Question 1

If you invest $500 today,and the value one year from today is $1000,then the annual interest rate must be

Accepted Answer

A)  10%. 
B)  50%. 
C)  100%. 
D)  200%. 
A)  10%. 
B)  50%. 
C)  100%. 
D)  200%.

Question 2

Today John says,"I will start working out tomorrow." Yet as tomorrow arrives,he doesn't.This is an example of

Accepted Answer

A)  time inconsistent preferences. 
B)  time consistent preferences. 
C)  exponential discounting. 
D)  future-biased preferences. 
A)  time inconsistent preferences. 
B)  time consistent preferences. 
C)  exponential discounting. 
D)  future-biased preferences.

Question 3

For a given rate of interest,the total interest you receive from lending money

Accepted Answer

A)  increases with the frequency of compounding. 
B)  decreases with the frequency of compounding. 
C)  is independent of the frequency of compounding. 
D)  is greatest when there is no compounding. 
A)  increases with the frequency of compounding. 
B)  decreases with the frequency of compounding. 
C)  is independent of the frequency of compounding. 
D)  is greatest when there is no compounding.

Question 4

At age 40,Joe is considering quitting his job and going back for a college degree.He needs two more years full-time.Tuition is $10,000 per year.He earns $30,000 per year.A college degree would raise his annual income by $10,000 per year.He will retire at age 70.His benefit of a degree would be

Accepted Answer

A)  10,000 ×   
B)  10,000 ×   
C)  10,000/r. 
D)  10,000 ×   
A)  10,000 ×   
B)  10,000 ×   
C)  10,000/r. 
D)  10,000 ×

Question 5

Explain why a decrease in an input price causes less of an increase in the quantity demanded of the factor if we assumed that product price remained constant.

Accepted Answer

The input price decrease will lead to ad

Question 6

For a monopoly,the value of the next worker equals

Accepted Answer

A)  MR ∗ MPL. 
B)  (price + the effect of increased output on price) ∗ MPL. 
C)  P(1+1/e) * MPL 
D)  all of the above. 
A)  MR ∗ MPL. 
B)  (price + the effect of increased output on price) ∗ MPL. 
C)  P(1+1/e) * MPL 
D)  all of the above.

Question 7

Suppose that your college offers you two payment plans.You may either pay tuition of $10,000 per year at the beginning of each of the next four years,or pay just $38,000 before the start of freshman year.If the interest rate is 10%,what would you do? If the interest rate were 2%,what would you do? Intuitively explain the difference in your answer.

Accepted Answer

At 10%,the future stream of tuition paym

Question 8

If a firm is a price taker in both the labor market and the output market,it will

Accepted Answer

A)  earn zero economic profit in the short run. 
B)  hire labor until the marginal product of labor equals zero. 
C)  hire labor until the marginal revenue product equals the output price. 
D)  hire labor until the marginal revenue product equals the wage rate. 
A)  earn zero economic profit in the short run. 
B)  hire labor until the marginal product of labor equals zero. 
C)  hire labor until the marginal revenue product equals the output price. 
D)  hire labor until the marginal revenue product equals the wage rate.

Question 9

-The above figure shows a competitive firm's demand for labor assuming that the firm's output sells for $1 per unit.If the wage is $5 per hour,a ten cent per unit subsidy on the good sold by the firm will cause the firm to

Accepted Answer

A)  demand less labor. 
B)  demand more labor. 
C)  raise the wage for workers to $5.10. 
D)  None of the above. 
A)  demand less labor. 
B)  demand more labor. 
C)  raise the wage for workers to $5.10. 
D)  None of the above.

Question 10

-The above figure shows a competitive firm's demand for labor assuming that the firm's output sells for $1 per unit.If the wage is $5 per hour,the firm will hire

Accepted Answer

A)  10 units of labor per hour. 
B)  5 units of labor per hour. 
C)  2.5 units of labor per hour. 
D)  0 units of labor per hour. 
A)  10 units of labor per hour. 
B)  5 units of labor per hour. 
C)  2.5 units of labor per hour. 
D)  0 units of labor per hour.

Question 11

In an economy with no inflation,explain why interest rates are positive.

Accepted Answer

Because most people prefer con

Question 12

In the short run,which one of the following causes a competitive firm to hire more labor?

Accepted Answer

A)  an increase in wage rate 
B)  an increase in the output price 
C)  a specific tax imposed on the firm's output 
D)  a decrease in the output price 
A)  an increase in wage rate 
B)  an increase in the output price 
C)  a specific tax imposed on the firm's output 
D)  a decrease in the output price

Question 13

A financial services company offers to pay you $1,000 a year for life in exchange for $20,000 today.What factors affect your decision to take this offer?

Accepted Answer

This policy has an internal ra

Question 14

If a firm buys its labor in a competitive market,then a short-run increase in the price of the firm's output will cause the firm to

Accepted Answer

A)  offer a higher wage. 
B)  hire fewer workers. 
C)  hire more workers. 
D)  offer a lower wage. 
A)  offer a higher wage. 
B)  hire fewer workers. 
C)  hire more workers. 
D)  offer a lower wage.

Question 15

Suppose n identical Cournot firms purchase labor in a competitive labor market.How is the market demand for labor affected by the number of firms in the market?

Accepted Answer

Each firm chooses a quantity of labor de

Question 16

For the following, please answer "True" or "False" and explain why.
-Suppose $100 is deposited in a bank account paying 5% compounded annually.If the interest earned is X after five years,then the interest earned will be 2X after 10 years.

