Exam 18: Pricing the Factors of Production

If a ton of steel sells for $15,000 and a car made from a ton of steel sells for $30,000, then if all markets are perfectly competitive, how many cars can be made from the last ton of steel used by a profit-maximizing firm?

Demand for inputs is a derived demand because

The supply of loanable funds is not

Suppose that nineteenth-century politicians had succeeded in their attempt to impose a "single tax"-a tax on suppliers of land (i.e., landlords).Most of the economic burden of the tax would have been borne by

If factor markets are competitive, a profit maximizing firm should buy inputs where MRP is

What is the distinction between innovation and invention?

The cost of production on the "bottom forty" is $100,000 for a given size crop.On the "north forty," due to erosion of the soil, the cost is $150,000.If both are being farmed by tenants, we would expect the rent on the "bottom forty" to be

The demand curve for a factor is that part of the MRP where marginal product is

Contrast the shapes of the supply curves for financial capital and land.

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

Profit is the return to entrepreneurship.

How can bonuses to exceptional employees be considered economic rents?

If a manager has determined that a particular piece of capital is likely to increase the cash flow of a business by $10,000 for the next five years, what is the present value of the capital at an interest rate of 10 percent? (Assume that the cash flow first increases one year from today.)

The difference between the cost of production on a piece of land less the cost of production on marginal land is called

As interest rates increase,

In Japan, the market value of the land is approximately four times that of all the land in the United States, even though Japan is only about the size of California.The most likely explanation for this fact is

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

Economists consider rent seeking activity to be highly productive.

An example of an investment is

Which is not a criticism of the marginal productivity theory of distribution?