Question 1

What is the distinction between innovation and invention?

Accepted Answer

Invention is the act of genera

Question 2

The demand for borrowed funds is

Accepted Answer

A)  directly related to the interest rate. 
B)  inversely related to the growth in gross domestic product. 
C)  a derived demand. 
D)  leads to derived demand for capital goods. 
A)  directly related to the interest rate. 
B)  inversely related to the growth in gross domestic product. 
C)  a derived demand. 
D)  leads to derived demand for capital goods.

Question 3

Marginal land is land that is not worth anything under any circumstances.

Accepted Answer

A) True 
 B)False

Question 4

If the interest rate is r (expressed as a decimal number), the present value today of $1 to be received n years from today equals ____.

Accepted Answer

A)  $1rn 
B)  $1(1 + r)n 
C)  $1/(1 + r)n 
D)  $1/(1 + n)r 
A)  $1rn 
B)  $1(1 + r)n 
C)  $1/(1 + r)n 
D)  $1/(1 + n)r

Question 5

Capital is a flow of resources into the production of investment goods.

Accepted Answer

A) True 
 B)False

Question 6

A ptomaine poisoning scare causes a decrease in the demand for canned tuna fish.Everything else equal, the demand curve for aluminum cans will

Accepted Answer

A)  become steeper. 
B)  become flatter. 
C)  fall. 
D)  rise. 
A)  become steeper. 
B)  become flatter. 
C)  fall. 
D)  rise.

Question 7

Although it is possible to determine the present value of a payment to be received in one year, it is not possible to determine the present value of a stream of payments over several years.

Accepted Answer

A) True 
 B)False

Question 8

Discounting is the process of

Accepted Answer

A)  cutting prices to get rid of surplus stocks. 
B)  finding the present value of future dollars. 
C)  finding the future value of present dollars. 
D)  giving special concessions to special customers. 
A)  cutting prices to get rid of surplus stocks. 
B)  finding the present value of future dollars. 
C)  finding the future value of present dollars. 
D)  giving special concessions to special customers.

Question 9

At higher interest rates, fewer people or firms will want to borrow.At lower interest rates, fewer people or firms will want to save.

Accepted Answer

A) True 
 B)False

Question 10

In Japan, the market value of the land is approximately four times that of all the land in the United States, even though Japan is only about the size of California.The most likely explanation for this fact is

Accepted Answer

A)  greater demand for land in Japan relative to the supply than in the United States. 
B)  land is very productive in Japan. 
C)  land is not fixed in supply in the United States. 
D)  Japanese workers are very productive. 
A)  greater demand for land in Japan relative to the supply than in the United States. 
B)  land is very productive in Japan. 
C)  land is not fixed in supply in the United States. 
D)  Japanese workers are very productive.

Question 11

Economic rents are earned whenever

Accepted Answer

A)  demand for a factor is perfectly inelastic. 
B)  a factor receives a reward that exceeds its cost. 
C)  a factor earns a reward that is greater than the amount needed to keep the factor in its present employment. 
D)  a factor's supply curve intersects its demand curve at a point where demand is inelastic. 
A)  demand for a factor is perfectly inelastic. 
B)  a factor receives a reward that exceeds its cost. 
C)  a factor earns a reward that is greater than the amount needed to keep the factor in its present employment. 
D)  a factor's supply curve intersects its demand curve at a point where demand is inelastic.

Question 12

As interest rates rise, more and more investments become profitable for a firm.

Accepted Answer

A) True 
 B)False

Question 13

Interest is the payment for the use of funds.

Accepted Answer

A) True 
 B)False

Question 14

Figure 19-1
  
-Mr.Paque is a bear hunter for timber companies that want to diminish damage to trees done by bears in the spring.Due to a reduction in the bear population between 1995 and 2005, Mr.Paque finds fewer bears each year and additional hours spent hunting produce fewer additional bears.The change in Mr.Paque's MPP curve between 1995 and 2005 is best illustrated by which panel in Figure 19-1?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 15

The marginal revenue product

Accepted Answer

A)  tells how many dollars the marginal physical product is worth. 
B)  is the marginal physical product times price of the product under perfect competition. 
C)  is the marginal physical product times marginal revenue. 
D)  All of the above are correct. 
A)  tells how many dollars the marginal physical product is worth. 
B)  is the marginal physical product times price of the product under perfect competition. 
C)  is the marginal physical product times marginal revenue. 
D)  All of the above are correct.

Question 16

Economic rent is paid only to land, and not to other resources.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following statements is correct?

Accepted Answer

A)  The demand for capital is derived from the demands for outputs. 
B)  The demands for output are derived from the demand for capital. 
C)  The demand for capital is derived from the demand for rent. 
D)  The demand for rent is derived from the demand for capital. 
A)  The demand for capital is derived from the demands for outputs. 
B)  The demands for output are derived from the demand for capital. 
C)  The demand for capital is derived from the demand for rent. 
D)  The demand for rent is derived from the demand for capital.

Question 18

The income of Lebron James, for example, is determined by

Accepted Answer

A)  the position of the demand curve. 
B)  the number of athletes in the NBA. 
C)  his supply curve for labor services. 
D)  marginal rent. 
A)  the position of the demand curve. 
B)  the number of athletes in the NBA. 
C)  his supply curve for labor services. 
D)  marginal rent.

Question 19

A lottery promises a $250,000 prize.But the prize money is paid out in $50,000 annual installments with the first installment received today..The winner is offered the option of an immediate lump-sum payment.If the interest rate remains at 10 percent for the entire period, what is the smallest amount the winner should accept?

Accepted Answer

A)  $189,540 
B)  $192,970 
C)  $208,494 
D)  $225,000 
A)  $189,540 
B)  $192,970 
C)  $208,494 
D)  $225,000

Question 20

Economic rent refers to profit derived from owning an apartment complex.

Accepted Answer

A) True 
 B)False

Exam 19: Pricing the Factors of Production

What is the distinction between innovation and invention?

The demand for borrowed funds is

Marginal land is land that is not worth anything under any circumstances.

If the interest rate is r (expressed as a decimal number), the present value today of $1 to be received n years from today equals ____.

Capital is a flow of resources into the production of investment goods.

A ptomaine poisoning scare causes a decrease in the demand for canned tuna fish.Everything else equal, the demand curve for aluminum cans will

Although it is possible to determine the present value of a payment to be received in one year, it is not possible to determine the present value of a stream of payments over several years.

Discounting is the process of

At higher interest rates, fewer people or firms will want to borrow.At lower interest rates, fewer people or firms will want to save.

In Japan, the market value of the land is approximately four times that of all the land in the United States, even though Japan is only about the size of California.The most likely explanation for this fact is

Economic rents are earned whenever

As interest rates rise, more and more investments become profitable for a firm.

Interest is the payment for the use of funds.

The marginal revenue product

Economic rent is paid only to land, and not to other resources.

Which of the following statements is correct?

The income of Lebron James, for example, is determined by

Economic rent refers to profit derived from owning an apartment complex.

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: The Importance of Marginal Analysis

Securities: Business Finance, and the Economy: The Tail that Wags the Dog?

The Firm and the Industry under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets I: The Price System

The Shortcomings of Free Markets

The Market's Prime Achievement: Innovation and Growth

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Labor and Entrepreneurship: The Human Inputs

Poverty, Inequality, and Discrimination

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

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