Question 1

The economy's stock of equipment and structures is best described as?

Accepted Answer

A)  aggregate stock 
B)  aggregate structures 
C)  capital 
D)  shares and derivatives 
A)  aggregate stock 
B)  aggregate structures 
C)  capital 
D)  shares and derivatives

Question 2

The equilibrium purchase price of land or capital depends on which of the following? (i) the current value of the marginal product
(ii) the expected future value of the marginal product
(iii) the price of the final good that is being produced by the given factor

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 3

A competitive firm will hire workers up to the point at which the value of the marginal product equals the:

Accepted Answer

A)  wage 
B)  price 
C)  total revenue 
D)  total cost 
A)  wage 
B)  price 
C)  total revenue 
D)  total cost

Question 4

The demand for apple pickers is derived from the demand for apples.

Accepted Answer

A) True 
 B)False

Question 5

Explain how a firm values the contribution of workers to its profitability. Would a profit-maximising competitive firm ever stop increasing employment as long as marginal product is rising? Explain your answer.

Accepted Answer

A firm values the contribution of a work

Question 6

Table 18-1
  
-Refer to Table 18-1. If the firm hires two workers, the two workers together produce:

Accepted Answer

A)  80 units 
B)  90 units 
C)  100 units 
D)  180 units 
A)  80 units 
B)  90 units 
C)  100 units 
D)  180 units

Question 7

Productivity is low in most Asian countries.

Accepted Answer

A) True 
 B)False

Question 8

Table 18-1
  
-Refer to Table 18-1. What is the market price of the final good?

Accepted Answer

A)  $5 
B)  $10 
C)  $15 
D)  $20 
A)  $5 
B)  $10 
C)  $15 
D)  $20

Question 9

Because of diminishing returns, a factor in scarce supply has a:

Accepted Answer

A)  low marginal product and a low rental price 
B)  low marginal product and a high rental price 
C)  high marginal product and a high rental price 
D)  high marginal product and a low rental price 
A)  low marginal product and a low rental price 
B)  low marginal product and a high rental price 
C)  high marginal product and a high rental price 
D)  high marginal product and a low rental price

Question 10

The purchase price of capital is the price a person pays to own that factor of production indefinitely, while the rental price of capital is the price paid to use capital for a limited time period.

Accepted Answer

A) True 
 B)False

Question 11

Faustmann owns a small forestry company in New Zealand. Which of the following events will lead to a decrease in Faustmann's labour demand curve for timber-workers?

Accepted Answer

A)  the local timber-workers form a union 
B)  the price of plywood falls 
C)  training subsidies for forestry workers leads to many more school-graduates applying for jobs at Faustmann's company 
D)  all of the above 
A)  the local timber-workers form a union 
B)  the price of plywood falls 
C)  training subsidies for forestry workers leads to many more school-graduates applying for jobs at Faustmann's company 
D)  all of the above

Question 12

If the price of bread falls, what will happen to the demand curve for bakers?

Accepted Answer

A)  it will shift to the right 
B)  it will shift to the left 
C)  it will shift down 
D)  it will remain unchanged; price changes do not shift demand curves 
A)  it will shift to the right 
B)  it will shift to the left 
C)  it will shift down 
D)  it will remain unchanged; price changes do not shift demand curves

Question 13

The opportunity cost of leisure is impossible to measure, since we can't measure leisure time in dollars.

Accepted Answer

A) True 
 B)False

Question 14

Table 18-1
  
-Refer to Table 18-1. The change in marginal product as the number of workers increases exemplifies a property called:

Accepted Answer

A)  supply and demand 
B)  labour theory 
C)  diminishing marginal product 
D)  utility maximisation 
A)  supply and demand 
B)  labour theory 
C)  diminishing marginal product 
D)  utility maximisation

Question 15

For a forestry firm, capital could be thought of as which of the following? (i) wages paid to loggers
(ii) sawmill plant and machinery
(iii) the government bonds the company directors have invested in

Accepted Answer

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

Question 16

Diminishing marginal product serves to have what effect on the shape of the production function?

Accepted Answer

A)  the slope of the production function increases as the units of input increases 
B)  the production function decreases at a decreasing rate 
C)  it becomes flatter as input usage increases 
D)  all of the above 
A)  the slope of the production function increases as the units of input increases 
B)  the production function decreases at a decreasing rate 
C)  it becomes flatter as input usage increases 
D)  all of the above

Question 17

The value of the marginal product curve gets its shape from:

Accepted Answer

A)  diminishing marginal product 
B)  increasing marginal product 
C)  tight labour markets 
D)  a surplus of workers 
A)  diminishing marginal product 
B)  increasing marginal product 
C)  tight labour markets 
D)  a surplus of workers

Question 18

The rental price of land is:

Accepted Answer

A)  the price paid for ownership of the land 
B)  always more than the purchase price 
C)  the price paid for the flow of services from land over a specified time period 
D)  determined outside the realm of conventional factor markets 
A)  the price paid for ownership of the land 
B)  always more than the purchase price 
C)  the price paid for the flow of services from land over a specified time period 
D)  determined outside the realm of conventional factor markets

Question 19

The rental price of capital is determined by:

Accepted Answer

A)  the amount of equity that is generated in equity markets 
B)  the amount of bond financing used by a profit-maximising firm 
C)  forces of supply and demand in capital markets 
D)  all of the above 
A)  the amount of equity that is generated in equity markets 
B)  the amount of bond financing used by a profit-maximising firm 
C)  forces of supply and demand in capital markets 
D)  all of the above

Question 20

The labour supply curve reflects how workers' decisions about the labour-leisure trade-off respond to changes in the opportunity cost of leisure.

Accepted Answer

A) True 
 B)False

Exam 19: The Markets for the Factors of Production

The economy's stock of equipment and structures is best described as?

The equilibrium purchase price of land or capital depends on which of the following? (i) the current value of the marginal product (ii) the expected future value of the marginal product (iii) the price of the final good that is being produced by the given factor

A competitive firm will hire workers up to the point at which the value of the marginal product equals the:

The demand for apple pickers is derived from the demand for apples.

Explain how a firm values the contribution of workers to its profitability. Would a profit-maximising competitive firm ever stop increasing employment as long as marginal product is rising? Explain your answer.

Table 18-1 -Refer to Table 18-1. If the firm hires two workers, the two workers together produce:

Productivity is low in most Asian countries.

Table 18-1 -Refer to Table 18-1. What is the market price of the final good?

Because of diminishing returns, a factor in scarce supply has a:

The purchase price of capital is the price a person pays to own that factor of production indefinitely, while the rental price of capital is the price paid to use capital for a limited time period.

Faustmann owns a small forestry company in New Zealand. Which of the following events will lead to a decrease in Faustmann's labour demand curve for timber-workers?

If the price of bread falls, what will happen to the demand curve for bakers?

The opportunity cost of leisure is impossible to measure, since we can't measure leisure time in dollars.

Table 18-1 -Refer to Table 18-1. The change in marginal product as the number of workers increases exemplifies a property called:

For a forestry firm, capital could be thought of as which of the following? (i) wages paid to loggers (ii) sawmill plant and machinery (iii) the government bonds the company directors have invested in

Diminishing marginal product serves to have what effect on the shape of the production function?

The value of the marginal product curve gets its shape from:

The rental price of land is:

The rental price of capital is determined by:

The labour supply curve reflects how workers' decisions about the labour-leisure trade-off respond to changes in the opportunity cost of leisure.

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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