Question 1

On the surface,usury laws are designed to protect consumers from exorbitant interest rates.

Accepted Answer

A) True 
 B)False  True

Question 2

The demand curve for funds is downward sloping because

Accepted Answer

A) the value of the MRP in terms of today's money shrinks as the interest rate rises. 
B) future returns must be discounted more when the interest rate rises. 
C) as the interest rate rises, more and more investments become unprofitable. 
D) All of the above are correct. 
A) the value of the MRP in terms of today's money shrinks as the interest rate rises. 
B) future returns must be discounted more when the interest rate rises. 
C) as the interest rate rises, more and more investments become unprofitable. 
D) All of the above are correct. D

Question 3

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. A

Question 4

An increase in rent will ordinarily lead to

Accepted Answer

A) an increase in usage of land that was formerly idle. 
B) a decrease in total land employed. 
C) less-intensive usage of land. 
D) a decrease in the income of landlords. 
A) an increase in usage of land that was formerly idle. 
B) a decrease in total land employed. 
C) less-intensive usage of land. 
D) a decrease in the income of landlords.

Question 5

The process of building up capital includes

Accepted Answer

A) acquiring funds from banks and other sources. 
B) use of borrowed funds to hire inputs to build factories, warehouses, etc. 
C) completion of the investment process by adding machinery and inventory. 
D) All of the above are correct. 
A) acquiring funds from banks and other sources. 
B) use of borrowed funds to hire inputs to build factories, warehouses, etc. 
C) completion of the investment process by adding machinery and inventory. 
D) All of the above are correct.

Question 6

If the interest rate is positive,the present value of $10 to be received in the future is

Accepted Answer

A) less than $10. 
B) equal to $10. 
C) more than $10. 
D) Any of the above is possible, depending on the interest rate and when the payment is to be received. 
A) less than $10. 
B) equal to $10. 
C) more than $10. 
D) Any of the above is possible, depending on the interest rate and when the payment is to be received.

Question 7

The marginal revenue product of an input is the marginal physical product times the price per unit of output under perfect competition.

Accepted Answer

A) True 
 B)False

Question 8

If investment is zero,the capital stock

Accepted Answer

A) continues to flow. 
B) falls to zero. 
C) remains constant. 
D) grows steadily. 
A) continues to flow. 
B) falls to zero. 
C) remains constant. 
D) grows steadily.

Question 9

Which factor of production receives the greatest share of the U.S.national income?

Accepted Answer

A) land 
B) labor 
C) capital 
D) entrepreneurship 
A) land 
B) labor 
C) capital 
D) entrepreneurship

Question 10

The quantity demanded of an input normally rises as its price rises.

Accepted Answer

A) True 
 B)False

Question 11

Marginal productivity analysis shows that a drop in the price of the product will cause input use to

Accepted Answer

A) increase. 
B) decrease. 
C) stay the same. 
D) The information is insufficient to provide an answer. 
A) increase. 
B) decrease. 
C) stay the same. 
D) The information is insufficient to provide an answer.

Question 12

The theory of land rent holds that

Accepted Answer

A) capital invested on any plot of land must yield the same return as capital invested on any other plot of land. 
B) the difference between the costs of producing on any two pieces of land must equal the difference between their rents. 
C) marginal land earns no rent. 
D) All of the above are correct. 
A) capital invested on any plot of land must yield the same return as capital invested on any other plot of land. 
B) the difference between the costs of producing on any two pieces of land must equal the difference between their rents. 
C) marginal land earns no rent. 
D) All of the above are correct.

Question 13

According to the principle of marginal productivity,if

Accepted Answer

A) the product price is less than MRP, the firm is using too little of the input. 
B) the price of an input rises, the quantity demanded of the input will increase. 
C) MRP is greater than product price, the firm should reduce the use of the input. 
D) price of the input equals MRP, the firm is maximizing profit. 
A) the product price is less than MRP, the firm is using too little of the input. 
B) the price of an input rises, the quantity demanded of the input will increase. 
C) MRP is greater than product price, the firm should reduce the use of the input. 
D) price of the input equals MRP, the firm is maximizing profit.

Question 14

Invention is the act of generating a new idea.

Accepted Answer

A) True 
 B)False

Question 15

If the rate of interest increases,firms will most likely respond by

Accepted Answer

A) increasing investment. 
B) decreasing investment. 
C) not changing investment. 
D) increasing capital stock. 
A) increasing investment. 
B) decreasing investment. 
C) not changing investment. 
D) increasing capital stock.

Question 16

Capital is defined as

Accepted Answer

A) a flow of money into a business to buy various inputs. 
B) automated production processes which require little or no labor. 
C) interest payments to owners of companies. 
D) an inventory of plant, equipment and other productive resources held by a firm. 
A) a flow of money into a business to buy various inputs. 
B) automated production processes which require little or no labor. 
C) interest payments to owners of companies. 
D) an inventory of plant, equipment and other productive resources held by a firm.

Question 17

When the interest rate is higher,the difference between the value of money today and tomorrow is smaller.

Accepted Answer

A) True 
 B)False

Question 18

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 19

Profits

Accepted Answer

A) are what remains from the selling price after factors have been paid. 
B) accrue to entrepreneurs. 
C) are lower than most people think. 
D) All of the above are correct. 
A) are what remains from the selling price after factors have been paid. 
B) accrue to entrepreneurs. 
C) are lower than most people think. 
D) All of the above are correct.

Question 20

A worker can always build a chair in four hours.If a chair sells for $40 in a perfectly competitive market,then the equilibrium wage per hour in a perfectly competitive labor market is

Accepted Answer

A) $4. 
B) $10. 
C) $40. 
D) $160. 
A) $4. 
B) $10. 
C) $40. 
D) $160.

Exam 19: Pricing the Factors of Production

On the surface,usury laws are designed to protect consumers from exorbitant interest rates.

The demand curve for funds is downward sloping because

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

An increase in rent will ordinarily lead to

The process of building up capital includes

If the interest rate is positive,the present value of $10 to be received in the future is

The marginal revenue product of an input is the marginal physical product times the price per unit of output under perfect competition.

If investment is zero,the capital stock

Which factor of production receives the greatest share of the U.S.national income?

The quantity demanded of an input normally rises as its price rises.

Marginal productivity analysis shows that a drop in the price of the product will cause input use to

The theory of land rent holds that

According to the principle of marginal productivity,if

Invention is the act of generating a new idea.

If the rate of interest increases,firms will most likely respond by

Capital is defined as

When the interest rate is higher,the difference between the value of money today and tomorrow is smaller.

The supply curve for funds

Profits

A worker can always build a chair in four hours.If a chair sells for $40 in a perfectly competitive market,then the equilibrium wage per hour in a perfectly competitive labor market is

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 I: the Price System

The Shortcomings of Free Markets

The Markets Prime Achievement: Innovation and Growth

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Labor and Entrepreneurship: The Human Inputs

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

Filters