Question 1

The price for loanable funds is the interest rate.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) It assumes that the existing distribution of ownership factors is fair and just when it may not be. 
B) It does not tell us much about real policy matters. 
C) A factor's MRP does not in any way correspond to productive effort. 
D) It is inconsistent with most empirical observations. 
A) It assumes that the existing distribution of ownership factors is fair and just when it may not be. 
B) It does not tell us much about real policy matters. 
C) A factor's MRP does not in any way correspond to productive effort. 
D) It is inconsistent with most empirical observations.

Question 3

The derived demand for an input decreases when

Accepted Answer

A) the price of the input increases. 
B) the price of the output increases. 
C) the price of the input decreases. 
D) the price of the output decreases. 
A) the price of the input increases. 
B) the price of the output increases. 
C) the price of the input decreases. 
D) the price of the output decreases.

Question 4

Demand for inputs is a derived demand because

Accepted Answer

A) it is derived from the need for income. 
B) it corresponds to the derived supply of the inputs. 
C) producers want the input to produce the finished good. 
D) it is downward sloping. 
A) it is derived from the need for income. 
B) it corresponds to the derived supply of the inputs. 
C) producers want the input to produce the finished good. 
D) it is downward sloping.

Question 5

The marginal productivity theory of distribution holds that

Accepted Answer

A) each factor is paid what it deserves. 
B) the owner of each factor is paid the amount that the factor contributes to earnings. 
C) each factor's income depends on how hard it works. 
D) each factor receives an equal share of the revenue from production. 
A) each factor is paid what it deserves. 
B) the owner of each factor is paid the amount that the factor contributes to earnings. 
C) each factor's income depends on how hard it works. 
D) each factor receives an equal share of the revenue from production.

Question 6

A lottery promises a $250,000 prize. But the prize money is paid out in $50,000 annual installments with the first installment received today. The winner is offered the option of an immediate lump-sum payment. If the interest rate remains at 10 percent for the entire period, what is the smallest amount the winner should accept?

Accepted Answer

A) $189,540 
B) $192,970 
C) $208,494 
D) $225,000 
A) $189,540 
B) $192,970 
C) $208,494 
D) $225,000

Question 7

California passed a law called "Proposition 2 ½" that limited property taxes to 2.5 percent of property value. Naturally this reduced taxes on many properties, and apartment landlords had more money at the end of the year at given rents. This windfall could be called an economic rent only if

Accepted Answer

A) we push the definition of economic rent too far. 
B) the supply of rental units can be expanded. 
C) the supply of rental units is fixed. 
D) competitors can build housing at costs that yield the return that was earned before the tax cut. 
A) we push the definition of economic rent too far. 
B) the supply of rental units can be expanded. 
C) the supply of rental units is fixed. 
D) competitors can build housing at costs that yield the return that was earned before the tax cut.

Question 8

Suppose Billy runs a baseball team but has far less money to pay players than other teams. So he figures out how to find overlooked players who are worth more than other teams realize. Billy pays these players less than other teams would be willing to pay if they knew how good they were. As a result, Billy's team wins a lot of games without spending much on players. Which of the following is likely not true?

Accepted Answer

A) Billy's rent will equal the payroll costs of other teams with a similar number of wins less his payroll costs. 
B) Billy's rent will equal his payroll costs less the payroll costs of other teams with a similar number of wins. 
C) When rich teams realize how valuable these players are, they compete for the rent Billy is receiving by offering higher pay. 
D) When rich and poor teams realize how valuable the players Billy finds are, they compete for the rent Billy is receiving by copying his methods for evaluating players. 
A) Billy's rent will equal the payroll costs of other teams with a similar number of wins less his payroll costs. 
B) Billy's rent will equal his payroll costs less the payroll costs of other teams with a similar number of wins. 
C) When rich teams realize how valuable these players are, they compete for the rent Billy is receiving by offering higher pay. 
D) When rich and poor teams realize how valuable the players Billy finds are, they compete for the rent Billy is receiving by copying his methods for evaluating players.

Question 9

If the interest rate is r (expressed as a decimal number), the present value today of $1 to be received n years from today equals ____.

