Question 1

For the following, please answer "True" or "False" and explain why.
-Because of market power,wages are higher under monopsony than under competitive conditions.

Accepted Answer

A) True 
 B)False

Question 2

If an exhaustible resource is scarce,has constant marginal cost over time,and is sold in a competitive market,then

Accepted Answer

A)  its price increases over time. 
B)  its price will not be a function of the interest rate. 
C)  its price moves independently of past prices. 
D)  its price equals marginal cost. 
A)  its price increases over time. 
B)  its price will not be a function of the interest rate. 
C)  its price moves independently of past prices. 
D)  its price equals marginal cost.

Question 3

If a bond's coupon adjusts to pay a constant real rate of return,then an increase in inflation would cause

Accepted Answer

A)  the nominal coupon payment to rise. 
B)  the nominal coupon payment to fall. 
C)  the nominal coupon payment to remain unchanged. 
D)  the bond's price to fluctuate wildly. 
A)  the nominal coupon payment to rise. 
B)  the nominal coupon payment to fall. 
C)  the nominal coupon payment to remain unchanged. 
D)  the bond's price to fluctuate wildly.

Question 4

A firm should make an investment if the expected return is greater than

Accepted Answer

A)  the marginal cost of the investment. 
B)  the fixed cost of the investment. 
C)  the opportunity cost of the investment. 
D)  the expected rate of inflation. 
A)  the marginal cost of the investment. 
B)  the fixed cost of the investment. 
C)  the opportunity cost of the investment. 
D)  the expected rate of inflation.

Question 5

In the short run,a competitive firm has a marginal product of labor,MPL = 5L⁻⁰.⁵.The output price is $10 per unit and the wage is $7 per hour.The short-run labor demand curve for the firm is

Accepted Answer

A)  5L⁻⁰.⁵. 
B)  15L⁻⁰.⁵. 
C)  35L⁻⁰.⁵. 
D)  50L⁻⁰.⁵. 
A)  5L⁻⁰.⁵. 
B)  15L⁻⁰.⁵. 
C)  35L⁻⁰.⁵. 
D)  50L⁻⁰.⁵.

Question 6

How does a competitive firm's demand for labor react to a specific tax on each unit of output it sells?

Accepted Answer

The price the firm receives for each uni

Question 7

Suppose a new cost-saving device will generate $1,000 net savings per year to a firm.The device costs $10,000.Should the firm purchase the device?

Accepted Answer

A)  definitely 
B)  absolutely not 
C)  The firm is indifferent between buying the device and not. 
D)  More information is required to answer. 
A)  definitely 
B)  absolutely not 
C)  The firm is indifferent between buying the device and not. 
D)  More information is required to answer.

Question 8

A bond issuer agrees to pay a stated nominal amount each year.An increase in the nominal interest rate will cause

Accepted Answer

A)  the price of the bond to fall. 
B)  the price of the bond to rise. 
C)  the nominal value of the bond's coupon to rise. 
D)  the nominal value of the bond's coupon to fall. 
A)  the price of the bond to fall. 
B)  the price of the bond to rise. 
C)  the nominal value of the bond's coupon to rise. 
D)  the nominal value of the bond's coupon to fall.

Question 9

Interest rates are positive mainly because

Accepted Answer

A)  of inflation. 
B)  people tend to prefer the present to the future. 
C)  people tend to prefer the future to the present. 
D)  bankers are greedy. 
A)  of inflation. 
B)  people tend to prefer the present to the future. 
C)  people tend to prefer the future to the present. 
D)  bankers are greedy.

Question 10

If wages for a certain type of labor were higher in one market than in another,then

Accepted Answer

A)  the differential would exist into the long run. 
B)  labor would move from the high wage market to the low wage market until wages were equal. 
C)  labor would move from the low wage market to the high wage market until wages were equal. 
D)  firms would not be acting as profit maximizers. 
A)  the differential would exist into the long run. 
B)  labor would move from the high wage market to the low wage market until wages were equal. 
C)  labor would move from the low wage market to the high wage market until wages were equal. 
D)  firms would not be acting as profit maximizers.

Question 11

An exhaustible resource with a very large known reserve will most likely exhibit

Accepted Answer

A)  a highly variable price in the near future. 
B)  a decreasing price in the near future. 
C)  an increasing price in the near future. 
D)  a constant price in the near future. 
A)  a highly variable price in the near future. 
B)  a decreasing price in the near future. 
C)  an increasing price in the near future. 
D)  a constant price in the near future.

Question 12

XYZ Co.operates in a competitive market.Its marginal product of labor is 1/L,and it takes the wage and price as given.Derive the firm's short-run demand for labor as a function of w and p.How much labor will the firm hire if w = 2 and p = 10?

