Question 1

The marginal product of a factor of production

Accepted Answer

A)  is equal to the ratio of the amount that factor of production to the amount of output produced. 
B)  is equal to the amount of additional output that can be produced with one additional unit of each factor input. 
C)  is equal to the amount of additional output that can be produced with one additional unit of that factor input, holding constant the quantities of the other factor inputs. 
D)  always exceeds the average product of that factor input, holding constant the quantities of the other factor inputs. 
E)  is equal to the additional output that can be produced with an additional change in total factor productivity. 
A)  is equal to the ratio of the amount that factor of production to the amount of output produced. 
B)  is equal to the amount of additional output that can be produced with one additional unit of each factor input. 
C)  is equal to the amount of additional output that can be produced with one additional unit of that factor input, holding constant the quantities of the other factor inputs. 
D)  always exceeds the average product of that factor input, holding constant the quantities of the other factor inputs. 
E)  is equal to the additional output that can be produced with an additional change in total factor productivity.

Question 2

A consumer's real disposable income equals

Accepted Answer

A)  wage income plus consumption expenditures. 
B)  wage income plus profit income minus taxes. 
C)  total income minus profit income minus taxes. 
D)  total income minus wage income minus taxes. 
E)  consumption plus savings minus taxes. 
A)  wage income plus consumption expenditures. 
B)  wage income plus profit income minus taxes. 
C)  total income minus profit income minus taxes. 
D)  total income minus wage income minus taxes. 
E)  consumption plus savings minus taxes.

Question 3

In a one-period economy

Accepted Answer

A)  consumption equals disposable income. 
B)  consumption equals disposable income plus the value of non-market work. 
C)  savings is always positive. 
D)  consumers may increase their consumption by borrowing. 
E)  consumers save more than they consume. 
A)  consumption equals disposable income. 
B)  consumption equals disposable income plus the value of non-market work. 
C)  savings is always positive. 
D)  consumers may increase their consumption by borrowing. 
E)  consumers save more than they consume.

Question 4

Two key properties of indifference curves are that an indifference curve slopes

Accepted Answer

A)  upward and is bowed out from the origin. 
B)  downward and is bowed out from the origin. 
C)  upward and is bowed in toward the origin. 
D)  downward and is bowed in toward the origin. 
E)  downward and is concave from the origin. 
A)  upward and is bowed out from the origin. 
B)  downward and is bowed out from the origin. 
C)  upward and is bowed in toward the origin. 
D)  downward and is bowed in toward the origin. 
E)  downward and is concave from the origin.

Question 5

We assume that the representative consumer's preferences exhibit the properties that

Accepted Answer

A)  they evolve over time and that more is always preferred to less. 
B)  more is preferred to less and that the consumer prefers diversity. 
C)  the consumer likes diversity and that more is sometimes preferred to less. 
D)  more is sometimes preferred to less and that consumption and leisure are both normal goods. 
E)  less consumption is preferred to more leisure and that consumption and leisure are both normal goods. 
A)  they evolve over time and that more is always preferred to less. 
B)  more is preferred to less and that the consumer prefers diversity. 
C)  the consumer likes diversity and that more is sometimes preferred to less. 
D)  more is sometimes preferred to less and that consumption and leisure are both normal goods. 
E)  less consumption is preferred to more leisure and that consumption and leisure are both normal goods.

Question 6

Moving down the indifference curve,the marginal rate of substitution

Accepted Answer

A)  is constant. 
B)  is rising. 
C)  diminishes. 
D)  is highly volatile. 
E)  depends on household income. 
A)  is constant. 
B)  is rising. 
C)  diminishes. 
D)  is highly volatile. 
E)  depends on household income.

Question 7

When consumption and leisure are both normal goods,an increase in real dividend income minus taxation,the rational consumer

Accepted Answer

A)  increases consumption and increases labour supply. 
B)  increases consumption and reduces labour supply. 
C)  reduces consumption and increases labour supply. 
D)  reduces consumption and reduces labour supply. 
E)  increases consumption and savings 
A)  increases consumption and increases labour supply. 
B)  increases consumption and reduces labour supply. 
C)  reduces consumption and increases labour supply. 
D)  reduces consumption and reduces labour supply. 
E)  increases consumption and savings

Question 8

The following question(s) deal with the Widget Company, which produces widgets. Widgets are produced according to:
  
-If the real wage is equal to 7 widgets,and only an integer number of workers can be hired,the Widget company should hire

Accepted Answer

A)  2 workers. 
B)  3 workers. 
C)  4 workers. 
D)  5 workers. 
E)  6 workers. 
A)  2 workers. 
B)  3 workers. 
C)  4 workers. 
D)  5 workers. 
E)  6 workers.

