Question 1

As interest rates rise, more and more investments become profitable for a firm.

Accepted Answer

A) True 
 B)False

Question 2

Innovation is the act of putting an invention to practical use.

Accepted Answer

A) True 
 B)False

Question 3

Marginal productivity analysis shows that a drop in the price of the product will cause input use to

Accepted Answer

A) increase. 
B) decrease. 
C) stay the same. 
D) The information is insufficient to provide an answer. 
A) increase. 
B) decrease. 
C) stay the same. 
D) The information is insufficient to provide an answer.

Question 4

Innovation is

Accepted Answer

A) the same thing as invention. 
B) the desired result of invention. 
C) the necessary precondition of invention. 
D) unrelated to invention. 
A) the same thing as invention. 
B) the desired result of invention. 
C) the necessary precondition of invention. 
D) unrelated to invention.

Question 5

Explain the effect of a usury law.

Accepted Answer

A usury law puts a ceiling on the intere

Question 6

The supply of loanable funds is not

Accepted Answer

A) upward sloping. 
B) affected by people's plans for fixed purchases. 
C) a function of the interest rate. 
D) the MRP of investment. 
A) upward sloping. 
B) affected by people's plans for fixed purchases. 
C) a function of the interest rate. 
D) the MRP of investment.

Question 7

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 8

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

Accepted Answer

A) True 
 B)False

Question 9

What is the relevance of the marginal productivity principle in explaining the use of inputs in production?

Accepted Answer

According to the marginal productivity p

Question 10

If the credit market is close to being a competitive market, an interest rate ceiling imposed by usury laws will bring misallocations of resources.

Accepted Answer

A) True 
 B)False

Question 11

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

Question 12

Interest is the payment for the use of funds used to produce capital.

Accepted Answer

A) True 
 B)False

Question 13

Discounting or computing present value is a way of comparing dollar values that will appear at different points in time.

Accepted Answer

A) True 
 B)False

Question 14

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 15

High profits in some risky industries attract additional entrepreneurs to those industries.

Accepted Answer

A) True 
 B)False

Question 16

It is not true of profits that they

Accepted Answer

A) are what remains from the selling price after factors have been paid. 
B) accrue to entrepreneurs. 
C) account for a relatively small portion of national income. 
D) account for about as much national income as wages and salaries. 
A) are what remains from the selling price after factors have been paid. 
B) accrue to entrepreneurs. 
C) account for a relatively small portion of national income. 
D) account for about as much national income as wages and salaries.

Question 17

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 18

If the equilibrium rate of interest would be 10 percent, but the usury law sets 8 percent,

Accepted Answer

A) the quantity of funds supplied would be greater than the quantity demanded. 
B) economic efficiency would be promoted. 
C) some applicants for loans would likely be turned down. 
D) lenders would be able to fund fully all requests for loans. 
A) the quantity of funds supplied would be greater than the quantity demanded. 
B) economic efficiency would be promoted. 
C) some applicants for loans would likely be turned down. 
D) lenders would be able to fund fully all requests for loans.

Question 19

Profit is the return to entrepreneurship.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 18: Pricing the Factors of Production

As interest rates rise, more and more investments become profitable for a firm.

Innovation is the act of putting an invention to practical use.

Marginal productivity analysis shows that a drop in the price of the product will cause input use to

Innovation is

Explain the effect of a usury law.

The supply of loanable funds is not

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

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

What is the relevance of the marginal productivity principle in explaining the use of inputs in production?

If the credit market is close to being a competitive market, an interest rate ceiling imposed by usury laws will bring misallocations of resources.

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

Interest is the payment for the use of funds used to produce capital.

Discounting or computing present value is a way of comparing dollar values that will appear at different points in time.

The quantity of loanable funds demanded

High profits in some risky industries attract additional entrepreneurs to those industries.

It is not true of profits that they

The economic rent analysis does not apply to any factor

If the equilibrium rate of interest would be 10 percent, but the usury law sets 8 percent,

Profit is the return to entrepreneurship.

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

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

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