Question 1

Plots of land differ in

Accepted Answer

A)  quality of soil. 
B)  topography. 
C)  proximity to marketplaces. 
D)  All of the above are correct. 
A)  quality of soil. 
B)  topography. 
C)  proximity to marketplaces. 
D)  All of the above are correct.

Question 2

A certain machine will last one year, will produce $120 in income (received one year later), and will cost $100.The lowest interest rate at which this investment will be unprofitable is

Accepted Answer

A)  10 percent. 
B)  11 percent. 
C)  19 percent. 
D)  22 percent. 
A)  10 percent. 
B)  11 percent. 
C)  19 percent. 
D)  22 percent.

Question 3

The supply curve for land is perfectly elastic.

Accepted Answer

A) True 
 B)False

Question 4

Economic rent is the minimum payment necessary to induce any of the factor to be supplied.

Accepted Answer

A) True 
 B)False

Question 5

An inward shift of the demand curve for a product causes outward shifts in the demand curves for all the factors used to produce the product.

Accepted Answer

A) True 
 B)False

Question 6

The income to someone such as Lebron James is

Accepted Answer

A)  mostly pure rent. 
B)  composed of a payment necessary to induce him into employment plus economic rent. 
C)  a return to a factor in fixed supply; there is only one of him. 
D)  All of the above are correct. 
A)  mostly pure rent. 
B)  composed of a payment necessary to induce him into employment plus economic rent. 
C)  a return to a factor in fixed supply; there is only one of him. 
D)  All of the above are correct.

Question 7

The demand curve for any input is the MP curve.

Accepted Answer

A) True 
 B)False

Question 8

If the demand for softballs increases, one could expect the demand for leather to increase.This is attributable to the

Accepted Answer

A)  opportunity cost of producing softballs. 
B)  marginal productivity principle. 
C)  reduction in the cost of production of softballs. 
D)  derived demand for an input. 
A)  opportunity cost of producing softballs. 
B)  marginal productivity principle. 
C)  reduction in the cost of production of softballs. 
D)  derived demand for an input.

Question 9

MRP represents what the marginal physical product is worth.

Accepted Answer

A) True 
 B)False

Question 10

Usury laws carry the potential of hurting

Accepted Answer

A)  borrowers. 
B)  lenders. 
C)  borrowers and lenders. 
D)  government. 
A)  borrowers. 
B)  lenders. 
C)  borrowers and lenders. 
D)  government.

Question 11

What is the relevance of the marginal productivity principle in explaining the use of inputs in production?

Accepted Answer

According to the marginal productivity p

Question 12

How does the market mechanism distribute income?

Accepted Answer

The market mechanism distributes income

Question 13

A ceiling on interest rates is likely to lead to

Accepted Answer

A)  an increase in lending activity. 
B)  more rapid capital formation by business. 
C)  increases in hiring of labor. 
D)  a shortage of loanable funds. 
A)  an increase in lending activity. 
B)  more rapid capital formation by business. 
C)  increases in hiring of labor. 
D)  a shortage of loanable funds.

Question 14

When factor markets are competitive, it always pays a profit-maximizing firm to

Accepted Answer

A)  use more of the factor. 
B)  bid very low prices for inputs. 
C)  reduce the use of all inputs. 
D)  use that quantity of input that makes MRP equal to the price of the input. 
A)  use more of the factor. 
B)  bid very low prices for inputs. 
C)  reduce the use of all inputs. 
D)  use that quantity of input that makes MRP equal to the price of the input.

Question 15

Rent seeking

Accepted Answer

A)  often entails large opportunity costs. 
B)  prevents waste of resources. 
C)  often promotes fairness in distribution of resources. 
D)  cannot occur in a planned economy. 
A)  often entails large opportunity costs. 
B)  prevents waste of resources. 
C)  often promotes fairness in distribution of resources. 
D)  cannot occur in a planned economy.

Question 16

Each firm's capital stock is fixed in the short run.Therefore, if the price of capital increases, then in the short run the market demand curve for labor in a perfectly competitive market will

Accepted Answer

A)  shift inward. 
B)  be unaffected. 
C)  shift outward. 
D)  change slope. 
A)  shift inward. 
B)  be unaffected. 
C)  shift outward. 
D)  change slope.

Question 17

When the interest rate is higher, the difference between the value of money today and tomorrow is smaller.

Accepted Answer

A) True 
 B)False

Question 18

Investment is a flow of resources into the production of new capital.

Accepted Answer

A) True 
 B)False

Question 19

Entrepreneurship is

Accepted Answer

A)  restricted to perfect competition. 
B)  occurs only in well-functioning markets. 
C)  the process of planting new crops. 
D)  the process of taking business risks. 
A)  restricted to perfect competition. 
B)  occurs only in well-functioning markets. 
C)  the process of planting new crops. 
D)  the process of taking business risks.

Question 20

In a free market for rental housing, effective rent control would have which effect?

Accepted Answer

A)  It would cause a reduction in the number of apartments. 
B)  It would cause an increase in the number of apartments, since landlords would try to increase their profits through larger scale. 
C)  It would have no effect on the number of apartments offered in the market. 
D)  The results are impossible to predict. 
A)  It would cause a reduction in the number of apartments. 
B)  It would cause an increase in the number of apartments, since landlords would try to increase their profits through larger scale. 
C)  It would have no effect on the number of apartments offered in the market. 
D)  The results are impossible to predict.

Exam 19: Pricing the Factors of Production

Plots of land differ in

A certain machine will last one year, will produce $120 in income (received one year later), and will cost $100.The lowest interest rate at which this investment will be unprofitable is

The supply curve for land is perfectly elastic.

Economic rent is the minimum payment necessary to induce any of the factor to be supplied.

An inward shift of the demand curve for a product causes outward shifts in the demand curves for all the factors used to produce the product.

The income to someone such as Lebron James is

The demand curve for any input is the MP curve.

If the demand for softballs increases, one could expect the demand for leather to increase.This is attributable to the

MRP represents what the marginal physical product is worth.

Usury laws carry the potential of hurting

What is the relevance of the marginal productivity principle in explaining the use of inputs in production?

How does the market mechanism distribute income?

A ceiling on interest rates is likely to lead to

When factor markets are competitive, it always pays a profit-maximizing firm to

Rent seeking

Each firm's capital stock is fixed in the short run.Therefore, if the price of capital increases, then in the short run the market demand curve for labor in a perfectly competitive market will

When the interest rate is higher, the difference between the value of money today and tomorrow is smaller.

Investment is a flow of resources into the production of new capital.

Entrepreneurship is

In a free market for rental housing, effective rent control would have which effect?

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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