Question 1

Demand for labor is

Accepted Answer

A) derived demand. 
B) highly elastic. 
C) dependant on its supply. 
D) directly proportional to capital employed. 
A) derived demand. 
B) highly elastic. 
C) dependant on its supply. 
D) directly proportional to capital employed.

Question 2

Invention is the act of generating a new idea.

Accepted Answer

A) True 
 B)False

Question 3

In 2013, interest payments were about ____ percent of national income.

Accepted Answer

A) 0.51/2 
B) 1.29 
C) 3.2 
D) 4.0 
A) 0.51/2 
B) 1.29 
C) 3.2 
D) 4.0

Question 4

Rent-seeking activity by firms

Accepted Answer

A) often wastes economic resources. 
B) increases economic efficiency. 
C) continues even when an industry is in long-run competitive equilibrium. 
D) increases the total amount of economic rent available. 
A) often wastes economic resources. 
B) increases economic efficiency. 
C) continues even when an industry is in long-run competitive equilibrium. 
D) increases the total amount of economic rent available.

Question 5

MPP is the additional output that results from a one-unit increase in use of the input.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Suppose that the rate of interest increases.What will happen to the discounted present value of an investment?

Accepted Answer

A) It will increase. 
B) It will decrease. 
C) It will remain unchanged. 
D) It depends on the magnitude of the change. 
A) It will increase. 
B) It will decrease. 
C) It will remain unchanged. 
D) It depends on the magnitude of the change.

Question 8

Mr.Paque is a bear hunter for timber companies that want to diminish damage to trees done by bears in the spring.Due to a reduction in the bear population between 1995 and 2005, Mr.Paque finds fewer bears each year and additional hours spent hunting produce fewer additional bears.With the information given and noting that the bounty on bears has risen, one can conclude that (i) Mr.Paque's income per hunting hours will fall; (ii) the derived demand for Mr.Paque's services will shift left.

Accepted Answer

A) i and ii 
B) i not ii 
C) ii not i 
D) neither i nor ii 
A) i and ii 
B) i not ii 
C) ii not i 
D) neither i nor ii

Question 9

The rent earned on marginal land is

Accepted Answer

A) zero. 
B) the average of all qualities of land. 
C) above the average of all qualities of land. 
D) below the average of all qualities of land. 
A) zero. 
B) the average of all qualities of land. 
C) above the average of all qualities of land. 
D) below the average of all qualities of land.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Which factor receives the profit from production?

Accepted Answer

A) land 
B) labor 
C) capital 
D) entrepreneurship 
A) land 
B) labor 
C) capital 
D) entrepreneurship

Question 12

Entrepreneurship is

Accepted Answer

A) restricted to perfect competition. 
B) occurs only in well-functioning markets. 
C) the process of planting new crops. 
D) the process of taking business risks. 
A) restricted to perfect competition. 
B) occurs only in well-functioning markets. 
C) the process of planting new crops. 
D) the process of taking business risks.

Question 13

What is the present value of an infinite stream of annual payments of $10,000 per year if the first payment is received one year from today?
Assume the interest rate is 10 percent.

Accepted Answer

A) $100,000 
B) $1,000,000 
C) $10,000,000 
D) $1,000,000,000 
A) $100,000 
B) $1,000,000 
C) $10,000,000 
D) $1,000,000,000

Question 14

The demand curve for any input is the MP curve.

Accepted Answer

A) True 
 B)False

Question 15

The marginal productivity principle has relevance only in a capitalist economy, and not in a socialist system.

Accepted Answer

A) True 
 B)False

Question 16

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 17

The difference in values between money today and money in the future is lower when the rate of interest is higher.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not a loan of funds?

Accepted Answer

A) home mortgage 
B) government bond 
C) corporate stock 
D) corporate bond 
A) home mortgage 
B) government bond 
C) corporate stock 
D) corporate bond

Question 19

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 20

The distribution of income in a market economy is determined by the minimum wage laws.

Accepted Answer

A) True 
 B)False

Exam 18: Pricing the Factors of Production

Demand for labor is

Invention is the act of generating a new idea.

In 2013, interest payments were about ____ percent of national income.

Rent-seeking activity by firms

MPP is the additional output that results from a one-unit increase in use of the input.

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

Suppose that the rate of interest increases.What will happen to the discounted present value of an investment?

The rent earned on marginal land is

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

Which factor receives the profit from production?

Entrepreneurship is

What is the present value of an infinite stream of annual payments of $10,000 per year if the first payment is received one year from today? Assume the interest rate is 10 percent.

The demand curve for any input is the MP curve.

The marginal productivity principle has relevance only in a capitalist economy, and not in a socialist system.

The demand for borrowed funds is

The difference in values between money today and money in the future is lower when the rate of interest is higher.

Which of the following is not a loan of funds?

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

The distribution of income in a market economy is determined by the minimum wage laws.

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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