Question 1

Why do interest rates for specific assets such as bonds,mortgages,credit card loans,and bank loans differ even in long-run equilibrium?

Accepted Answer

Variations in interest rates exist even

Question 2

Which of the following is true of the net marginal productivity of a capital investment?

Accepted Answer

A) The net marginal productivity falls with an increase in the additional output generated. 
B) The net marginal productivity increases when the rate of interest increases. 
C) The net marginal productivity falls with a higher rate of investment. 
D) The net marginal productivity increases if the initial cost of capital increases. 
A) The net marginal productivity falls with an increase in the additional output generated. 
B) The net marginal productivity increases when the rate of interest increases. 
C) The net marginal productivity falls with a higher rate of investment. 
D) The net marginal productivity increases if the initial cost of capital increases.

Question 3

Use the following figure to answer the question : Figure 17-2 : shows the demand [D],marginal revenue [MR],and supply [S] curves in the market for labor.
 
-Refer to Figure 17-2.If union members cartelize the supply side of the market,the economic rent that accrues to the union is represented by the area _____.

Accepted Answer

A) W1BF 
B) W2ACF 
C) W2ABF 
D) W2AL2O 
A) W1BF 
B) W2ACF 
C) W2ABF 
D) W2AL2O

Question 4

Use the following figure to answer the question : Figure 17-1 : shows the weekly income (in dollars)and leisure (in hours)of a worker using an indifference curve and a budget line.
 
-Refer to Figure 17-1.If the number of leisure hours is OL2 after a change in the wage rate,it implies that:

Accepted Answer

A) the income effect of the wage change is greater than the substitution effect. 
B) the income effect of the wage change is less than the substitution effect. 
C) the income effect of the wage change exactly offsets the substitution effect. 
D) the income and substitution effects of a wage change operate in the same direction. 
A) the income effect of the wage change is greater than the substitution effect. 
B) the income effect of the wage change is less than the substitution effect. 
C) the income effect of the wage change exactly offsets the substitution effect. 
D) the income and substitution effects of a wage change operate in the same direction.

Question 5

If identical workers are paid an extra $1 per hour to work the night shift,then one can conclude that:

Accepted Answer

A) workers who work the day shift should also be paid an extra $1. 
B) the night shift is intrinsically more attractive to all workers. 
C) the value of working the day shift is at least $1 per hour to some workers. 
D) the marginal product of night shift workers is higher than the day shift workers. 
A) workers who work the day shift should also be paid an extra $1. 
B) the night shift is intrinsically more attractive to all workers. 
C) the value of working the day shift is at least $1 per hour to some workers. 
D) the marginal product of night shift workers is higher than the day shift workers.

Question 6

In the income-leisure model of work,leisure is the portion of time when:

Accepted Answer

A) the worker is employed but not at work. 
B) the worker is not receiving compensation from an employer. 
C) the worker is not receiving at least the minimum wage. 
D) the worker is temporarily employed or working part-time. 
A) the worker is employed but not at work. 
B) the worker is not receiving compensation from an employer. 
C) the worker is not receiving at least the minimum wage. 
D) the worker is temporarily employed or working part-time.

Question 7

The aggregate investment demand curve slopes downward because:

Accepted Answer

A) the cost of the investment falls at lower interest rates. 
B) of the law of diminishing marginal returns. 
C) the total addition to productivity increases at higher interest rates. 
D) an expansion in investment pushes up interest rates. 
A) the cost of the investment falls at lower interest rates. 
B) of the law of diminishing marginal returns. 
C) the total addition to productivity increases at higher interest rates. 
D) an expansion in investment pushes up interest rates.

Question 8

In equilibrium,labor will be allocated across industries in such a way that the:

Accepted Answer

A) real wage is highest in the most profitable industries. 
B) capital-to-labor ratio is equalized across industries. 
C) wages are equalized across industries. 
D) the economic rents are equalized across industries. 
A) real wage is highest in the most profitable industries. 
B) capital-to-labor ratio is equalized across industries. 
C) wages are equalized across industries. 
D) the economic rents are equalized across industries.

Question 9

What does the height of the supply curve in a labor market represent?

Accepted Answer

A) The marginal revenue product of a worker 
B) The value of the output produced by a worker 
C) The marginal value product of a worker 
D) The minimum payment required to induce the worker to work 
A) The marginal revenue product of a worker 
B) The value of the output produced by a worker 
C) The marginal value product of a worker 
D) The minimum payment required to induce the worker to work

Question 10

The value of economic rent _____.