Question 9

The slope of the indifference curve is defined as

Accepted Answer

A)  the marginal rate of substitution. 
B)  the marginal rate of transformation. 
C)  the marginal propensity to consume. 
D)  the marginal propensity to substitute. 
E)  the relative price of good Y. 
A)  the marginal rate of substitution. 
B)  the marginal rate of transformation. 
C)  the marginal propensity to consume. 
D)  the marginal propensity to substitute. 
E)  the relative price of good Y.

Question 10

In the goal of consumer optimization,it is assumed that

Accepted Answer

A)  consumption equals disposable income. 
B)  savings are positive. 
C)  more is preferred to less. 
D)  the consumer is rational. 
E)  the consumer consumes more than his or her disposable income. 
A)  consumption equals disposable income. 
B)  savings are positive. 
C)  more is preferred to less. 
D)  the consumer is rational. 
E)  the consumer consumes more than his or her disposable income.

Question 11

The following question(s) deal with The Gizmo Company, which has the following production function:
  
-The marginal product of the fourth gizmo worker hired is

Accepted Answer

A)  1. 
B)  3. 
C)  5. 
D)  10. 
E)  12. 
A)  1. 
B)  3. 
C)  5. 
D)  10. 
E)  12.

Question 12

A consumer maximizes satisfaction at the point where his subjective valuation of good X measured as the amount of good Y he or she is willing to give up to obtain an additional unit of X equals

Accepted Answer

A)  the slope of the indifference curve through that point. 
B)  one over the slope of the indifference curve through that point. 
C)  Px / Py. 
D)  Py / Px. 
E)  Y / Px. 
A)  the slope of the indifference curve through that point. 
B)  one over the slope of the indifference curve through that point. 
C)  Px / Py. 
D)  Py / Px. 
E)  Y / Px.

Question 13

An increase in total factor productivity shifts the production function

Accepted Answer

A)  upward and increases the marginal product of labour. 
B)  upward and decreases the marginal product of labour. 
C)  downward and increases the marginal product of labour. 
D)  downward and decreases the marginal product of labour. 
E)  upward and increases the marginal product of capital. 
A)  upward and increases the marginal product of labour. 
B)  upward and decreases the marginal product of labour. 
C)  downward and increases the marginal product of labour. 
D)  downward and decreases the marginal product of labour. 
E)  upward and increases the marginal product of capital.

Question 14

The marginal rate of substitution is defined as

Accepted Answer

A)  the amount of good Y substituted for good X by a consumer. 
B)  the amount of good Y that a consumer is willing to substitute for good X and stay at a given level of satisfaction. 
C)  the feasible rate of substitution given prices. 
D)  the slope of the utility function. 
E)  the convexity of the indifference curve. 
A)  the amount of good Y substituted for good X by a consumer. 
B)  the amount of good Y that a consumer is willing to substitute for good X and stay at a given level of satisfaction. 
C)  the feasible rate of substitution given prices. 
D)  the slope of the utility function. 
E)  the convexity of the indifference curve.

Question 15

The following question(s) deal with The Gizmo Company, which has the following production function:
  
-If the real wage is equal to 8 widgets,and only an integer number of workers can be hired,the Gizmo company should hire

Accepted Answer

A)  2 workers. 
B)  3 workers. 
C)  4 workers. 
D)  5 workers. 
E)  6 workers. 
A)  2 workers. 
B)  3 workers. 
C)  4 workers. 
D)  5 workers. 
E)  6 workers.

Question 16

In a one-period economy,real consumption

Accepted Answer

A)  is always less than disposable income. 
B)  is typically greater than disposable income. 
C)  is exactly equal to disposable income. 
D)  can be greater than, less than, or equal to disposable income. 
E)  can be less than savings. 
A)  is always less than disposable income. 
B)  is typically greater than disposable income. 
C)  is exactly equal to disposable income. 
D)  can be greater than, less than, or equal to disposable income. 
E)  can be less than savings.

Question 17

At the optimal consumption bundle,the marginal rate of substitution of leisure for consumption is equal to

Accepted Answer

A)  the real wage and the budget line is tangent to an indifference curve. 
B)  minus the real wage and the budget line is tangent to the indifference curve. 
C)  the real wage and the budget line intersects the indifference curve.. 
D)  minus the real wage and the budget line intersects the indifference curve. 
E)  the real wage and on the highest possible indifference curve. 
A)  the real wage and the budget line is tangent to an indifference curve. 
B)  minus the real wage and the budget line is tangent to the indifference curve. 
C)  the real wage and the budget line intersects the indifference curve.. 
D)  minus the real wage and the budget line intersects the indifference curve. 
E)  the real wage and on the highest possible indifference curve.

Question 18

An increase in total factor productivity

Accepted Answer

A)  changes neither the slope nor the position of the production function. 
B)  changes the slope but not the position of the production function. 
C)  changes the position but not the slope of the production function. 
D)  changes both the slope and the position of the production function. 
E)  keeps the marginal product of labour constant. 
A)  changes neither the slope nor the position of the production function. 
B)  changes the slope but not the position of the production function. 
C)  changes the position but not the slope of the production function. 
D)  changes both the slope and the position of the production function. 
E)  keeps the marginal product of labour constant.

Question 19

A static decision is one that

Accepted Answer

A)  is made very slowly. 
B)  involves planning over one time period. 
C)  involves planning over exactly two time periods. 
D)  involves planning over more than one time period. 
E)  involves only the present. 
A)  is made very slowly. 
B)  involves planning over one time period. 
C)  involves planning over exactly two time periods. 
D)  involves planning over more than one time period. 
E)  involves only the present.

Question 20

Perfect substitutes will have

Accepted Answer

A)  straight line indifference curves. 
B)  reverse L-shaped indifference curves. 
C)  L-shaped indifference curves. 
D)  curved indifference curves, bowed in from the origin. 
E)  curved indifference curve, bowed out from the origin. 
A)  straight line indifference curves. 
B)  reverse L-shaped indifference curves. 
C)  L-shaped indifference curves. 
D)  curved indifference curves, bowed in from the origin. 
E)  curved indifference curve, bowed out from the origin.

The marginal product of a factor of production

A consumer's real disposable income equals

In a one-period economy

Two key properties of indifference curves are that an indifference curve slopes

We assume that the representative consumer's preferences exhibit the properties that

Moving down the indifference curve,the marginal rate of substitution

When consumption and leisure are both normal goods,an increase in real dividend income minus taxation,the rational consumer

The following question(s) deal with the Widget Company, which produces widgets. Widgets are produced according to: -If the real wage is equal to 7 widgets,and only an integer number of workers can be hired,the Widget company should hire

The slope of the indifference curve is defined as

In the goal of consumer optimization,it is assumed that

The following question(s) deal with The Gizmo Company, which has the following production function: -The marginal product of the fourth gizmo worker hired is

A consumer maximizes satisfaction at the point where his subjective valuation of good X measured as the amount of good Y he or she is willing to give up to obtain an additional unit of X equals

An increase in total factor productivity shifts the production function

The marginal rate of substitution is defined as

The following question(s) deal with The Gizmo Company, which has the following production function: -If the real wage is equal to 8 widgets,and only an integer number of workers can be hired,the Gizmo company should hire

In a one-period economy,real consumption

At the optimal consumption bundle,the marginal rate of substitution of leisure for consumption is equal to

An increase in total factor productivity

A static decision is one that

Perfect substitutes will have

Introduction

Measurement

Business Cycle Measurement

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity Among Countries and Endogenous Growth

A Two-Period Model: The Consumption–Savings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

Money, Banking, Prices, and Monetary Policy

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: A Deeper Look

Filters

Exam 4: Consumer and Firm Behavior: The Work–Leisure Decision and Profit Maximization

The marginal product of a factor of production

A consumer's real disposable income equals

In a one-period economy

Two key properties of indifference curves are that an indifference curve slopes

We assume that the representative consumer's preferences exhibit the properties that

Moving down the indifference curve,the marginal rate of substitution

When consumption and leisure are both normal goods,an increase in real dividend income minus taxation,the rational consumer

The following question(s) deal with the Widget Company, which produces widgets. Widgets are produced according to: -If the real wage is equal to 7 widgets,and only an integer number of workers can be hired,the Widget company should hire

The slope of the indifference curve is defined as

In the goal of consumer optimization,it is assumed that

The following question(s) deal with The Gizmo Company, which has the following production function: -The marginal product of the fourth gizmo worker hired is

A consumer maximizes satisfaction at the point where his subjective valuation of good X measured as the amount of good Y he or she is willing to give up to obtain an additional unit of X equals

An increase in total factor productivity shifts the production function

The marginal rate of substitution is defined as

The following question(s) deal with The Gizmo Company, which has the following production function: -If the real wage is equal to 8 widgets,and only an integer number of workers can be hired,the Gizmo company should hire

In a one-period economy,real consumption

At the optimal consumption bundle,the marginal rate of substitution of leisure for consumption is equal to

An increase in total factor productivity

A static decision is one that

Perfect substitutes will have

Introduction

Measurement

Business Cycle Measurement

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity Among Countries and Endogenous Growth

A Two-Period Model: The Consumption–Savings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

Money, Banking, Prices, and Monetary Policy

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: A Deeper Look

Filters