Accepted Answer

Setting w = p ∗ MPL

Question 13

Jerry wishes to retire in five years with $1 million in his bank account.If the account pays 4% and his current balance is $500,000,how much must he deposit at the beginning of each of the next five years for his wish to come true? The amount must be the same each year.

Accepted Answer

His current accumulation will grow to $6

Question 14

Suppose an exhaustible resource can be sold only this period or next period.The resource owner is considering selling 100 tons of the resource this period.The future value of the resource when 100 tons are sold this period is less than the present value of the 100 tons sold this period multiplied by one plus the interest rate.What should the resource owner do?

Accepted Answer

A)  She should sell more than 100 tons this period. 
B)  She should sell only 100 tons this period. 
C)  She should sell less than 100 tons this period. 
D)  She should not sell any of the resource in either period. 
A)  She should sell more than 100 tons this period. 
B)  She should sell only 100 tons this period. 
C)  She should sell less than 100 tons this period. 
D)  She should not sell any of the resource in either period.

Question 15

Suppose a monopoly producer is also a monopsonist in the labor market.Demand for the output is p = 100 - Q.The production function is Q = L,and the labor supply curve is w = 10 + L.How much labor does the firm hire? What wage is paid?

Accepted Answer

The firm's marginal revenue product of l

For the following, please answer "True" or "False" and explain why. -Because of market power,wages are higher under monopsony than under competitive conditions.

If an exhaustible resource is scarce,has constant marginal cost over time,and is sold in a competitive market,then

If a bond's coupon adjusts to pay a constant real rate of return,then an increase in inflation would cause

A firm should make an investment if the expected return is greater than

In the short run,a competitive firm has a marginal product of labor,MPL = 5L⁻⁰.⁵.The output price is $10 per unit and the wage is $7 per hour.The short-run labor demand curve for the firm is

How does a competitive firm's demand for labor react to a specific tax on each unit of output it sells?

Suppose a new cost-saving device will generate $1,000 net savings per year to a firm.The device costs $10,000.Should the firm purchase the device?

A bond issuer agrees to pay a stated nominal amount each year.An increase in the nominal interest rate will cause

Interest rates are positive mainly because

If wages for a certain type of labor were higher in one market than in another,then

An exhaustible resource with a very large known reserve will most likely exhibit

XYZ Co.operates in a competitive market.Its marginal product of labor is 1/L,and it takes the wage and price as given.Derive the firm's short-run demand for labor as a function of w and p.How much labor will the firm hire if w = 2 and p = 10?

Jerry wishes to retire in five years with $1 million in his bank account.If the account pays 4% and his current balance is $500,000,how much must he deposit at the beginning of each of the next five years for his wish to come true? The amount must be the same each year.

Suppose a monopoly producer is also a monopsonist in the labor market.Demand for the output is p = 100 - Q.The production function is Q = L,and the labor supply curve is w = 10 + L.How much labor does the firm hire? What wage is paid?

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

For the following, please answer "True" or "False" and explain why. -Because of market power,wages are higher under monopsony than under competitive conditions.

If an exhaustible resource is scarce,has constant marginal cost over time,and is sold in a competitive market,then

If a bond's coupon adjusts to pay a constant real rate of return,then an increase in inflation would cause

A firm should make an investment if the expected return is greater than

In the short run,a competitive firm has a marginal product of labor,MPL = 5L⁻⁰.⁵.The output price is $10 per unit and the wage is $7 per hour.The short-run labor demand curve for the firm is

How does a competitive firm's demand for labor react to a specific tax on each unit of output it sells?

Suppose a new cost-saving device will generate $1,000 net savings per year to a firm.The device costs $10,000.Should the firm purchase the device?

A bond issuer agrees to pay a stated nominal amount each year.An increase in the nominal interest rate will cause

Interest rates are positive mainly because

If wages for a certain type of labor were higher in one market than in another,then

An exhaustible resource with a very large known reserve will most likely exhibit

XYZ Co.operates in a competitive market.Its marginal product of labor is 1/L,and it takes the wage and price as given.Derive the firm's short-run demand for labor as a function of w and p.How much labor will the firm hire if w = 2 and p = 10?

Jerry wishes to retire in five years with $1 million in his bank account.If the account pays 4% and his current balance is $500,000,how much must he deposit at the beginning of each of the next five years for his wish to come true? The amount must be the same each year.

Suppose a monopoly producer is also a monopsonist in the labor market.Demand for the output is p = 100 - Q.The production function is Q = L,and the labor supply curve is w = 10 + L.How much labor does the firm hire? What wage is paid?

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