Accepted Answer

A) is directly related to the elasticity of supply of the input 
B) decreases with an increase in the total payment made for the use of the input 
C) increases with an increase in the total payment made for the use of the input 
D) is inversely related to the elasticity of supply of the input 
A) is directly related to the elasticity of supply of the input 
B) decreases with an increase in the total payment made for the use of the input 
C) increases with an increase in the total payment made for the use of the input 
D) is inversely related to the elasticity of supply of the input

Question 11

Karen works as an emergency-room nurse at a hospital.Although her regular shifts last 8 hours,she has to work twelve-hour shifts on Saturday and Sunday.For these extra hours that she puts in during the weekends,Karen's hourly wage is doubled.Karen's income during the weekends is an example of:

Accepted Answer

A) a labor-leisure tradeoff. 
B) a compensating wage differential. 
C) increasing marginal revenue product. 
D) the diminishing marginal product of labor. 
A) a labor-leisure tradeoff. 
B) a compensating wage differential. 
C) increasing marginal revenue product. 
D) the diminishing marginal product of labor.

Question 12

Which of the following is true of wage differentials between different occupations in equilibrium?

Accepted Answer

A) Wages cannot differ across occupations if there is free mobility of labor. 
B) Wages can differ across occupations due to differences in training,abilities,and preferences. 
C) Wages can differ across occupations depending on the size of the labor force in the economy. 
D) Wages cannot differ across occupations if there are equal opportunity employment laws. 
A) Wages cannot differ across occupations if there is free mobility of labor. 
B) Wages can differ across occupations due to differences in training,abilities,and preferences. 
C) Wages can differ across occupations depending on the size of the labor force in the economy. 
D) Wages cannot differ across occupations if there are equal opportunity employment laws.

Question 13

What does the height of the demand curve in a labor market represent?

Accepted Answer

A) The value of output produced by an incremental worker 
B) The increase in revenue from the sale of an additional unit of output 
C) The marginal cost of hiring an additional worker 
D) The payment made to an individual worker 
A) The value of output produced by an incremental worker 
B) The increase in revenue from the sale of an additional unit of output 
C) The marginal cost of hiring an additional worker 
D) The payment made to an individual worker

Question 14

Which of the following does not explain differences in specific interest rates in equilibrium?

Accepted Answer

A) The level of risk 
B) The duration of the loan 
C) The economy's productive capacity 
D) The cost of administering a loan 
A) The level of risk 
B) The duration of the loan 
C) The economy's productive capacity 
D) The cost of administering a loan

Question 15

Use the following figure to answer the question : Figure 17-2 : shows the demand [D],marginal revenue [MR],and supply [S] curves in the market for labor.
 
-Refer to Figure 17-2.If union members cartelize the supply side of the market,the deadweight loss associated with the union is shown by the area _____.

Accepted Answer

A) ABL1L2 
B) BCL2L1 
C) W2AL2O 
D) ABC 
A) ABL1L2 
B) BCL2L1 
C) W2AL2O 
D) ABC

Question 16

Jane,who works at a publishing firm,chooses to work fewer hours following an increase in her wage.Which of the following is correct?

Accepted Answer

A) Jane has a backward-bending labor supply curve. 
B) Jane considers leisure to be an inferior good. 
C) Jane's has an upward-sloping labor supply curve. 
D) Jane considers work to be a normal good. 
A) Jane has a backward-bending labor supply curve. 
B) Jane considers leisure to be an inferior good. 
C) Jane's has an upward-sloping labor supply curve. 
D) Jane considers work to be a normal good.

Question 17

Suppose leisure is shown on the horizontal axis and weekly income is shown on the vertical axis,an increase in the wage rate will cause the budget line to:

Accepted Answer

A) become steeper. 
B) shift inward toward the origin. 
C) shift outward away from the origin. 
D) become flatter. 
A) become steeper. 
B) shift inward toward the origin. 
C) shift outward away from the origin. 
D) become flatter.

Question 18

Consider a machine that lasts two years before it wears out and adds $100 to output in each of these two years.If the rate of return per year is 5%,calculate the initial cost of the machine.

Accepted Answer

A) $150 
B) $186 
C) $100 
D) $136 
A) $150 
B) $186 
C) $100 
D) $136

Question 19

For an input with a vertical supply curve,an increase in the demand for the input will lead to:

Accepted Answer

A) an increase in economic rent which is less than the payment to the input. 
B) an increase in economic rent equal to the payment to the input. 
C) a decrease in economic rent equal to the payment to an input. 
D) a decrease in economic rent which is higher than the payment to the input. 
A) an increase in economic rent which is less than the payment to the input. 
B) an increase in economic rent equal to the payment to the input. 
C) a decrease in economic rent equal to the payment to an input. 
D) a decrease in economic rent which is higher than the payment to the input.

