Question 1

Economic rent is the minimum payment necessary to induce any of the factor to be supplied.

Accepted Answer

A) True 
 B)False  False

Question 2

Capital is a flow of resources into the production of investment goods.

Accepted Answer

A) True 
 B)False  False

Question 3

The rent earned on marginal land is

Accepted Answer

A) zero. 
B) the average of all qualities of land. 
C) above the average of all qualities of land. 
D) below the average of all qualities of land. 
A) zero. 
B) the average of all qualities of land. 
C) above the average of all qualities of land. 
D) below the average of all qualities of land. A

Question 4

Invention is the act of generating a new idea.

Accepted Answer

A) True 
 B)False

Question 5

The three major sources of economic profit are

Accepted Answer

A) risk-bearing, innovation, and exercise of monopoly power. 
B) risk-bearing, rent seeking, and discounting. 
C) innovation, invention, and speculation. 
D) exercise of market power, marginalization, and speculation. 
A) risk-bearing, innovation, and exercise of monopoly power. 
B) risk-bearing, rent seeking, and discounting. 
C) innovation, invention, and speculation. 
D) exercise of market power, marginalization, and speculation.

Question 6

Which of the following is usually a durable good?

Accepted Answer

A) A unit of labor 
B) The interest rate 
C) A depletable resource 
D) A capital good 
A) A unit of labor 
B) The interest rate 
C) A depletable resource 
D) A capital good

Question 7

Contrast the shapes of the supply curves for financial capital and land.

Accepted Answer

The usual supply curve for capital shows

Question 8

Price ceilings can be used to lower usurious interest rates.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is not held constant along a demand curve for labor by a firm?

Accepted Answer

A) The firm's technology of production 
B) The price of the firm's output 
C) The marginal product of labor for the firm 
D) The price of substitutes for the firm's output 
A) The firm's technology of production 
B) The price of the firm's output 
C) The marginal product of labor for the firm 
D) The price of substitutes for the firm's output

Question 10

Figure 19-3
 
Which panel in Figure 19-3 represents the case of an effective usury law?

Accepted Answer

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

Question 11

The distinguishing feature of the land market is that the

Accepted Answer

A) supply is highly inelastic. 
B) supply is highly elastic. 
C) demand is highly inelastic. 
D) demand is highly elastic. 
A) supply is highly inelastic. 
B) supply is highly elastic. 
C) demand is highly inelastic. 
D) demand is highly elastic.

Question 12

Marginal land can be defined as land that earns neither profits nor losses.

Accepted Answer

A) True 
 B)False

Question 13

In a free market for rental housing, the average rental rate

Accepted Answer

A) includes a large amount of economic rent. 
B) includes zero economic rent. 
C) is entirely economic rent, since rental housing is fixed in supply. 
D) includes some economic rent. 
A) includes a large amount of economic rent. 
B) includes zero economic rent. 
C) is entirely economic rent, since rental housing is fixed in supply. 
D) includes some economic rent.

Question 14

The marginal productivity theory is irrelevant to organizing production in a socialist society.

Accepted Answer

A) True 
 B)False

Question 15

Define the following terms briefly and concisely and indicate their importance to the study of economics. 
a. Entrepreneurship 
b. Investment 
c. Capital 
d. Innovation 
e. Discounting

Accepted Answer

a. Entrepreneurship is the act of starti

Question 16

Economic rents are earned whenever

Accepted Answer

A) demand for a factor is perfectly inelastic. 
B) a factor receives a reward that exceeds its cost. 
C) a factor earns a reward that is greater than the amount needed to keep the factor in its present employment. 
D) a factor's supply curve intersects its demand curve at a point where demand is inelastic. 
A) demand for a factor is perfectly inelastic. 
B) a factor receives a reward that exceeds its cost. 
C) a factor earns a reward that is greater than the amount needed to keep the factor in its present employment. 
D) a factor's supply curve intersects its demand curve at a point where demand is inelastic.

Question 17

A tax on accounting profits in an industry

Accepted Answer

A) will lead to more inefficiency if economic profits are high. 
B) will lead to more inefficiency if economic profits are low 
C) will increase the MRP curve of nonfixed factors. 
D) will increase the MRP curve of fixed factors. 
A) will lead to more inefficiency if economic profits are high. 
B) will lead to more inefficiency if economic profits are low 
C) will increase the MRP curve of nonfixed factors. 
D) will increase the MRP curve of fixed factors.

Question 18

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 19

Distinguish between invention and innovation.

Accepted Answer

Invention is the creation of new product

Question 20

A recent decline in interest rates made home construction more affordable for many families. The consequent increase in construction produced a rightward shift in the demand curves for construction materials. Economists would say that the change in demand for materials is due to

Accepted Answer

A) the principle of marginal productivity. 
B) rent seeking. 
C) diminishing marginal returns. 
D) derived demand. 
A) the principle of marginal productivity. 
B) rent seeking. 
C) diminishing marginal returns. 
D) derived demand.

Exam 18: Pricing the Factors of Production

Economic rent is the minimum payment necessary to induce any of the factor to be supplied.

Capital is a flow of resources into the production of investment goods.

The rent earned on marginal land is

Invention is the act of generating a new idea.

The three major sources of economic profit are

Which of the following is usually a durable good?

Contrast the shapes of the supply curves for financial capital and land.

Price ceilings can be used to lower usurious interest rates.

Which of the following is not held constant along a demand curve for labor by a firm?

Figure 19-3 Which panel in Figure 19-3 represents the case of an effective usury law?

The distinguishing feature of the land market is that the

Marginal land can be defined as land that earns neither profits nor losses.

In a free market for rental housing, the average rental rate

The marginal productivity theory is irrelevant to organizing production in a socialist society.

Define the following terms briefly and concisely and indicate their importance to the study of economics. a. Entrepreneurship b. Investment c. Capital d. Innovation e. Discounting

Economic rents are earned whenever

A tax on accounting profits in an industry

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

Distinguish between invention and innovation.

A recent decline in interest rates made home construction more affordable for many families. The consequent increase in construction produced a rightward shift in the demand curves for construction materials. Economists would say that the change in demand for materials is due to

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

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

Externalities, Externaliteis, the Environment, and Natural Resources

Taxation and Resource Allocation

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

Contemporary Issues in the Us Economy

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