Question 1

Activist capitalists who seek out or create earnings opportunities and assume risk, for which they receive profits, are called

Accepted Answer

A) rent seekers. 
B) entrepreneurs. 
C) muckrakers. 
D) marginalists. 
A) rent seekers. 
B) entrepreneurs. 
C) muckrakers. 
D) marginalists.

Question 2

On the surface, usury laws are designed to protect consumers from exorbitant interest rates.

Accepted Answer

A) True 
 B)False

Question 3

In 2013 ____ of national factor income consisted of employee compensation.

Accepted Answer

A) 90 percent 
B) 50 percent 
C) 60 percent 
D) 70 percent 
A) 90 percent 
B) 50 percent 
C) 60 percent 
D) 70 percent

Question 4

Usury laws typically regulate

Accepted Answer

A) interest rates paid on savings. 
B) interest rates charged on loans. 
C) rents charged on land. 
D) economic rent earned in all factor markets. 
A) interest rates paid on savings. 
B) interest rates charged on loans. 
C) rents charged on land. 
D) economic rent earned in all factor markets.

Question 5

An increase in the interest rate causes the MRP of a resource to fall.

Accepted Answer

A) True 
 B)False

Question 6

The income to someone such as Lebron James is

Accepted Answer

A) mostly pure rent. 
B) composed of a payment necessary to induce him into employment plus economic rent. 
C) a return to a factor in fixed supply; there is only one of him. 
D) All of the above are correct. 
A) mostly pure rent. 
B) composed of a payment necessary to induce him into employment plus economic rent. 
C) a return to a factor in fixed supply; there is only one of him. 
D) All of the above are correct.

Question 7

An increase in rent will ordinarily lead to

Accepted Answer

A) an increase in usage of land that was formerly idle. 
B) a decrease in total land employed. 
C) less-intensive usage of land. 
D) a decrease in the income of landlords. 
A) an increase in usage of land that was formerly idle. 
B) a decrease in total land employed. 
C) less-intensive usage of land. 
D) a decrease in the income of landlords.

Question 8

Rent seeking

Accepted Answer

A) often entails large opportunity costs. 
B) prevents waste of resources. 
C) often promotes fairness in distribution of resources. 
D) cannot occur in a planned economy. 
A) often entails large opportunity costs. 
B) prevents waste of resources. 
C) often promotes fairness in distribution of resources. 
D) cannot occur in a planned economy.

Question 9

A usury rate is like a price ceiling.

Accepted Answer

A) True 
 B)False

Question 10

A worker can always build a chair in four hours.If a chair sells for $40 in a perfectly competitive market, then the equilibrium wage per hour in a perfectly competitive labor market is

Accepted Answer

A) $4. 
B) $10. 
C) $40. 
D) $160. 
A) $4. 
B) $10. 
C) $40. 
D) $160.

Question 11

If a small firm wishes to pay cash in one year for a $10,000 machine, how much must the firm currently place in savings at 5 percent in order to have the necessary total cash in one year?

Accepted Answer

ApplicationPV = ($10,000)/(1.0

Question 12

MRP represents what the marginal physical product is worth.

Accepted Answer

A) True 
 B)False

Question 13

Plots of land differ in

Accepted Answer

A) quality of soil. 
B) topography. 
C) proximity to marketplaces. 
D) All of the above are correct. 
A) quality of soil. 
B) topography. 
C) proximity to marketplaces. 
D) All of the above are correct.

Question 14

If mining companies are indifferent between operating and not operating a quarry, that quarry is

Accepted Answer

A) discounted. 
B) usurious. 
C) marginal. 
D) nonexcludable. 
A) discounted. 
B) usurious. 
C) marginal. 
D) nonexcludable.

Question 15

Profits

Accepted Answer

A) are what remains from the selling price after factors have been paid. 
B) accrue to entrepreneurs. 
C) are lower than most people think. 
D) All of the above are correct. 
A) are what remains from the selling price after factors have been paid. 
B) accrue to entrepreneurs. 
C) are lower than most people think. 
D) All of the above are correct.

Question 16

A sum of money received at a future date is worth less than the same sum of money received today.Why?
 Explain this with an example.

Accepted Answer

A dollar obtainable sooner is worth more

Question 17

The market level (magnitude) of economic rent is determined by the

Accepted Answer

A) supply side of the market. 
B) demand side of the market. 
C) intersection of supply and demand. 
D) elasticity of demand for land. 
A) supply side of the market. 
B) demand side of the market. 
C) intersection of supply and demand. 
D) elasticity of demand for land.

Question 18

The interest rate is determined by

Accepted Answer

A) the supply and demand of loanable funds. 
B) the supply and demand of land. 
C) the supply and demand of marginal land. 
D) None of the above is correct. 
A) the supply and demand of loanable funds. 
B) the supply and demand of land. 
C) the supply and demand of marginal land. 
D) None of the above is correct.

Question 19

How can bonuses to exceptional employees be considered economic rents?

Accepted Answer

The payment for any input can be divided

Question 20

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.)

Accepted Answer

PV = ($10,000)/(1.1) + ($10,00

Exam 18: Pricing the Factors of Production

Activist capitalists who seek out or create earnings opportunities and assume risk, for which they receive profits, are called

On the surface, usury laws are designed to protect consumers from exorbitant interest rates.

In 2013 ____ of national factor income consisted of employee compensation.

Usury laws typically regulate

An increase in the interest rate causes the MRP of a resource to fall.

The income to someone such as Lebron James is

An increase in rent will ordinarily lead to

Rent seeking

A usury rate is like a price ceiling.

A worker can always build a chair in four hours.If a chair sells for $40 in a perfectly competitive market, then the equilibrium wage per hour in a perfectly competitive labor market is

If a small firm wishes to pay cash in one year for a $10,000 machine, how much must the firm currently place in savings at 5 percent in order to have the necessary total cash in one year?

MRP represents what the marginal physical product is worth.

Plots of land differ in

If mining companies are indifferent between operating and not operating a quarry, that quarry is

Profits

A sum of money received at a future date is worth less than the same sum of money received today.Why? Explain this with an example.

The market level (magnitude) of economic rent is determined by the

The interest rate is determined by

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.)

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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