Question 20

Using an indifference curve and budget line,explain the effect of a wage increase on the income and leisure choices of an individual who considers leisure a normal good.

Accepted Answer

The graph shows the weekly income of an

Why do interest rates for specific assets such as bonds,mortgages,credit card loans,and bank loans differ even in long-run equilibrium?

Which of the following is true of the net marginal productivity of a capital investment?

Use the following figure to answer the question : Figure 17-1 : shows the weekly income (in dollars)and leisure (in hours)of a worker using an indifference curve and a budget line. -Refer to Figure 17-1.If the number of leisure hours is OL₂ after a change in the wage rate,it implies that:

If identical workers are paid an extra $1 per hour to work the night shift,then one can conclude that:

In the income-leisure model of work,leisure is the portion of time when:

The aggregate investment demand curve slopes downward because:

In equilibrium,labor will be allocated across industries in such a way that the:

What does the height of the supply curve in a labor market represent?

The value of economic rent _____.

Karen works as an emergency-room nurse at a hospital.Although her regular shifts last 8 hours,she has to work twelve-hour shifts on Saturday and Sunday.For these extra hours that she puts in during the weekends,Karen's hourly wage is doubled.Karen's income during the weekends is an example of:

Which of the following is true of wage differentials between different occupations in equilibrium?

What does the height of the demand curve in a labor market represent?

Which of the following does not explain differences in specific interest rates in equilibrium?

Jane,who works at a publishing firm,chooses to work fewer hours following an increase in her wage.Which of the following is correct?

Suppose leisure is shown on the horizontal axis and weekly income is shown on the vertical axis,an increase in the wage rate will cause the budget line to:

Consider a machine that lasts two years before it wears out and adds $100 to output in each of these two years.If the rate of return per year is 5%,calculate the initial cost of the machine.

For an input with a vertical supply curve,an increase in the demand for the input will lead to:

Using an indifference curve and budget line,explain the effect of a wage increase on the income and leisure choices of an individual who considers leisure a normal good.

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters

Exam 17: Wages, Rent, Interest, and Profit

Why do interest rates for specific assets such as bonds,mortgages,credit card loans,and bank loans differ even in long-run equilibrium?

Which of the following is true of the net marginal productivity of a capital investment?

Use the following figure to answer the question : Figure 17-1 : shows the weekly income (in dollars)and leisure (in hours)of a worker using an indifference curve and a budget line. -Refer to Figure 17-1.If the number of leisure hours is OL2 after a change in the wage rate,it implies that:

If identical workers are paid an extra $1 per hour to work the night shift,then one can conclude that:

In the income-leisure model of work,leisure is the portion of time when:

The aggregate investment demand curve slopes downward because:

In equilibrium,labor will be allocated across industries in such a way that the:

What does the height of the supply curve in a labor market represent?

The value of economic rent _____.

Karen works as an emergency-room nurse at a hospital.Although her regular shifts last 8 hours,she has to work twelve-hour shifts on Saturday and Sunday.For these extra hours that she puts in during the weekends,Karen's hourly wage is doubled.Karen's income during the weekends is an example of:

Which of the following is true of wage differentials between different occupations in equilibrium?

What does the height of the demand curve in a labor market represent?

Which of the following does not explain differences in specific interest rates in equilibrium?

Jane,who works at a publishing firm,chooses to work fewer hours following an increase in her wage.Which of the following is correct?

Suppose leisure is shown on the horizontal axis and weekly income is shown on the vertical axis,an increase in the wage rate will cause the budget line to:

Consider a machine that lasts two years before it wears out and adds $100 to output in each of these two years.If the rate of return per year is 5%,calculate the initial cost of the machine.

For an input with a vertical supply curve,an increase in the demand for the input will lead to:

Using an indifference curve and budget line,explain the effect of a wage increase on the income and leisure choices of an individual who considers leisure a normal good.

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters

Use the following figure to answer the question : Figure 17-1 : shows the weekly income (in dollars)and leisure (in hours)of a worker using an indifference curve and a budget line. -Refer to Figure 17-1.If the number of leisure hours is OL₂ after a change in the wage rate,it implies that: