Question 1

In sophisticated analysis of rent differences

Accepted Answer

A) quality of land is assumed away. 
B) quality of land is recognized and considered. 
C) rates of return are assumed away. 
D) returns on land and capital are assumed to be similar. 
A) quality of land is assumed away. 
B) quality of land is recognized and considered. 
C) rates of return are assumed away. 
D) returns on land and capital are assumed to be similar. B

Question 2

At higher interest rates, fewer people or firms will want to borrow.At lower interest rates, fewer people or firms will want to save.

Accepted Answer

A) True 
 B)False  True

Question 3

Economic profit can be viewed as

Accepted Answer

A) a reward for bearing risks. 
B) an undeserved "reward" for exercising monopoly power. 
C) a reward for innovation. 
D) All of the above are correct. 
A) a reward for bearing risks. 
B) an undeserved "reward" for exercising monopoly power. 
C) a reward for innovation. 
D) All of the above are correct. D

Question 4

In Japan, the market value of the land is approximately four times that of all the land in the United States, even though Japan is only about the size of California.The most likely explanation for this fact is

Accepted Answer

A) greater demand for land in Japan relative to the supply than in the United States. 
B) land is very productive in Japan. 
C) land is not fixed in supply in the United States. 
D) Japanese workers are very productive. 
A) greater demand for land in Japan relative to the supply than in the United States. 
B) land is very productive in Japan. 
C) land is not fixed in supply in the United States. 
D) Japanese workers are very productive.

Question 5

It is true of the demand side of the market for input pricing that

Accepted Answer

A) the same marginal productivity principle serves as the foundation for the demand schedule for each type of input. 
B) the demand schedule for one input cannot be determined independently of demand schedules for other inputs. 
C) the demand curve is the complete MRP curve. 
D) any inward shift in demand for a commodity will result in outward shifts in the demand curves for the inputs used to produce the commodity. 
A) the same marginal productivity principle serves as the foundation for the demand schedule for each type of input. 
B) the demand schedule for one input cannot be determined independently of demand schedules for other inputs. 
C) the demand curve is the complete MRP curve. 
D) any inward shift in demand for a commodity will result in outward shifts in the demand curves for the inputs used to produce the commodity.

Question 6

Rent-seeking activity by firms

Accepted Answer

A) often wastes economic resources. 
B) increases economic efficiency. 
C) continues even when an industry is in long-run competitive equilibrium. 
D) increases the total amount of economic rent available. 
A) often wastes economic resources. 
B) increases economic efficiency. 
C) continues even when an industry is in long-run competitive equilibrium. 
D) increases the total amount of economic rent available.

Question 7

When a few rival groups spend money in competition for a license that grants them a monopoly for the provision of cable TV for an area, economists label this activity

Accepted Answer

A) perfect competition. 
B) oligopoly. 
C) monopolistic competition. 
D) rent seeking. 
A) perfect competition. 
B) oligopoly. 
C) monopolistic competition. 
D) rent seeking.

Question 8

Which of the following statements is correct?

Accepted Answer

A) The demand for capital is derived from the demands for outputs. 
B) The demands for output are derived from the demand for capital. 
C) The demand for capital is derived from the demand for rent. 
D) The demand for rent is derived from the demand for capital. 
A) The demand for capital is derived from the demands for outputs. 
B) The demands for output are derived from the demand for capital. 
C) The demand for capital is derived from the demand for rent. 
D) The demand for rent is derived from the demand for capital.

Question 9

The supply curve for funds

Accepted Answer

A) is generally positively sloped. 
B) depends upon people's savings plans. 
C) is a function of the interest rate. 
D) All of the above are correct. 
A) is generally positively sloped. 
B) depends upon people's savings plans. 
C) is a function of the interest rate. 
D) All of the above are correct.

Question 10

Figure 19-1  
-Mr.Paque is a bear hunter for timber companies that want to diminish damage to trees done by bears in the spring.Due to a reduction in the bear population between 1995 and 2005, Mr.Paque finds fewer bears each year and additional hours spent hunting produce fewer additional bears.The change in Mr.Paque's MPP curve between 1995 and 2005 is best illustrated by which panel in Figure 19-1?

Accepted Answer

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

Question 11

Explain how usury laws distort the market for funds.What is the most likely result if a usury law is passed and enforced?

