Question 1

A change in the interest rate changes the demand for loanable funds.

Accepted Answer

A) True 
 B)False

Question 2

A worker can always build a chair in four hours.If a chair sells for $40 in a perfectly competitive market, then the equilibrium wage per hour in a perfectly competitive labor market is

Accepted Answer

A) $4. 
B) $10. 
C) $40. 
D) $160. 
A) $4. 
B) $10. 
C) $40. 
D) $160.

Question 3

Critics of the huge net returns on, for example, oil production will claim that the returns are

Accepted Answer

A) interest on the capital investment. 
B) rents on a natural resource. 
C) profits on entrepreneurial activity. 
D) exorbitant and should be taxed away. 
A) interest on the capital investment. 
B) rents on a natural resource. 
C) profits on entrepreneurial activity. 
D) exorbitant and should be taxed away.

Question 4

Marginal physical product is

Accepted Answer

A) the increase in input usage resulting from an increase in revenue. 
B) the same as marginal revenue product. 
C) equal to average physical product when a monopoly firm is in equilibrium. 
D) the increase in output stemming from a one-unit increase in input. 
A) the increase in input usage resulting from an increase in revenue. 
B) the same as marginal revenue product. 
C) equal to average physical product when a monopoly firm is in equilibrium. 
D) the increase in output stemming from a one-unit increase in input.

Question 5

The three major sources of economic profit are

Accepted Answer

A) risk-bearing, innovation, and exercise of monopoly power. 
B) risk-bearing, rent seeking, and discounting. 
C) innovation, invention, and speculation. 
D) exercise of market power, marginalization, and speculation. 
A) risk-bearing, innovation, and exercise of monopoly power. 
B) risk-bearing, rent seeking, and discounting. 
C) innovation, invention, and speculation. 
D) exercise of market power, marginalization, and speculation.

Question 6

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 7

Discounted cash flows shows that dollars received now are worth less than dollars received in the future.

Accepted Answer

A) True 
 B)False

Question 8

In a competitive market for Sardines, if Mama Jessica's chain of pizza restaurants decides to support hard-working sardine fishers by paying 15 percent above market price, what would the theory of economic rent predict?

Accepted Answer

A) The quantity supplied of sardines will exceed the quantity demanded. 
B) The quantity demanded of sardined will exceed the quantity supplied. 
C) The expected economic profits selling from sardines to Mama Jessica's will exceed the competitive sardine market profits. 
D) The expected economic profits selling from sardines to Mama Jessica's will equal the competitive sardine market profits. 
A) The quantity supplied of sardines will exceed the quantity demanded. 
B) The quantity demanded of sardined will exceed the quantity supplied. 
C) The expected economic profits selling from sardines to Mama Jessica's will exceed the competitive sardine market profits. 
D) The expected economic profits selling from sardines to Mama Jessica's will equal the competitive sardine market profits.

Question 9

What are the factors that contribute to productivity growth in the market economy and which of them is considered most important?

Accepted Answer

There are three oft-cited factors that c

Question 10

The functioning of a market economy is very dependent upon investment for provision of capital and future growth.Describe the process of investment and employment of the created capital in production.

Accepted Answer

The text lists five steps: (1) decision

Question 11

No economist today would claim that

Accepted Answer

A) marginal productivity analysis is either just or unjust. 
B) the marginal productivity theory of distribution is a theory of the demand side of the pertinent market. 
C) payments are made not to factors of production but to the people who happen to own them. 
D) a productive input's MRP depends in part on how much of it is employed. 
A) marginal productivity analysis is either just or unjust. 
B) the marginal productivity theory of distribution is a theory of the demand side of the pertinent market. 
C) payments are made not to factors of production but to the people who happen to own them. 
D) a productive input's MRP depends in part on how much of it is employed.

Question 12

If the interest rate is positive, the present value of $10 to be received in the future is

Accepted Answer

A) less than $10. 
B) equal to $10. 
C) more than $10. 
D) Any of the above is possible, depending on the interest rate and when the payment is to be received. 
A) less than $10. 
B) equal to $10. 
C) more than $10. 
D) Any of the above is possible, depending on the interest rate and when the payment is to be received.

Question 13

Marginal land can be defined as land that earns neither profits nor losses.

Accepted Answer

A) True 
 B)False

Question 14

The distribution of income in a market economy is determined by

Accepted Answer

A) the level of employment and prices of the factors of production. 
B) the prices of factors of production. 
C) largely unknown forces, which economists seek to discover. 
D) decisions of government offices related to distribution. 
A) the level of employment and prices of the factors of production. 
B) the prices of factors of production. 
C) largely unknown forces, which economists seek to discover. 
D) decisions of government offices related to distribution.

Question 15

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 16

Marginal land is land on the borderline of

Accepted Answer

A) producing revenue. 
B) being used profitably. 
C) producing economic rent. 
D) a facility that produces output. 
A) producing revenue. 
B) being used profitably. 
C) producing economic rent. 
D) a facility that produces output.

Question 17

The demand for borrowed funds is

Accepted Answer

A) directly related to the interest rate. 
B) inversely related to the growth in gross domestic product. 
C) a derived demand. 
D) leads to derived demand for capital goods. 
A) directly related to the interest rate. 
B) inversely related to the growth in gross domestic product. 
C) a derived demand. 
D) leads to derived demand for capital goods.

Question 18

Innovation is the act of generating an idea for a new product.

Accepted Answer

A) True 
 B)False

Question 19

Which factor of production receives the greatest share of the U.S.national income?

Accepted Answer

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

Question 20

What involves taking the risks that are necessary to seek out business opportunities?

Accepted Answer

A) Invention 
B) Benchmarking 
C) Averaging 
D) Entrepreneurship 
A) Invention 
B) Benchmarking 
C) Averaging 
D) Entrepreneurship

Exam 18: Pricing the Factors of Production

A change in the interest rate changes the demand for loanable funds.

A worker can always build a chair in four hours.If a chair sells for $40 in a perfectly competitive market, then the equilibrium wage per hour in a perfectly competitive labor market is

Critics of the huge net returns on, for example, oil production will claim that the returns are

Marginal physical product is

The three major sources of economic profit are

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

Discounted cash flows shows that dollars received now are worth less than dollars received in the future.

In a competitive market for Sardines, if Mama Jessica's chain of pizza restaurants decides to support hard-working sardine fishers by paying 15 percent above market price, what would the theory of economic rent predict?

What are the factors that contribute to productivity growth in the market economy and which of them is considered most important?

The functioning of a market economy is very dependent upon investment for provision of capital and future growth.Describe the process of investment and employment of the created capital in production.

No economist today would claim that

If the interest rate is positive, the present value of $10 to be received in the future is

Marginal land can be defined as land that earns neither profits nor losses.

The distribution of income in a market economy is determined by

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

Marginal land is land on the borderline of

The demand for borrowed funds is

Innovation is the act of generating an idea for a new product.

Which factor of production receives the greatest share of the U.S.national income?

What involves taking the risks that are necessary to seek out business opportunities?

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

Filters