Accepted Answer

A) $1 r n 
B) $1(1 + r ) n  
C) $1\(1 + r ) n  
D) $1\(1 + n ) r  
A) $1 r n 
B) $1(1 + r ) n  
C) $1\(1 + r ) n  
D) $1\(1 + n ) r

Question 10

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.

Question 11

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 12

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 13

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 14

Steph Curry loves playing basketball so much that he would be willing accept a salary that simply keeps him housed and fed. But because his skills are so rare, professional basketball teams will compete to pay him tens of millions of dollars to play for them. These tens of millions of dollars are

Accepted Answer

A) pure profit. 
B) economic rent. 
C) marginal rent. 
D) competitive rent. 
A) pure profit. 
B) economic rent. 
C) marginal rent. 
D) competitive rent.

Question 15

Economic rent is paid only to land, and not to other resources.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) renters, because the demand for land is generally less elastic than its supply. 
B) renters, because the demand for land is generally more elastic than its supply. 
C) landlords, because the demand for land is generally less elastic than its supply. 
D) landlords, because the demand for land is generally more elastic than its supply. 
A) renters, because the demand for land is generally less elastic than its supply. 
B) renters, because the demand for land is generally more elastic than its supply. 
C) landlords, because the demand for land is generally less elastic than its supply. 
D) landlords, because the demand for land is generally more elastic than its supply.

Question 17

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 18

Economic rent is the payment made to a factor of production above the amount necessary to induce any of that factor to be supplied at its present employment.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) rising. 
B) falling. 
C) positive. 
D) negative. 
A) rising. 
B) falling. 
C) positive. 
D) negative.

Question 20

The interest rate is the

Accepted Answer

A) rate of investment. 
B) price of credit. 
C) rate of return on investment in capital goods. 
D) expected rate of inflation. 
A) rate of investment. 
B) price of credit. 
C) rate of return on investment in capital goods. 
D) expected rate of inflation.

The price for loanable funds is the interest rate.

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

The derived demand for an input decreases when

Demand for inputs is a derived demand because

The marginal productivity theory of distribution holds that

California passed a law called "Proposition 2 ½" that limited property taxes to 2.5 percent of property value. Naturally this reduced taxes on many properties, and apartment landlords had more money at the end of the year at given rents. This windfall could be called an economic rent only if

If the interest rate is r (expressed as a decimal number), the present value today of $1 to be received n years from today equals ____.

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

Which of the following would be classified as an innovation?

The equilibrium rent for marginal land

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

Steph Curry loves playing basketball so much that he would be willing accept a salary that simply keeps him housed and fed. But because his skills are so rare, professional basketball teams will compete to pay him tens of millions of dollars to play for them. These tens of millions of dollars are

Economic rent is paid only to land, and not to other resources.

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

It is not true of economic profits that they

Economic rent is the payment made to a factor of production above the amount necessary to induce any of that factor to be supplied at its present employment.

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

The interest rate is the

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

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

Externalities, Externaliteis, the Environment, and Natural Resources

Taxation and Resource Allocation

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

Contemporary Issues in the Us Economy

Filters

Exam 18: Pricing the Factors of Production

The price for loanable funds is the interest rate.

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

The derived demand for an input decreases when

Demand for inputs is a derived demand because

The marginal productivity theory of distribution holds that

California passed a law called "Proposition 2 ½" that limited property taxes to 2.5 percent of property value. Naturally this reduced taxes on many properties, and apartment landlords had more money at the end of the year at given rents. This windfall could be called an economic rent only if

If the interest rate is r (expressed as a decimal number), the present value today of $1 to be received n years from today equals ____.

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

Which of the following would be classified as an innovation?

The equilibrium rent for marginal land

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

Steph Curry loves playing basketball so much that he would be willing accept a salary that simply keeps him housed and fed. But because his skills are so rare, professional basketball teams will compete to pay him tens of millions of dollars to play for them. These tens of millions of dollars are

Economic rent is paid only to land, and not to other resources.

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

It is not true of economic profits that they

Economic rent is the payment made to a factor of production above the amount necessary to induce any of that factor to be supplied at its present employment.

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

The interest rate is the

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

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

Externalities, Externaliteis, the Environment, and Natural Resources

Taxation and Resource Allocation

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

Contemporary Issues in the Us Economy

Filters