Question 1

Which is not a reason Usury laws are often politically popular?

Accepted Answer

A) Few people sympathize with banks and other lenders who are suspected of price gouging. 
B) Consumers are in favor of the lower lending rates. 
C) The lower rates allow people to borrow more. 
D) Lenders, not the Usury laws, are often blamed by people who do not get loans. 
A) Few people sympathize with banks and other lenders who are suspected of price gouging. 
B) Consumers are in favor of the lower lending rates. 
C) The lower rates allow people to borrow more. 
D) Lenders, not the Usury laws, are often blamed by people who do not get loans. C

Question 2

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?

Accepted Answer

A) $2,500 
B) $2,900 
C) $5,200 
D) $5,400 
A) $2,500 
B) $2,900 
C) $5,200 
D) $5,400 C

Question 3

Usury laws interfere with the automatic workings of the market mechanism.

Accepted Answer

A) True 
 B)False  True

Question 4

The quantity of loanable funds demanded

Accepted Answer

A) is where the interest rate equals the MPP of investment. 
B) is where the interest rate equals the MRP of investment. 
C) is where the interest rate equals the discounted value of investment. 
D) is where the interest rate makes equals the rental rate for marginal land. 
A) is where the interest rate equals the MPP of investment. 
B) is where the interest rate equals the MRP of investment. 
C) is where the interest rate equals the discounted value of investment. 
D) is where the interest rate makes equals the rental rate for marginal land.

Question 5

Demand for labor is

Accepted Answer

A) derived demand. 
B) highly elastic. 
C) dependent on its supply. 
D) directly proportional to capital employed. 
A) derived demand. 
B) highly elastic. 
C) dependent on its supply. 
D) directly proportional to capital employed.

Question 6

The economic rent analysis does not apply to any factor

Accepted Answer

A) except land. 
B) whose supply curve is vertical. 
C) whose supply curve is horizontal. 
D) whose quantity supplied is fixed. 
A) except land. 
B) whose supply curve is vertical. 
C) whose supply curve is horizontal. 
D) whose quantity supplied is fixed.

Question 7

Which factor receives the profit from production?

Accepted Answer

A) Land 
B) Labor 
C) Capital 
D) Entrepreneurship 
A) Land 
B) Labor 
C) Capital 
D) Entrepreneurship

Question 8

Mr.Calhoun owned a worn-out piece of farmland for growing cotton, which he had been unable to rent for years.Suddenly he was getting offers from cotton farmers to lease his land.What is the most likely explanation of this?

Accepted Answer

A) The price of cotton went down. 
B) The physical productivity of the land went up. 
C) Taxes on land went up. 
D) The price of cotton went up. 
A) The price of cotton went down. 
B) The physical productivity of the land went up. 
C) Taxes on land went up. 
D) The price of cotton went up.

Question 9

The marginal productivity principle implies that

Accepted Answer

A) quantity demanded of an input normally declines as the input price falls. 
B) at equilibrium, profit from the last unit of input will be zero. 
C) for maximizing profit, marginal revenue product should be greater than price. 
D) marginal productivity of inputs increase when price of inputs increase. 
A) quantity demanded of an input normally declines as the input price falls. 
B) at equilibrium, profit from the last unit of input will be zero. 
C) for maximizing profit, marginal revenue product should be greater than price. 
D) marginal productivity of inputs increase when price of inputs increase.

Question 10

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 11

Putting new ideas to work is called

Accepted Answer

A) invention. 
B) innovation. 
C) management. 
D) MPP. 
A) invention. 
B) innovation. 
C) management. 
D) MPP.

Question 12

Figure 19-3  
-The distinguishing feature of the land market is that the

Accepted Answer

A) supply is highly inelastic. 
B) supply is highly elastic. 
C) demand is highly inelastic. 
D) demand is highly elastic. 
A) supply is highly inelastic. 
B) supply is highly elastic. 
C) demand is highly inelastic. 
D) demand is highly elastic.

Question 13

The distribution of income in a market economy is determined by the minimum wage laws.

Accepted Answer

A) True 
 B)False

Question 14

It is not true of economic profits that they

Accepted Answer

A) are a reward for bearing risks. 
B) are generally greater than accounting profits. 
C) are zero in a competitive market. 
D) are difficult to measure. 
A) are a reward for bearing risks. 
B) are generally greater than accounting profits. 
C) are zero in a competitive market. 
D) are difficult to measure.

Question 15

Explain the distinction between investment and capital.

Accepted Answer

Investment is the flow of resources into

Question 16

Figure 19-3  
-Which panel in Figure 19-3 represents the case of an effective usury law?

Accepted Answer

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

Question 17

A sum of money received at a future date

Accepted Answer

A) is worth less than the same sum of money received today. 
B) is worth more than the same sum of money received today. 
C) has the same value as the same sum of money received today. 
D) is worth less than the same sum of money received yesterday. 
A) is worth less than the same sum of money received today. 
B) is worth more than the same sum of money received today. 
C) has the same value as the same sum of money received today. 
D) is worth less than the same sum of money received yesterday.

Question 18

Capital refers to an inventory or a stock of productive equipment and machines.

Accepted Answer

A) True 
 B)False

Question 19

Invention is the act of generating a new idea.

Accepted Answer

A) True 
 B)False

Question 20

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?

Accepted Answer

PV = ($10,000)/(1.05) = $ 9,52

Exam 18: Pricing the Factors of Production

Which is not a reason Usury laws are often politically popular?

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?

Usury laws interfere with the automatic workings of the market mechanism.

The quantity of loanable funds demanded

Demand for labor is

The economic rent analysis does not apply to any factor

Which factor receives the profit from production?

Mr.Calhoun owned a worn-out piece of farmland for growing cotton, which he had been unable to rent for years.Suddenly he was getting offers from cotton farmers to lease his land.What is the most likely explanation of this?

The marginal productivity principle implies that

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

Putting new ideas to work is called

Figure 19-3 -The distinguishing feature of the land market is that the

The distribution of income in a market economy is determined by the minimum wage laws.

It is not true of economic profits that they

Explain the distinction between investment and capital.

Figure 19-3 -Which panel in Figure 19-3 represents the case of an effective usury law?

A sum of money received at a future date

Capital refers to an inventory or a stock of productive equipment and machines.

Invention is the act of generating a new idea.

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?

What Is Economics

The Economony: 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

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

The Economics of 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

Contemporary Issues in the Useconomy

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