Question 1

-In the table above, if the wage rate is $12.00 per hour, the profit-maximizing number of workers is

Accepted Answer

A)  2. 
B)  3. 
C)  4. 
D)  5. 
A)  2. 
B)  3. 
C)  4. 
D)  5.

Question 2

A company is considering the purchase or the rental of a new machine. An increase in the interest rate

Accepted Answer

A)  increases the likelihood the company will buy the machine. 
B)  increases the likelihood the company will rent the machine. 
C)  has no effect on the likelihood that the company will buy the machine. 
D)  has no effect on the likelihood that the company will rent the machine. 
A)  increases the likelihood the company will buy the machine. 
B)  increases the likelihood the company will rent the machine. 
C)  has no effect on the likelihood that the company will buy the machine. 
D)  has no effect on the likelihood that the company will rent the machine.

Question 3

If the price of hair styling increases, then

Accepted Answer

A)  hair styling salons hire fewer workers but makes more profit. 
B)  hair stylists demand an increase in wages and the salons hire fewer workers. 
C)  the value of marginal product of each hair stylist increases and the demand curve for hair stylists shifts leftward. 
D)  the value of marginal product of each hair stylist increases and the demand curve for hair stylists shifts rightward. 
A)  hair styling salons hire fewer workers but makes more profit. 
B)  hair stylists demand an increase in wages and the salons hire fewer workers. 
C)  the value of marginal product of each hair stylist increases and the demand curve for hair stylists shifts leftward. 
D)  the value of marginal product of each hair stylist increases and the demand curve for hair stylists shifts rightward.

Question 4

Other things being equal, a technological change that raises the value of marginal product of capital raises the rental rate of capital because the

Accepted Answer

A)  supply curve of capital shifts leftward. 
B)  supply curve of capital shifts rightward. 
C)  demand curve for capital shifts rightward. 
D)  demand curve for capital shifts leftward. 
A)  supply curve of capital shifts leftward. 
B)  supply curve of capital shifts rightward. 
C)  demand curve for capital shifts rightward. 
D)  demand curve for capital shifts leftward.

Question 5

With respect to the labor supply curve, the income effect

Accepted Answer

A)  reinforces the substitution effect. 
B)  lowers the opportunity cost of labor. 
C)  raises the opportunity cost of labor. 
D)  influences a person to work less as the wage rate increases. 
A)  reinforces the substitution effect. 
B)  lowers the opportunity cost of labor. 
C)  raises the opportunity cost of labor. 
D)  influences a person to work less as the wage rate increases.

Question 6

A firm's demand for labor increases and its demand curve for labor shifts rightward if

Accepted Answer

A)  the wage rate falls. 
B)  the price of its product falls. 
C)  its value of marginal product decreases. 
D)  an advance in technology increases the marginal product of labor. 
A)  the wage rate falls. 
B)  the price of its product falls. 
C)  its value of marginal product decreases. 
D)  an advance in technology increases the marginal product of labor.

Question 7

A monopsony is

Accepted Answer

A)  a market in which there is only a single seller. 
B)  a market in which there is only a single buyer. 
C)  a monopoly sanctioned by law. 
D)  an illegal monopoly. 
A)  a market in which there is only a single seller. 
B)  a market in which there is only a single buyer. 
C)  a monopoly sanctioned by law. 
D)  an illegal monopoly.

Question 8

If the interest rate is 5 percent, what is the present value of $100 that will be received 3 years from now?

Accepted Answer

A)  $90.70 
B)  $86.38 
C)  $115.00 
D)  $13.62 
A)  $90.70 
B)  $86.38 
C)  $115.00 
D)  $13.62

Question 9

Which of the following is NOT a method by which unions try to increase the demand for the labor of their members?

Accepted Answer

A)  increasing the marginal product of union members 
B)  increasing the supply of the goods produced by union labor 
C)  supporting minimum wage laws 
D)  supporting immigration restrictions 
A)  increasing the marginal product of union members 
B)  increasing the supply of the goods produced by union labor 
C)  supporting minimum wage laws 
D)  supporting immigration restrictions

Question 10

The proposition that the price of a resource is expected to rise at a rate equal to the interest rate is called the

Accepted Answer

A)  discounted present value. 
B)  derived demand for productive resources. 
C)  diminishing marginal revenue product. 
D)  Hotelling Principle. 
A)  discounted present value. 
B)  derived demand for productive resources. 
C)  diminishing marginal revenue product. 
D)  Hotelling Principle.

Question 11

For a monopsony, the marginal cost of labor curve lies above the labor supply curve because

Accepted Answer

A)  to hire one more unit of labor requires that the wage be raised for all units of labor. 
B)  to hire one more unit of labor requires that the wage be raised for just the last unit of labor hired. 
C)  to hire one more unit of labor, the firm uses its monopsony power to not raise the wage it pays. 
D)  to hire one more unit of labor requires that the firm offer a lower wage. 
A)  to hire one more unit of labor requires that the wage be raised for all units of labor. 
B)  to hire one more unit of labor requires that the wage be raised for just the last unit of labor hired. 
C)  to hire one more unit of labor, the firm uses its monopsony power to not raise the wage it pays. 
D)  to hire one more unit of labor requires that the firm offer a lower wage.

