Question 1

If Delores wanted to make sure that she had $3,000 a year from now, how much would she need to save now if the interest rate is 7 percent?

Accepted Answer

A)  $3000 
B)  $2804 
C)  $2790 
D)  $2666 
A)  $3000 
B)  $2804 
C)  $2790 
D)  $2666

Question 2

Changes in which of the following change the demand for capital and shifts the demand curve for capital?

Accepted Answer

A)  current income 
B)  expected future income 
C)  the rental rate 
D)  the marginal product of capital 
A)  current income 
B)  expected future income 
C)  the rental rate 
D)  the marginal product of capital

Question 3

-Hank's Propane Storage Company is a profit-maximizing monopsony in the local labor market for propane handling, delivery, and other associated services. The supply and marginal cost of labor curves are shown in the figure above. Hank's demand for labor curve is the curve labeled VMP = D. At what level should a minimum wage be set in order to achieve the wage rate and quantity of employment that would be attained in a competitive labor market?

Accepted Answer

A)  $4 per hour 
B)  $6 per hour 
C)  $8 per hour 
D)  $12 per hour 
A)  $4 per hour 
B)  $6 per hour 
C)  $8 per hour 
D)  $12 per hour

Question 4

Discounting is the process whereby

Accepted Answer

A)  present values are adjusted to their future value, using the interest rate. 
B)  future values are converted to their value today, using the interest rate. 
C)  product prices are reduced (discounted) to increase sales and profits today. 
D)  future values are adjusted for inflation. 
A)  present values are adjusted to their future value, using the interest rate. 
B)  future values are converted to their value today, using the interest rate. 
C)  product prices are reduced (discounted) to increase sales and profits today. 
D)  future values are adjusted for inflation.

Question 5

Because the value of marginal product diminishes as the quantity of labor employed increases, the ________ the wage rate, the ________ workers the firm hires.

Accepted Answer

A)  lower; more 
B)  higher; more 
C)  lower; fewer 
D)  None of the above answers is correct because there is no relationship between the wage rate and the number of workers hired. 
A)  lower; more 
B)  higher; more 
C)  lower; fewer 
D)  None of the above answers is correct because there is no relationship between the wage rate and the number of workers hired.

Question 6

An auction of the leases to drill for natural gas on about 55,000 acres on the Roan Plateau in western Colorado in August 2008 generated nearly $114 million, a record high for onshore energy lease sales in the lower 48 states. What is going on in the rental market for land?

Accepted Answer

A)  There is a decrease in the value of marginal product for an acre on the Roan Plateau, leading to an increase in the equilibrium rental rate. 
B)  There is an increase in the value of marginal product for an acre on the Roan Plateau, leading to a decrease in the equilibrium rental rate. 
C)  There is an increase in the supply of acreage on the Roan Plateau, leading to an increase in the equilibrium rental rate. 
D)  There is an increase in the value of marginal product for an acre on the Roan Plateau, leading to an increase in the equilibrium rental rate. 
A)  There is a decrease in the value of marginal product for an acre on the Roan Plateau, leading to an increase in the equilibrium rental rate. 
B)  There is an increase in the value of marginal product for an acre on the Roan Plateau, leading to a decrease in the equilibrium rental rate. 
C)  There is an increase in the supply of acreage on the Roan Plateau, leading to an increase in the equilibrium rental rate. 
D)  There is an increase in the value of marginal product for an acre on the Roan Plateau, leading to an increase in the equilibrium rental rate.

Question 7

Pennsylvania's largest grower of fresh-to-market tomatoes announced in March 2009 he will no longer produce the crop. The acreage he previously devoted to tomatoes and pumpkins will be converted to field corn that is harvested by machines. Of the following, which could have led to the shift from labor intensive tomato production to field corn?

Accepted Answer

A)  The market price of tomatoes increased. 
B)  Farm workers' reservation wage fell. 
C)  The wage rate for farm workers increased. 
D)  All of the answers are true. 
A)  The market price of tomatoes increased. 
B)  Farm workers' reservation wage fell. 
C)  The wage rate for farm workers increased. 
D)  All of the answers are true.

Question 8

A firm that can sell its output for $40 per unit. When it increases its labor force from 4 workers to 5 workers its output increases from 15 to 17 units. The value of marginal product of the 5th worker is

Accepted Answer

A)  $680. 
B)  $340. 
C)  $80. 
D)  $40. 
A)  $680. 
B)  $340. 
C)  $80. 
D)  $40.

Question 9

-In the above figure, the monopsony wage rate is ________ and the quantity of labor is ________.

Accepted Answer

A)  $7.00; 150 hours 
B)  $8.00; 200 hours 
C)  $6.00; 100 hours 
D)  $8.00; 100 hours 
A)  $7.00; 150 hours 
B)  $8.00; 200 hours 
C)  $6.00; 100 hours 
D)  $8.00; 100 hours

Question 10

The present value of $50 to be received next year is $40. The interest rate is

Accepted Answer

A)  10 percent. 
B)  20 percent. 
C)  25 percent. 
D)  50 percent. 
A)  10 percent. 
B)  20 percent. 
C)  25 percent. 
D)  50 percent.

Question 11

A technological change that raises the value of marginal product of capital ________ the rental rate of capital because the ________.

Accepted Answer

A)  raises; supply curve of capital shifts leftward 
B)  lowers; supply curve of capital shifts rightward 
C)  raises; demand curve for capital shifts rightward 
D)  lowers; demand curve for capital shifts leftward 
A)  raises; supply curve of capital shifts leftward 
B)  lowers; supply curve of capital shifts rightward 
C)  raises; demand curve for capital shifts rightward 
D)  lowers; demand curve for capital shifts leftward

Question 12

The labor supply curve is backward bending because

Accepted Answer

A)  as the wage rate rises, the substitution effect becomes larger than the income effect. 
B)  as the wage rate rises, the income effect becomes larger than the substitution effect. 
C)  an increase in the wage rate shifts the supply of labor curve leftward at higher wages. 
D)  an increase in the wage rate shifts the supply of labor curve rightward at higher wages. 
A)  as the wage rate rises, the substitution effect becomes larger than the income effect. 
B)  as the wage rate rises, the income effect becomes larger than the substitution effect. 
C)  an increase in the wage rate shifts the supply of labor curve leftward at higher wages. 
D)  an increase in the wage rate shifts the supply of labor curve rightward at higher wages.

Question 13

When the price of the good or service it produces rises, the firm's

Accepted Answer

A)  demand for labor curve shifts rightward. 
B)  demand for labor curve shifts leftward. 
C)  demand for labor curve remains unchanged. 
D)  output decreases. 
A)  demand for labor curve shifts rightward. 
B)  demand for labor curve shifts leftward. 
C)  demand for labor curve remains unchanged. 
D)  output decreases.

Question 14

Suppose the price of car wash returns to $5 but the wage rate increases to $80 per day.
a) What happens to the marginal product of labor? What happens to the value of marginal product? What happens to Sandy's demand for labor curve?
b) What happens to the number of workers Sandy employs? How does this number compare with the number Sandy employs when the wage rate is $60 per day?

Accepted Answer

@#IMG-DLM& a) The marginal product of labor depend

Question 15

The value of marginal product equals

Accepted Answer

A)  total revenue divided by total product (output). 
B)  marginal revenue divided by marginal product. 
C)  total revenue multiplied by total product (output). 
D)  good's market price multiplied by marginal product. 
A)  total revenue divided by total product (output). 
B)  marginal revenue divided by marginal product. 
C)  total revenue multiplied by total product (output). 
D)  good's market price multiplied by marginal product.

Question 16

Land is an example of an nonrenewable resource.

Accepted Answer

A) True 
 B)False

Question 17

Next year's expected price of oil is $88 per barrel and the interest rate is 10 percent per year. According to the Hotelling Principle the price of oil this year is

Accepted Answer

A)  $80 per barrel. 
B)  $88 per barrel. 
C)  $96 per barrel. 
D)  None of the above answer is correct. 
A)  $80 per barrel. 
B)  $88 per barrel. 
C)  $96 per barrel. 
D)  None of the above answer is correct.

Question 18

The demand for the services of labor ________ a derived demand and the demand for the services of land ________ a derived demand.

Accepted Answer

A)  is; is 
B)  is; is not 
C)  is not; is 
D)  is not; is not 
A)  is; is 
B)  is; is not 
C)  is not; is 
D)  is not; is not

Question 19

A rational individual would be indifferent between ________ today and ________ four years from today if the interest is 20 percent.

Accepted Answer

A)  $100, $100 
B)  $48, $100 
C)  $30, $100 
D)  $100, $48 
A)  $100, $100 
B)  $48, $100 
C)  $30, $100 
D)  $100, $48

Question 20

-Winnie's Car Wash is a perfectly competitive firm. The table above shows Winnie's total product schedule. If the price of a car wash is $4 and the wage rate is $70 per day, how many workers should Winnie employ to maximize his profit?

Accepted Answer

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

If Delores wanted to make sure that she had $3,000 a year from now, how much would she need to save now if the interest rate is 7 percent?

Changes in which of the following change the demand for capital and shifts the demand curve for capital?

Discounting is the process whereby

Because the value of marginal product diminishes as the quantity of labor employed increases, the the wage rate, the workers the firm hires.

An auction of the leases to drill for natural gas on about 55,000 acres on the Roan Plateau in western Colorado in August 2008 generated nearly $114 million, a record high for onshore energy lease sales in the lower 48 states. What is going on in the rental market for land?

A firm that can sell its output for $40 per unit. When it increases its labor force from 4 workers to 5 workers its output increases from 15 to 17 units. The value of marginal product of the 5th worker is

-In the above figure, the monopsony wage rate is and the quantity of labor is .

The present value of $50 to be received next year is $40. The interest rate is

A technological change that raises the value of marginal product of capital the rental rate of capital because the .

The labor supply curve is backward bending because

When the price of the good or service it produces rises, the firm's

The value of marginal product equals

Land is an example of an nonrenewable resource.

Next year's expected price of oil is $88 per barrel and the interest rate is 10 percent per year. According to the Hotelling Principle the price of oil this year is

The demand for the services of labor a derived demand and the demand for the services of land a derived demand.

A rational individual would be indifferent between today and four years from today if the interest is 20 percent.

-Winnie's Car Wash is a perfectly competitive firm. The table above shows Winnie's total product schedule. If the price of a car wash is $4 and the wage rate is $70 per day, how many workers should Winnie employ to maximize his profit?

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Economic Inequality

Uncertainty and Information

Filters

Exam 18: Markets for Factors of Production

If Delores wanted to make sure that she had $3,000 a year from now, how much would she need to save now if the interest rate is 7 percent?

Changes in which of the following change the demand for capital and shifts the demand curve for capital?

Discounting is the process whereby

Because the value of marginal product diminishes as the quantity of labor employed increases, the ________ the wage rate, the ________ workers the firm hires.

An auction of the leases to drill for natural gas on about 55,000 acres on the Roan Plateau in western Colorado in August 2008 generated nearly $114 million, a record high for onshore energy lease sales in the lower 48 states. What is going on in the rental market for land?

A firm that can sell its output for $40 per unit. When it increases its labor force from 4 workers to 5 workers its output increases from 15 to 17 units. The value of marginal product of the 5th worker is

-In the above figure, the monopsony wage rate is ________ and the quantity of labor is ________.

The present value of $50 to be received next year is $40. The interest rate is

A technological change that raises the value of marginal product of capital ________ the rental rate of capital because the ________.

The labor supply curve is backward bending because

When the price of the good or service it produces rises, the firm's

The value of marginal product equals

Land is an example of an nonrenewable resource.

Next year's expected price of oil is $88 per barrel and the interest rate is 10 percent per year. According to the Hotelling Principle the price of oil this year is

The demand for the services of labor ________ a derived demand and the demand for the services of land ________ a derived demand.

A rational individual would be indifferent between ________ today and ________ four years from today if the interest is 20 percent.

-Winnie's Car Wash is a perfectly competitive firm. The table above shows Winnie's total product schedule. If the price of a car wash is $4 and the wage rate is $70 per day, how many workers should Winnie employ to maximize his profit?

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Economic Inequality

Uncertainty and Information

Filters

Because the value of marginal product diminishes as the quantity of labor employed increases, the the wage rate, the workers the firm hires.

-In the above figure, the monopsony wage rate is and the quantity of labor is .

A technological change that raises the value of marginal product of capital the rental rate of capital because the .

The demand for the services of labor a derived demand and the demand for the services of land a derived demand.

A rational individual would be indifferent between today and four years from today if the interest is 20 percent.