Question 1

The present value of a future sum of money is the amount that,if invested today,will grow

Accepted Answer

A) as large as that future sum, given the interest rate. 
B) as large as that future sum. 
C) as large as that future sum, less taxes payable. 
D) as large as that future sum, if the rate of interest is zero. 
E) at a constant rate forever. 
A) as large as that future sum, given the interest rate. 
B) as large as that future sum. 
C) as large as that future sum, less taxes payable. 
D) as large as that future sum, if the rate of interest is zero. 
E) at a constant rate forever.

Question 2

Use the table below to answer the following questions.
Table 18.2.1
  
-Refer to Table 18.2.1.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 3

Use the figure below to answer the following questions.
   
Figure 18.3.2
-If a union forms to face the monopsonist in Figure 18.3.2,the situation is one of

Accepted Answer

A) binding arbitration. 
B) derived demand. 
C) duopoly. 
D) collusive oligopoly. 
E) bilateral monopoly. 
A) binding arbitration. 
B) derived demand. 
C) duopoly. 
D) collusive oligopoly. 
E) bilateral monopoly.

Question 4

The Brown's Egg store in Lethbridge Alberta hires workers to paint eggs.The price of an egg is $2.50.The value of marginal product of this store's fifth worker is $25.The marginal product of the fifth worker is

Accepted Answer

A) 62.5 eggs. 
B) 25 eggs. 
C) 2 eggs. 
D) 10 eggs. 
E) 0.1 eggs. 
A) 62.5 eggs. 
B) 25 eggs. 
C) 2 eggs. 
D) 10 eggs. 
E) 0.1 eggs.

Question 5

An example of a nonrenewable natural resource is

Accepted Answer

A) oil. 
B) Lake Erie. 
C) rain. 
D) sunshine. 
E) the St.Lawrence River. 
A) oil. 
B) Lake Erie. 
C) rain. 
D) sunshine. 
E) the St.Lawrence River.

Question 6

The value of marginal product is

Accepted Answer

A) the value to the firm of hiring one more unit of a factor of production. 
B) the price of a unit of output multiplied by the marginal product of the factor of production. 
C) calculated as total revenue divided by the total quantity employed. 
D) Both A and B are correct. 
E) All of the above are correct. 
A) the value to the firm of hiring one more unit of a factor of production. 
B) the price of a unit of output multiplied by the marginal product of the factor of production. 
C) calculated as total revenue divided by the total quantity employed. 
D) Both A and B are correct. 
E) All of the above are correct.

Question 7

Use the figure below to answer the following questions.
   
Figure 18.3.1
-Refer to Figure 18.3.1.This figure shows the value of marginal product of labour curve,the labour supply curve,and the marginal cost of labour curve.Suppose the government passes a minimum wage law that prohibits anyone from hiring labour at less than $6.50 per hour.The new marginal cost of labour (MCL)for the monopsonist

Accepted Answer

A) is not affected. 
B) equals $6.50 only from zero to 50 hours of labour. 
C) equals $6.50 only from zero to 75 hours of labour. 
D) equals $6.50 only from zero to 100 hours of labour. 
E) none of the above. 
A) is not affected. 
B) equals $6.50 only from zero to 50 hours of labour. 
C) equals $6.50 only from zero to 75 hours of labour. 
D) equals $6.50 only from zero to 100 hours of labour. 
E) none of the above.

Question 8

Profit is the factor price for

Accepted Answer

A) capital. 
B) land. 
C) entrepreneurship. 
D) labour. 
E) capital services. 
A) capital. 
B) land. 
C) entrepreneurship. 
D) labour. 
E) capital services.

Question 9

Use the table below to answer the following questions.
   
Table 18.3.1
-Refer to Table 18.3.1.Table 18.3.1 gives information about the labour market in Lantis,a community in which the labour market is perfectly competitive.If the price of the good that Lantis produces increases and the value of marginal product of labour changes by $10 an hour,the equilibrium wage rate ________ an hour and the quantity of labour employed ________.

Accepted Answer

A) rises to $17.50;increases to 450 hours 
B) rises to $10;increases to 600 
C) rises to $20;increases to 500 hours 
D) remains at $15;decreases to 300 hours 
E) rises to $20;decreases to 300 hours 
A) rises to $17.50;increases to 450 hours 
B) rises to $10;increases to 600 
C) rises to $20;increases to 500 hours 
D) remains at $15;decreases to 300 hours 
E) rises to $20;decreases to 300 hours

Question 10

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

Accepted Answer

A) increase the wage rate. 
B) decrease the wage rate. 
C) increase the quantity of labour it hires. 
D) decrease the quantity of labour it hires. 
E) shut down. 
A) increase the wage rate. 
B) decrease the wage rate. 
C) increase the quantity of labour it hires. 
D) decrease the quantity of labour it hires. 
E) shut down.

