Exam 19: Pricing the Factors of Production

On January 1, 2010, a homeowner borrowed $5,000 for a term of six months to complete some home improvements, paying an annual interest rate of 8 percent.How much principal and interest will the homeowner pay back on July 1, 2010?

If the equilibrium rate of interest would be 10 percent, but the usury law sets 8 percent,

When a few rival groups spend money in competition for a license that grants them a monopoly for the provision of cable TV for an area, economists label this activity

A landlord will supply her land for rental only if in equilibrium

Economic rent is a payment for a factor of production that elicits an increase in the quantity supplied.

A sum of money received at a future date is worth less than the same sum of money received today.Why? Explain this with an example.

List three primary ways in which profits above "normal" interest rate levels can be earned.

Usury laws that set maximum interest rates

Capital is defined as

The market level (magnitude) of economic rent is determined by the

The demand curve for funds is downward sloping because

An increase in rent will ordinarily lead to

Between 1988 and 1989, the price of retail space in Ginza, Tokyo's premier commercial and entertainment center, rose from $400 to $625 per square foot.This was the result of an increase in demand in the face of a perfectly inelastic supply curve for retail space.Economists call this

All the land in a California valley is owned by one person.The supply of land is fixed and is rented each year to farmers who bid for it in an open auction.Given the rents they must pay, the farmers barely earn subsistence.Sympathy for the poor farmers leads the state to bring in irrigation facilities to raise the productivity of the farms and raise the farmers' income.The most likely outcome is

In general, the quantity of savings supplied to be used for lending increases with the rate of interest.

Use the concept of economic rent to explain how rent controls could have an effect quite opposite to the intention.

The windfall profits tax on oil will curtail oil production if

If a small firm wishes to pay cash in one year for a $10,000 machine, how much must the firm currently place in savings at 5 percent in order to have the necessary total cash in one year?

No economist today would claim that

How can bonuses to exceptional employees be considered economic rents?