Question 1

Rent is defined as

Accepted Answer

A) the cost of using land. 
B) the difference between revenues received for a product less the costs of inputs other than entrepreneurship. 
C) the payments to an input less the amount needed to induce the factor to be supplied. 
D) the cost of using factor inputs. 
A) the cost of using land. 
B) the difference between revenues received for a product less the costs of inputs other than entrepreneurship. 
C) the payments to an input less the amount needed to induce the factor to be supplied. 
D) the cost of using factor inputs.

Question 2

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 3

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

Accepted Answer

A) he or she receives economic rent on the land. 
B) he or she is paid at least the opportunity cost of using the land himself or herself. 
C) his or her land is marginal. 
D) his or her rate of return on his or her investment in the land is zero. 
A) he or she receives economic rent on the land. 
B) he or she is paid at least the opportunity cost of using the land himself or herself. 
C) his or her land is marginal. 
D) his or her rate of return on his or her investment in the land is zero.

Question 4

The demand curve for any input is the downward-sloping portion of its marginal revenue product curve.

Accepted Answer

A) True 
 B)False

Question 5

Economic rent refers to profit derived from owning real estate.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) perfect competition. 
B) oligopoly. 
C) monopolistic competition. 
D) rent seeking. 
A) perfect competition. 
B) oligopoly. 
C) monopolistic competition. 
D) rent seeking.

Question 7

If marginal revenue product is less than price of the input, the firm should use more of the input.

Accepted Answer

A) True 
 B)False

Question 8

Investment is the amount by which ____ grows.

Accepted Answer

A) portfolio 
B) income 
C) earnings 
D) capital 
A) portfolio 
B) income 
C) earnings 
D) capital

Question 9

The theory of land rent holds that

Accepted Answer

A) all plots of land are identical. 
B) all land yields a positive rent return. 
C) rent on any piece of land will equal the difference between the cost of producing the output on that land and the cost of producing it on marginal land. 
D) competition for superior plots of land will force the rent on those lands to a marginal return of zero. 
A) all plots of land are identical. 
B) all land yields a positive rent return. 
C) rent on any piece of land will equal the difference between the cost of producing the output on that land and the cost of producing it on marginal land. 
D) competition for superior plots of land will force the rent on those lands to a marginal return of zero.

Question 10

One major fault with factor pricing analysis is that marginal productivity theory merely attempts to justify the income distribution that the capitalist system yields.

Accepted Answer

A) True 
 B)False

Question 11

An employer would never operate on the upward-sloping part of an MRP curve because

Accepted Answer

A) he or she would not be maximizing profits. 
B) he or she would be hiring workers at wages above MRP. 
C) the number of workers is too large to get economies of scale. 
D) he or she would then have too little capital per worker. 
A) he or she would not be maximizing profits. 
B) he or she would be hiring workers at wages above MRP. 
C) the number of workers is too large to get economies of scale. 
D) he or she would then have too little capital per worker.

Question 12

On January 1, 2006, a consumer borrowed $10,000 for a term of one year at an interest rate of 12 percent.How much principal and interest will the consumer pay back on January 1, 2007?

Accepted Answer

A) $10,000 
B) $1,200 
C) $8,929 
D) $11,200 
A) $10,000 
B) $1,200 
C) $8,929 
D) $11,200

Question 13

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 14

Which of the following is not held constant along a demand curve for labor by a firm?

Accepted Answer

A) The firm's technology of production 
B) The price of the firm's output 
C) The marginal product of labor for the firm 
D) The price of substitutes for the firm's output 
A) The firm's technology of production 
B) The price of the firm's output 
C) The marginal product of labor for the firm 
D) The price of substitutes for the firm's output

Question 15

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 16

The derived demand for borrowed funds has the characteristic negative slope of any demand curve.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Which of the following activities is most likely to be considered rent seeking?

Accepted Answer

A) Buying an apartment building 
B) Hiring a lobbyist 
C) Voting for a politician who supports government spending 
D) Buying common stock 
A) Buying an apartment building 
B) Hiring a lobbyist 
C) Voting for a politician who supports government spending 
D) Buying common stock

Question 19

A profit-maximizing firm will hire inputs until MRP = P of the input.

Accepted Answer

A) True 
 B)False

Question 20

Which is not an example of rent seeking?

Accepted Answer

A) Lobbying by industrial groups for special income tax reductions. 
B) Lawsuits filed by a firm to keep a competitor from selling similar products. 
C) A firm competing in an auction to purchase exclusive licenses to sell in a market. 
D) A firm increasing production when the price for it product increases. 
A) Lobbying by industrial groups for special income tax reductions. 
B) Lawsuits filed by a firm to keep a competitor from selling similar products. 
C) A firm competing in an auction to purchase exclusive licenses to sell in a market. 
D) A firm increasing production when the price for it product increases.

Exam 18: Pricing the Factors of Production

Rent is defined as

Rent seeking

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

The demand curve for any input is the downward-sloping portion of its marginal revenue product curve.

Economic rent refers to profit derived from owning real estate.

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

If marginal revenue product is less than price of the input, the firm should use more of the input.

Investment is the amount by which ____ grows.

The theory of land rent holds that

One major fault with factor pricing analysis is that marginal productivity theory merely attempts to justify the income distribution that the capitalist system yields.

An employer would never operate on the upward-sloping part of an MRP curve because

On January 1, 2006, a consumer borrowed $10,000 for a term of one year at an interest rate of 12 percent.How much principal and interest will the consumer pay back on January 1, 2007?

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

Which of the following is not held constant along a demand curve for labor by a firm?

Which of the following would be classified as an innovation?

The derived demand for borrowed funds has the characteristic negative slope of any demand curve.

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

Which of the following activities is most likely to be considered rent seeking?

A profit-maximizing firm will hire inputs until MRP = P of the input.

Which is not an example of rent seeking?

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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