Question 1

Rent-seeking activity by firms

Accepted Answer

A)  often wastes economic resources. 
B)  increases economic efficiency. 
C)  continues even when an industry is in long-run competitive equilibrium. 
D)  increases the total amount of economic rent available. 
A)  often wastes economic resources. 
B)  increases economic efficiency. 
C)  continues even when an industry is in long-run competitive equilibrium. 
D)  increases the total amount of economic rent available.

Question 2

In 2009, corporate profits in the U.S.economy were about 10 percent of national income.

Accepted Answer

A) True 
 B)False

Question 3

Economic rent is the amount of money above and beyond that necessary to keep the factor of production employed where it is.

Accepted Answer

A) True 
 B)False

Question 4

The equilibrium rent for marginal land

Accepted Answer

A)  equals zero. 
B)  depends on the supply and demand of land. 
C)  exceeds the opportunity cost of the land. 
D)  is always greater than the equilibrium rent for nonmarginal land. 
A)  equals zero. 
B)  depends on the supply and demand of land. 
C)  exceeds the opportunity cost of the land. 
D)  is always greater than the equilibrium rent for nonmarginal land.

Question 5

If the demand for land shifts upward, rents will be

Accepted Answer

A)  earned by some land that was formerly unprofitable. 
B)  lost to many landowners. 
C)  diminished for society as a whole. 
D)  taxed away to help pay the costs of government. 
A)  earned by some land that was formerly unprofitable. 
B)  lost to many landowners. 
C)  diminished for society as a whole. 
D)  taxed away to help pay the costs of government.

Question 6

A sum of money to be received in the future is worth more than a sum of money today.

Accepted Answer

A) True 
 B)False

Question 7

As the rate of interest on borrowed funds increases, the quantity of investment funds demanded diminishes.

Accepted Answer

A) True 
 B)False

Question 8

The supply curve for funds

Accepted Answer

A)  is generally positively sloped. 
B)  depends upon people's savings plans. 
C)  is a function of the interest rate. 
D)  All of the above are correct. 
A)  is generally positively sloped. 
B)  depends upon people's savings plans. 
C)  is a function of the interest rate. 
D)  All of the above are correct.

Question 9

Which of the following would be classified as an innovation?

Accepted Answer

A)  Edwin H.Land perfects the single-step photographic process in 1947. 
B)  Polaroid markets the single-step film in 1948. 
C)  Thomas Alva Edison perfects the incandescent lamp with carbon filament in 1879. 
D)  In 1803, Robert Fulton constructs his first small steamboat in Paris. 
A)  Edwin H.Land perfects the single-step photographic process in 1947. 
B)  Polaroid markets the single-step film in 1948. 
C)  Thomas Alva Edison perfects the incandescent lamp with carbon filament in 1879. 
D)  In 1803, Robert Fulton constructs his first small steamboat in Paris.

Question 10

According to the principle of marginal productivity, the quantity of an input demanded depends on the

Accepted Answer

A)  price of the input. 
B)  price of outputs in which the input is used. 
C)  technology of production. 
D)  All of the above are correct. 
A)  price of the input. 
B)  price of outputs in which the input is used. 
C)  technology of production. 
D)  All of the above are correct.

Question 11

Capital is to investment as

Accepted Answer

A)  hard is to soft. 
B)  a flow is to a stock. 
C)  a stock is to a flow. 
D)  paper is to metal. 
A)  hard is to soft. 
B)  a flow is to a stock. 
C)  a stock is to a flow. 
D)  paper is to metal.

Question 12

Marginal land is on the borderline of being used in production.

Accepted Answer

A) True 
 B)False

Question 13

Entrepreneurship is the act of starting new firms and taking the risks that are necessary in business opportunities.

Accepted Answer

A) True 
 B)False

Question 14

The marginal productivity principle demonstrates that distribution under a capitalist system is ethically valid.

Accepted Answer

A) True 
 B)False

Question 15

When an economist says a change in the market for land causes a farmer to use his land more intensively, he means that the farmer

Accepted Answer

A)  produces more output than before, so the marginal product of his land falls. 
B)  produces less output than before, so the marginal product of his land rises. 
C)  uses greater amounts of nonland inputs than before, so the marginal revenue product of his land rises. 
D)  uses smaller amounts of nonland inputs than before, so the marginal revenue product of his land falls. 
A)  produces more output than before, so the marginal product of his land falls. 
B)  produces less output than before, so the marginal product of his land rises. 
C)  uses greater amounts of nonland inputs than before, so the marginal revenue product of his land rises. 
D)  uses smaller amounts of nonland inputs than before, so the marginal revenue product of his land falls.

Question 16

Demand for an input is derived from the demand for the final product.

Accepted Answer

A) True 
 B)False

Question 17

Firms will borrow to finance capital expansion until the MRP of the investment equals the

Accepted Answer

A)  MRP of labor. 
B)  marginal cost of the finished good. 
C)  marginal physical product of capital. 
D)  interest payment charged for borrowing. 
A)  MRP of labor. 
B)  marginal cost of the finished good. 
C)  marginal physical product of capital. 
D)  interest payment charged for borrowing.

Question 18

What is the distribution of national income currently among the owners of the factors of production-land, labor, capital, and entrepreneurship?

Accepted Answer

According to the text, in 2009, rent was

Question 19

Equilibrium in the market for funds occurs when the

Accepted Answer

A)  lenders and borrowers are mutually satisfied at some interest rate. 
B)  marginal revenue product of investment using the funds equals the interest rate. 
C)  demand curve for funds and the supply curve for funds intersect. 
D)  All of the above are correct. 
A)  lenders and borrowers are mutually satisfied at some interest rate. 
B)  marginal revenue product of investment using the funds equals the interest rate. 
C)  demand curve for funds and the supply curve for funds intersect. 
D)  All of the above are correct.

Question 20

If mining companies are indifferent between operating and not operating a quarry, that quarry is

Accepted Answer

A)  discounted. 
B)  usurious. 
C)  marginal. 
D)  nonexcludable. 
A)  discounted. 
B)  usurious. 
C)  marginal. 
D)  nonexcludable.

Exam 19: Pricing the Factors of Production

Rent-seeking activity by firms

In 2009, corporate profits in the U.S.economy were about 10 percent of national income.

Economic rent is the amount of money above and beyond that necessary to keep the factor of production employed where it is.

The equilibrium rent for marginal land

If the demand for land shifts upward, rents will be

A sum of money to be received in the future is worth more than a sum of money today.

As the rate of interest on borrowed funds increases, the quantity of investment funds demanded diminishes.

The supply curve for funds

Which of the following would be classified as an innovation?

According to the principle of marginal productivity, the quantity of an input demanded depends on the

Capital is to investment as

Marginal land is on the borderline of being used in production.

Entrepreneurship is the act of starting new firms and taking the risks that are necessary in business opportunities.

The marginal productivity principle demonstrates that distribution under a capitalist system is ethically valid.

When an economist says a change in the market for land causes a farmer to use his land more intensively, he means that the farmer

Demand for an input is derived from the demand for the final product.

Firms will borrow to finance capital expansion until the MRP of the investment equals the

What is the distribution of national income currently among the owners of the factors of production-land, labor, capital, and entrepreneurship?

Equilibrium in the market for funds occurs when the

If mining companies are indifferent between operating and not operating a quarry, that quarry is

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

Filters