Accepted Answer

A usury law sets a maximum interest rate

Question 12

The demand for borrowed funds is

Accepted Answer

A) directly related to the interest rate. 
B) inversely related to the growth in gross domestic product. 
C) a derived demand. 
D) leads to derived demand for capital goods. 
A) directly related to the interest rate. 
B) inversely related to the growth in gross domestic product. 
C) a derived demand. 
D) leads to derived demand for capital goods.

Question 13

Entrepreneurs differ from managers because

Accepted Answer

A) they use innovation to gain advantage over their competitors. 
B) managers use established managing styles; entrepreneurs do not. 
C) entrepreneurs tend to take more risk than managers. 
D) All of the above are correct. 
A) they use innovation to gain advantage over their competitors. 
B) managers use established managing styles; entrepreneurs do not. 
C) entrepreneurs tend to take more risk than managers. 
D) All of the above are correct.

Question 14

Capital is the

Accepted Answer

A) flow of new equipment that a firm acquires over the course of a year. 
B) amount of increase in a firm's equipment over a year. 
C) amount of money that a firm has on hand at a given time. 
D) stock of plant, equipment, and other productive resources held by a firm. 
A) flow of new equipment that a firm acquires over the course of a year. 
B) amount of increase in a firm's equipment over a year. 
C) amount of money that a firm has on hand at a given time. 
D) stock of plant, equipment, and other productive resources held by a firm.

Question 15

In general, the quantity of savings supplied to be used for lending increases with the rate of interest.

Accepted Answer

A) True 
 B)False

Question 16

Capital is appropriately classified as a

Accepted Answer

A) flow. 
B) process. 
C) stock. 
D) growth rate. 
A) flow. 
B) process. 
C) stock. 
D) growth rate.

Question 17

Explain the effect of a usury law.

Accepted Answer

A usury law puts a ceiling on the intere

Question 18

If the equilibrium rate of interest would be 10 percent, but the usury law sets 8 percent,

Accepted Answer

A) the quantity of funds supplied would be greater than the quantity demanded. 
B) economic efficiency would be promoted. 
C) some applicants for loans would likely be turned down. 
D) lenders would be able to fund fully all requests for loans. 
A) the quantity of funds supplied would be greater than the quantity demanded. 
B) economic efficiency would be promoted. 
C) some applicants for loans would likely be turned down. 
D) lenders would be able to fund fully all requests for loans.

Question 19

What is the distinction between innovation and invention?

Accepted Answer

Invention is the act of genera

Question 20

Owners of buildings can expect to collect ____ economic rent in the long run.

Accepted Answer

A) much 
B) marginal 
C) a competitive 
D) little or no 
A) much 
B) marginal 
C) a competitive 
D) little or no

Exam 18: Pricing the Factors of Production

In sophisticated analysis of rent differences

At higher interest rates, fewer people or firms will want to borrow.At lower interest rates, fewer people or firms will want to save.

Economic profit can be viewed as

In Japan, the market value of the land is approximately four times that of all the land in the United States, even though Japan is only about the size of California.The most likely explanation for this fact is

It is true of the demand side of the market for input pricing that

Rent-seeking activity by firms

When a few rival groups spend money in competition for a license that grants them a monopoly for the provision of cable TV for an area, economists label this activity

Which of the following statements is correct?

The supply curve for funds

Explain how usury laws distort the market for funds.What is the most likely result if a usury law is passed and enforced?

The demand for borrowed funds is

Entrepreneurs differ from managers because

Capital is the

In general, the quantity of savings supplied to be used for lending increases with the rate of interest.

Capital is appropriately classified as a

Explain the effect of a usury law.

If the equilibrium rate of interest would be 10 percent, but the usury law sets 8 percent,

What is the distinction between innovation and invention?

Owners of buildings can expect to collect ____ economic rent in the long run.

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand an Initial Look

Consumer Choice Individual and Market Demand

Demand and Elasticity

Production Inputs and Cost Building Blocks for Supply Analysis

Output Price and Profit the Importance of Marginal Analysis

Securities Business Finance and the Economy the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power Regulation and Antitrust

The Case for Free Markets the Price System

The Shortcomings of Free Markets

Externalities the Environment and Natural Resources

Taxation and Resource Allocation

Labor and Entrepreneurship the Human Inputs

Poverty Inequality and Discrimination

Is Us Economic Leadership Threatened

International Trade and Comparative Advantage

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