Question 11

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 12

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 13

To maximize profit,the firm must equate the

Accepted Answer

A) wage rate to the price of the good. 
B) wage rate to the marginal product of labour. 
C) value of marginal product to the factor price. 
D) marginal factor cost to the price of the output. 
E) marginal cost of the factor to the marginal product of the factor. 
A) wage rate to the price of the good. 
B) wage rate to the marginal product of labour. 
C) value of marginal product to the factor price. 
D) marginal factor cost to the price of the output. 
E) marginal cost of the factor to the marginal product of the factor.

Question 14

Choose the correct statement.

Accepted Answer

A) The quantity of land demanded cannot be changed by people's decisions. 
B) The supply of each particular block of land is perfectly inelastic. 
C) The lower the rental rate, other things remaining the same, the smaller is the quantity of land demanded. 
D) Profit-maximizing firms rent the quantity of land at which the value of marginal product of land is equal to the quantity of land demanded. 
E) None of the above statements are correct. 
A) The quantity of land demanded cannot be changed by people's decisions. 
B) The supply of each particular block of land is perfectly inelastic. 
C) The lower the rental rate, other things remaining the same, the smaller is the quantity of land demanded. 
D) Profit-maximizing firms rent the quantity of land at which the value of marginal product of land is equal to the quantity of land demanded. 
E) None of the above statements are correct.

Question 15

If the interest rate is 10 percent per year,the present value of $100 in two years is

Accepted Answer

A) $80.00. 
B) $82.64. 
C) $90.91. 
D) $120.00. 
E) $121.00. 
A) $80.00. 
B) $82.64. 
C) $90.91. 
D) $120.00. 
E) $121.00.

Question 16

A firm can sell its output for $40 per unit.When it increases its labour force from 4 workers to 5 workers its output increases from 15 to 17 units.The value of marginal product of the 5th worker is

Accepted Answer

A) $80. 
B) $40. 
C) $600. 
D) $680. 
E) $136. 
A) $80. 
B) $40. 
C) $600. 
D) $680. 
E) $136.

Question 17

Mr.Shaw has a small factory in Estevan Saskatchewan.He will continue hiring labour as long as the value of marginal product of labour ________ the wage rate.

Accepted Answer

A) is greater than 
B) is less than 
C) is less than or equal to 
D) determines 
E) maximizes 
A) is greater than 
B) is less than 
C) is less than or equal to 
D) determines 
E) maximizes

Question 18

If the marginal product of a baker is 10 loaves of bread,and the price of a loaf of bread is $2,the baker's value of marginal product is

Accepted Answer

A) $2.00. 
B) $20.00. 
C) $0.20. 
D) $5.00. 
E) $12.00. 
A) $2.00. 
B) $20.00. 
C) $0.20. 
D) $5.00. 
E) $12.00.

Question 19

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 20

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

Exam 18: Markets for Factors of Production

The present value of a future sum of money is the amount that,if invested today,will grow

Use the table below to answer the following questions. Table 18.2.1 -Refer to Table 18.2.1.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 18.3.2 -If a union forms to face the monopsonist in Figure 18.3.2,the situation is one of

The Brown's Egg store in Lethbridge Alberta hires workers to paint eggs.The price of an egg is $2.50.The value of marginal product of this store's fifth worker is $25.The marginal product of the fifth worker is

An example of a nonrenewable natural resource is

The value of marginal product is

Profit is the factor price for

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

All of the following statements are correct except

Natural resources that are depleted as they are used

To maximize profit,the firm must equate the

Choose the correct statement.

If the interest rate is 10 percent per year,the present value of $100 in two years is

A firm can sell its output for $40 per unit.When it increases its labour force from 4 workers to 5 workers its output increases from 15 to 17 units.The value of marginal product of the 5th worker is

Mr.Shaw has a small factory in Estevan Saskatchewan.He will continue hiring labour as long as the value of marginal product of labour ________ the wage rate.

If the marginal product of a baker is 10 loaves of bread,and the price of a loaf of bread is $2,the baker's value of marginal product is

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

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?

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

Externalities

Public Goods and Common Resources

Economic Inequality

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: The Keynesian Model

Canadian Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

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