Question 1

The demand curve for loanable funds is downward sloping because

Accepted Answer

A) people save more at higher interest rates. 
B) more investments are profitable at low interest rates than at high interest rates. 
C) future income is more valuable now at higher interest rates than at low interest rates. 
D) usury laws increase the quantity of funds demanded at low interest rates but do not affect the quantity of funds demanded at high interest rates. 
A) people save more at higher interest rates. 
B) more investments are profitable at low interest rates than at high interest rates. 
C) future income is more valuable now at higher interest rates than at low interest rates. 
D) usury laws increase the quantity of funds demanded at low interest rates but do not affect the quantity of funds demanded at high interest rates.

Question 2

Distinguish between invention and innovation.

Accepted Answer

Invention is the creation of new product

Question 3

Usury laws carry the potential of hurting

Accepted Answer

A) borrowers. 
B) lenders. 
C) borrowers and lenders. 
D) government. 
A) borrowers. 
B) lenders. 
C) borrowers and lenders. 
D) government.

Question 4

Entrepreneurs differ from managers because

Accepted Answer

A) they use innovation to gain advantage over their competitors. 
B) managers use established managing styles; entrepreneurs do not. 
C) entrepreneurs tend to take more risk than managers. 
D) All of the above are correct. 
A) they use innovation to gain advantage over their competitors. 
B) managers use established managing styles; entrepreneurs do not. 
C) entrepreneurs tend to take more risk than managers. 
D) All of the above are correct.

Question 5

Interest is the payment for the use of funds.

Accepted Answer

A) True 
 B)False

Question 6

Use the concept of economic rent to explain how rent controls could have an effect quite opposite to the intention.

Accepted Answer

Only economic rent can be taxed away wit

Question 7

How does the market mechanism distribute income?

Accepted Answer

The market mechanism distributes income

Question 8

A certain machine will last one year, will produce $120 in income (received one year later), and will cost $100.The lowest interest rate at which this investment will be unprofitable is

Accepted Answer

A) 10 percent. 
B) 11 percent. 
C) 19 percent. 
D) 22 percent. 
A) 10 percent. 
B) 11 percent. 
C) 19 percent. 
D) 22 percent.

Question 9

The theory of economic rent can be used to explain high incomes received by movie stars and athletes.

Accepted Answer

A) True 
 B)False

Question 10

The supply curve for land is perfectly elastic.

Accepted Answer

A) True 
 B)False

Question 11

Figure 19-3
  
-Which panel in Figure 19-3 represents the case of an effective usury law?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 12

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 13

Each firm's capital stock is fixed in the short run.Therefore, if the price of capital increases, then in the short run the market demand curve for labor in a perfectly competitive market will

Accepted Answer

A) shift inward. 
B) be unaffected. 
C) shift outward. 
D) change slope. 
A) shift inward. 
B) be unaffected. 
C) shift outward. 
D) change slope.

Question 14

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 15

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 16

Which of the following have been suggested as sources of economic profit?

Accepted Answer

A) exercise of monopoly power by firms 
B) accepting a large degree of risk 
C) successful innovation 
D) All of the above are correct. 
A) exercise of monopoly power by firms 
B) accepting a large degree of risk 
C) successful innovation 
D) All of the above are correct.

Question 17

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 18

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 19

What is the distribution of national income currently among the owners of the factors of production-land, labor, capital, and entrepreneurship?

Accepted Answer

According to the text, in 2013, rent was

Question 20

The loan supply curve has a positive slope

Accepted Answer

A) for all savers. 
B) only for savers with fixed accumulation targets. 
C) for all savers except those with fixed accumulation goals. 
D) only for those contemplating retirement. 
A) for all savers. 
B) only for savers with fixed accumulation targets. 
C) for all savers except those with fixed accumulation goals. 
D) only for those contemplating retirement.

Exam 18: Pricing the Factors of Production

The demand curve for loanable funds is downward sloping because

Distinguish between invention and innovation.

Usury laws carry the potential of hurting

Entrepreneurs differ from managers because

Interest is the payment for the use of funds.

Use the concept of economic rent to explain how rent controls could have an effect quite opposite to the intention.

How does the market mechanism distribute income?

A certain machine will last one year, will produce $120 in income (received one year later), and will cost $100.The lowest interest rate at which this investment will be unprofitable is

The theory of economic rent can be used to explain high incomes received by movie stars and athletes.

The supply curve for land is perfectly elastic.

Figure 19-3 -Which panel in Figure 19-3 represents the case of an effective usury law?

Innovation is

Each firm's capital stock is fixed in the short run.Therefore, if the price of capital increases, then in the short run the market demand curve for labor in a perfectly competitive market will

No economist today would claim that

The marginal productivity theory of distribution holds that

Which of the following have been suggested as sources of economic profit?

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

Investment is the amount by which ____ grows.

What is the distribution of national income currently among the owners of the factors of production-land, labor, capital, and entrepreneurship?

The loan supply curve has a positive slope

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

Securities: Business Finance and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets: the Price System

The Shortcomings of Free Markets

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

Is Useconomic Leadership Threatened

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

He 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

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