Question 12

The present value of a stream of future revenues varies ________ with the future revenues and ________ with the interest rate.

Accepted Answer

A)  inversely; inversely 
B)  directly; directly 
C)  inversely; directly 
D)  directly; inversely 
A)  inversely; inversely 
B)  directly; directly 
C)  inversely; directly 
D)  directly; inversely

Question 13

If the interest rate is 4 percent, the present value of $10,000 to be received one year from today is about

Accepted Answer

A)  $9,246. 
B)  $9,615. 
C)  $10,816. 
D)  $10,400. 
A)  $9,246. 
B)  $9,615. 
C)  $10,816. 
D)  $10,400.

Question 14

-The market supply of labor curve has a positive slope if higher wages induce households to choose

Accepted Answer

A)  leisure rather than supplying labor in the labor market. 
B)  supplying labor in the labor market rather than leisure. 
C)  demanding labor rather than supplying it. 
D)  None of the above answers is correct. 
A)  leisure rather than supplying labor in the labor market. 
B)  supplying labor in the labor market rather than leisure. 
C)  demanding labor rather than supplying it. 
D)  None of the above answers is correct.

Question 15

The supply of a renewable resource is perfectly elastic.

Accepted Answer

A) True 
 B)False

Question 16

The value in one year of $25 invested today at an annual interest rate of 5 percent will be

Accepted Answer

A)  $25.00. 
B)  $26.25. 
C)  $27.50. 
D)  $30.00. 
A)  $25.00. 
B)  $26.25. 
C)  $27.50. 
D)  $30.00.

Question 17

If the price of a barrel of oil is $100 this year and the interest rate is 10 percent, then according to the Hotelling Principle the price next year is expected to be ________ per barrel.

Accepted Answer

A)  $90 
B)  $110 
C)  $100 
D)  None of the above is correct. 
A)  $90 
B)  $110 
C)  $100 
D)  None of the above is correct.

Question 18

-City-Mart is the only employer of sales clerks in Panburg. In the figure above S is the labor supply curve faced by City-Mart, VMP is City-Mart's value of marginal product curve, and MCL is its marginal cost of labor curve. City-Mart sales clerks' wage is ________ it would be if the labor market were competitive.

Accepted Answer

A)  $3 per hour higher than 
B)  $3 per hour lower than 
C)  $6 per hour lower than 
D)  the same as 
A)  $3 per hour higher than 
B)  $3 per hour lower than 
C)  $6 per hour lower than 
D)  the same as

Question 19

Water from the Mississippi river is an example of

Accepted Answer

A)  a nonrenewable natural resource. 
B)  a renewable natural resource. 
C)  capital. 
D)  a static resource. 
A)  a nonrenewable natural resource. 
B)  a renewable natural resource. 
C)  capital. 
D)  a static resource.

Question 20

Which of the following is a condition for maximum profit?

Accepted Answer

A)  VMP = W. 
B)  VMP = MC. 
C)  MP = W. 
D)  MC = W. 
A)  VMP = W. 
B)  VMP = MC. 
C)  MP = W. 
D)  MC = W.

Exam 18: Markets for Factors of Production

-In the table above, if the wage rate is $12.00 per hour, the profit-maximizing number of workers is

A company is considering the purchase or the rental of a new machine. An increase in the interest rate

If the price of hair styling increases, then

Other things being equal, a technological change that raises the value of marginal product of capital raises the rental rate of capital because the

With respect to the labor supply curve, the income effect

A firm's demand for labor increases and its demand curve for labor shifts rightward if

A monopsony is

If the interest rate is 5 percent, what is the present value of $100 that will be received 3 years from now?

Which of the following is NOT a method by which unions try to increase the demand for the labor of their members?

The proposition that the price of a resource is expected to rise at a rate equal to the interest rate is called the

For a monopsony, the marginal cost of labor curve lies above the labor supply curve because

The present value of a stream of future revenues varies ________ with the future revenues and ________ with the interest rate.

If the interest rate is 4 percent, the present value of $10,000 to be received one year from today is about

-The market supply of labor curve has a positive slope if higher wages induce households to choose

The supply of a renewable resource is perfectly elastic.

The value in one year of $25 invested today at an annual interest rate of 5 percent will be

If the price of a barrel of oil is $100 this year and the interest rate is 10 percent, then according to the Hotelling Principle the price next year is expected to be ________ per barrel.

Water from the Mississippi river is an example of

Which of the following is a condition for maximum profit?

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

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices and Public Goods

Externalities and the Environment

Economic Inequality

Uncertainty and Information

Extension A: Review

Extension B: Review

Extension C: Review

Extension D: Review

Extension E: Review

Extension F: Review

Filters

The present value of a stream of future revenues varies with the future revenues and with the interest rate.