product of oil is the ________ influence on demand.The greater the quantity of oil used,the ________ is the value of marginal product of oil.

The income effect on labour supply refers to

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, preferences, and Choices

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Economic Inequality

Filters

The Hotelling Principle is the idea that the price of a is expected to rise at a rate equal to the .

Coal in an Alberta coal mine is a natural resource.Algonquin Park is natural resource.

Use the figure below to answer the following questions. Figure 17.3.2 -Refer to Figure 17.3.2.If the labour market illustrated in this figure is competitive,the equilibrium wage rate is and the quantity of labour hired is .

Use the figure below to answer the following questions. Figure 17.3.2 -Refer to Figure 17.3.2.This figure illustrates a monopsonist in the labour market.The profit-maximizing wage rate is and the quantity of labour hired is .

The demand for the services of labour a derived demand and the demand for the services of land a derived demand.

The value of marginal product of oil is the influence on demand.The greater the quantity of oil used,the is the value of marginal product of oil.