Accepted Answer

A) True 
 B)False

Question 17

For the following, please answer "True" or "False" and explain why.
-A recent purchaser of a bond that agrees to pay an annual nominal amount would hope that interest rates do not rise.

Accepted Answer

A) True 
 B)False

Question 18

The real internal rate of return on a college education is about

Accepted Answer

A)  0%. 
B)  2.5%. 
C)  6.9%. 
D)  15%. 
A)  0%. 
B)  2.5%. 
C)  6.9%. 
D)  15%.

Question 19

In a perfectly competitive resource market,the labor supply curve facing the single firm is

Accepted Answer

A)  vertical. 
B)  horizontal. 
C)  downward sloping. 
D)  upward sloping. 
A)  vertical. 
B)  horizontal. 
C)  downward sloping. 
D)  upward sloping.

Question 20

Suppose coal sells for $50 per ton and can be mined at a constant marginal cost of $20 per ton.Forecasters predict that the price of coal next year will be $55.If your marginal cost next year will still be $20 and the interest rate is 10%,do you sell coal today?

Accepted Answer

You are indifferent if coal pr

If you invest $500 today,and the value one year from today is $1000,then the annual interest rate must be

Today John says,"I will start working out tomorrow." Yet as tomorrow arrives,he doesn't.This is an example of

For a given rate of interest,the total interest you receive from lending money

At age 40,Joe is considering quitting his job and going back for a college degree.He needs two more years full-time.Tuition is $10,000 per year.He earns $30,000 per year.A college degree would raise his annual income by $10,000 per year.He will retire at age 70.His benefit of a degree would be

Explain why a decrease in an input price causes less of an increase in the quantity demanded of the factor if we assumed that product price remained constant.

For a monopoly,the value of the next worker equals

If a firm is a price taker in both the labor market and the output market,it will

-The above figure shows a competitive firm's demand for labor assuming that the firm's output sells for $1 per unit.If the wage is $5 per hour,a ten cent per unit subsidy on the good sold by the firm will cause the firm to

-The above figure shows a competitive firm's demand for labor assuming that the firm's output sells for $1 per unit.If the wage is $5 per hour,the firm will hire

In an economy with no inflation,explain why interest rates are positive.

In the short run,which one of the following causes a competitive firm to hire more labor?

A financial services company offers to pay you $1,000 a year for life in exchange for $20,000 today.What factors affect your decision to take this offer?

If a firm buys its labor in a competitive market,then a short-run increase in the price of the firm's output will cause the firm to

Suppose n identical Cournot firms purchase labor in a competitive labor market.How is the market demand for labor affected by the number of firms in the market?

For the following, please answer "True" or "False" and explain why. -Suppose $100 is deposited in a bank account paying 5% compounded annually.If the interest earned is X after five years,then the interest earned will be 2X after 10 years.

For the following, please answer "True" or "False" and explain why. -A recent purchaser of a bond that agrees to pay an annual nominal amount would hope that interest rates do not rise.

The real internal rate of return on a college education is about

In a perfectly competitive resource market,the labor supply curve facing the single firm is

Suppose coal sells for $50 per ton and can be mined at a constant marginal cost of $20 per ton.Forecasters predict that the price of coal next year will be $55.If your marginal cost next year will still be $20 and the interest rate is 10%,do you sell coal today?

Introduction

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Monopoly and Monopsony

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Uncertainty

Property Rights, externalities, rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 15: Factor Markets

If you invest $500 today,and the value one year from today is $1000,then the annual interest rate must be

Today John says,"I will start working out tomorrow." Yet as tomorrow arrives,he doesn't.This is an example of

For a given rate of interest,the total interest you receive from lending money

At age 40,Joe is considering quitting his job and going back for a college degree.He needs two more years full-time.Tuition is $10,000 per year.He earns $30,000 per year.A college degree would raise his annual income by $10,000 per year.He will retire at age 70.His benefit of a degree would be

Explain why a decrease in an input price causes less of an increase in the quantity demanded of the factor if we assumed that product price remained constant.

For a monopoly,the value of the next worker equals

If a firm is a price taker in both the labor market and the output market,it will

-The above figure shows a competitive firm's demand for labor assuming that the firm's output sells for $1 per unit.If the wage is $5 per hour,a ten cent per unit subsidy on the good sold by the firm will cause the firm to

-The above figure shows a competitive firm's demand for labor assuming that the firm's output sells for $1 per unit.If the wage is $5 per hour,the firm will hire

In an economy with no inflation,explain why interest rates are positive.

In the short run,which one of the following causes a competitive firm to hire more labor?

A financial services company offers to pay you $1,000 a year for life in exchange for $20,000 today.What factors affect your decision to take this offer?

If a firm buys its labor in a competitive market,then a short-run increase in the price of the firm's output will cause the firm to

Suppose n identical Cournot firms purchase labor in a competitive labor market.How is the market demand for labor affected by the number of firms in the market?

For the following, please answer "True" or "False" and explain why. -Suppose $100 is deposited in a bank account paying 5% compounded annually.If the interest earned is X after five years,then the interest earned will be 2X after 10 years.

For the following, please answer "True" or "False" and explain why. -A recent purchaser of a bond that agrees to pay an annual nominal amount would hope that interest rates do not rise.

The real internal rate of return on a college education is about

In a perfectly competitive resource market,the labor supply curve facing the single firm is

Suppose coal sells for $50 per ton and can be mined at a constant marginal cost of $20 per ton.Forecasters predict that the price of coal next year will be $55.If your marginal cost next year will still be $20 and the interest rate is 10%,do you sell coal today?

Introduction

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Monopoly and Monopsony

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Uncertainty

Property Rights, externalities, rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters