Question 1

The accumulation of machinery and buildings used in the production of new goods and services is referred to as:

Accepted Answer

A)  financial equity 
B)  capital stock 
C)  capital flow 
D)  financial capital 
A)  financial equity 
B)  capital stock 
C)  capital flow 
D)  financial capital

Question 2

Labour markets are governed by the force(s) of:

Accepted Answer

A)  supply and demand 
B)  regulation and supply 
C)  demand only 
D)  supply only 
A)  supply and demand 
B)  regulation and supply 
C)  demand only 
D)  supply only

Question 3

If workers respond to an increase in the opportunity cost of leisure by taking more of it, their labour supply curve is:

Accepted Answer

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

Question 4

If you purchase a part ownership stake in a firm, you are said to be:

Accepted Answer

A)  preferred sharing 
B)  share-sharing 
C)  a bond holder 
D)  a shareholder 
A)  preferred sharing 
B)  share-sharing 
C)  a bond holder 
D)  a shareholder

Question 5

The purchase price of capital is:

Accepted Answer

A)  the price a person pays to own that factor of production indefinitely 
B)  the price received from the flow of some capital services 
C)  the value of the capital to the firm 
D)  always less than the rental price 
A)  the price a person pays to own that factor of production indefinitely 
B)  the price received from the flow of some capital services 
C)  the value of the capital to the firm 
D)  always less than the rental price

Question 6

Suppose that the value of the marginal product of labour is now less than the wage. Hiring an additional worker would be:

Accepted Answer

A)  profitable 
B)  unprofitable 
C)  either profitable or unprofitable depending on other circumstances 
D)  a socially responsible thing to do 
A)  profitable 
B)  unprofitable 
C)  either profitable or unprofitable depending on other circumstances 
D)  a socially responsible thing to do

Question 7

As the number of concrete workers in Australia falls, the wage paid to the remaining concrete workers will fall as well.

Accepted Answer

A) True 
 B)False

Question 8

The value of the marginal product of labour is equal to the change in:

Accepted Answer

A)  total revenue with the addition of the last worker 
B)  total cost with the addition of the last worker 
C)  total profit with the addition of the last worker 
D)  marginal cost with the addition of the last worker 
A)  total revenue with the addition of the last worker 
B)  total cost with the addition of the last worker 
C)  total profit with the addition of the last worker 
D)  marginal cost with the addition of the last worker

Question 9

Amy has two jobs, one for the winter and one for the summer. In the winter, she works as a tour guide at a crocodile zoo and earns $15 an hour. During the summer, Amy works as an English tutor and earns $18 an hour.
-According to the information provided, what is Amy's opportunity cost of taking an hour off work to go cycling during the winter months?

Accepted Answer

A)  less than $15 
B)  $15 
C)  $18 
D)  between $15 and $18 
A)  less than $15 
B)  $15 
C)  $18 
D)  between $15 and $18

Question 10

A recent flood in Queensland has destroyed much of the farmland used to cultivate bananas and tomatoes that lies in fertile regions near the rivers. Describe the effect of the flood on the marginal productivity of land, labour and capital. How would the flood affect the price of inputs? Provide some examples.

Accepted Answer

The flood would increase the marginal pr

Question 11

Faustmann owns a small forestry company in New Zealand. Which of the following events will lead to an increase in Faustmann's labour demand curve for timber-workers? (i) the price of A-grade timber increases
(ii) local workers form a union to protect themselves from low wages
(iii) Faustmann installs a new drying kiln to increase the volume of timber that can be processed

Accepted Answer

A)  (i) and (ii) 
B)  (ii) and (iii) 
C)  (i) and (iii) 
D)  (i), (ii) and (iii) 
A)  (i) and (ii) 
B)  (ii) and (iii) 
C)  (i) and (iii) 
D)  (i), (ii) and (iii)

Question 12

The marginal product of any factor of production depends on:

Accepted Answer

A)  the price of the final good 
B)  the demand for the final good 
C)  the quantity of the factor used 
D)  all of the above 
A)  the price of the final good 
B)  the demand for the final good 
C)  the quantity of the factor used 
D)  all of the above

Question 13

Graph 18-1
   This graph represents the value of marginal product for a firm that sells its product in a competitive market. Use the graph to answer the following question(s).
-Refer to Graph 18-1. If a firm was operating at a level of output above Q*, decreasing the amount of labour would do which of the following? (i) raise profit
(ii) possibly lower revenue
(iii) increase the marginal product of labour

Accepted Answer

A)  (i) and (ii) 
B)  (ii) and (iii) 
C)  (i) and (iii) 
D)  (i), (ii) and (iii) 
A)  (i) and (ii) 
B)  (ii) and (iii) 
C)  (i) and (iii) 
D)  (i), (ii) and (iii)

Question 14

The value of the marginal product of any input is equal to the marginal product of that input multiplied by the market price of the output.

Accepted Answer

A) True 
 B)False

Question 15

Describe the difference between a diminishing marginal product of labour and a negative marginal product of labour. Why would a profit-maximising firm always choose to operate where the marginal product of labour is decreasing (but not negative)?

Accepted Answer

Diminishing marginal product of labour m

Question 16

What will happen to the labour demand curve for timber workers and why in the following cases:
a. the price of timber increases.
b. new harvesting technology increases the quantity of logs that can be processed.
c. several of the forestry company's sawmills have to be shut down to deal with toxic waste spills.

Accepted Answer

a. Labour demand will increase because t

Question 17

Describe the process by which the market for capital and the market for land reach equilibrium. As part of your description, elaborate on the role of the stock of the resource versus the flow of services from the resource.

Accepted Answer

Equilibrium in the markets for land and

Question 18

Which of the following qualify as part of our economy's capital income?

Accepted Answer

A)  interest earned in savings accounts 
B)  interest paid to the owners of corporate bonds 
C)  dividends paid to stockholders 
D)  all of the above 
A)  interest earned in savings accounts 
B)  interest paid to the owners of corporate bonds 
C)  dividends paid to stockholders 
D)  all of the above

Question 19

For the profit-maximising competitive firm, the value of marginal product curve is:

Accepted Answer

A)  the labour demand curve 
B)  the labour supply curve 
C)  always rising 
D)  falling only when marginal product is rising 
A)  the labour demand curve 
B)  the labour supply curve 
C)  always rising 
D)  falling only when marginal product is rising

Question 20

The rental price of capital is:

Accepted Answer

A)  the price paid to use capital for a limited time period 
B)  the price paid for ownership of the capital 
C)  always more than the purchase price 
D)  determined outside the realm of factor markets 
A)  the price paid to use capital for a limited time period 
B)  the price paid for ownership of the capital 
C)  always more than the purchase price 
D)  determined outside the realm of factor markets

Exam 19: The Markets for the Factors of Production

The accumulation of machinery and buildings used in the production of new goods and services is referred to as:

Labour markets are governed by the force(s) of:

If workers respond to an increase in the opportunity cost of leisure by taking more of it, their labour supply curve is:

If you purchase a part ownership stake in a firm, you are said to be:

The purchase price of capital is:

Suppose that the value of the marginal product of labour is now less than the wage. Hiring an additional worker would be:

As the number of concrete workers in Australia falls, the wage paid to the remaining concrete workers will fall as well.

The value of the marginal product of labour is equal to the change in:

The marginal product of any factor of production depends on:

The value of the marginal product of any input is equal to the marginal product of that input multiplied by the market price of the output.

Describe the difference between a diminishing marginal product of labour and a negative marginal product of labour. Why would a profit-maximising firm always choose to operate where the marginal product of labour is decreasing (but not negative)?

Describe the process by which the market for capital and the market for land reach equilibrium. As part of your description, elaborate on the role of the stock of the resource versus the flow of services from the resource.

Which of the following qualify as part of our economy's capital income?

For the profit-maximising competitive firm, the value of marginal product curve is:

The rental price of capital is:

Ten Lessons From Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand and Government Policies

Consumers, Producers and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Business Strategy

Competition Policy

Monopolistic Competition

Earnings, Unions and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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