What line in the above graph would best represent the supply curve for land? 1 2 3 Show more What line in the above graph would best represent the supply curve for land? 1 2 3 4 1.66 points Question 10 A bank charges one borrower (A) 8 percent interest per year and another borrower (B) 10 percent interest per year. Which of the following is a plausible reason for the higher interest rate for B? A is borrowing the money for a longer period than B A is borrowing a larger amount than B B is using the money for a less risky project than A B has a better credit rating than A 1.66 points Question 11 A characteristic of a purely competitive labor market would be: price maker behavior by the workers wage taker behavior by workers Many firms selling the same product Many workers with different skills 1.66 points Question 12 A firm considering whether to borrow money to purchase a capital good will compare the rate of interest for the loan with the: Opportunity cost of the capital good Rate of return on the investment Length of the investment Treasury bill rate 1.66 points Question 13 An increase in the demand for loanable funds may be caused by a(n): Increase in the availability of loanable funds Increase in consumers willingness to save Increase in business borrowing Decrease in the interest rate 1.66 points Question 14 Answer the question using the following table. Figures are in billions of dollars. Refer to the above table. If the government passes a usury law that sets the interest rate 4% below the market equilibrium the interest rate will be: 6 percent 8 percent 10 percent 12 percent 1.66 points Question 15 Compared to a purely competitive firm a monopsonist will pay: A higher wage rate to its workers Lower wages but hire more workers than the purely competitive firm Lower wage rates and hire fewer workers than the purely competitive firm Lower wages while hiring the same quantity of workers as the purely competitive firm 1.66 points Question 16 Critics contend that imposing a minimum wage higher than the equilibrium wage in a competitive industry would: Decrease the number of workers employed in that industry Decrease the quantity of labor supplied to that industry Increase the demand for labor in the industry Increase employment in that industry 1.66 points Question 17 Critics of large pay packages for CEOs argue that they: Are based on a faulty calculation of piece rate Are an ineffective form of an efficiency wage Bear little relation to marginal revenue product Would be better if they were determined by royalty payments 1.66 points Question 18 Economic profits: Are identical to accounting profits Must be earned by every firm which continues to produce in the long run Serve no useful economic purpose and should never occur in a competitive economy Serve in the short run as an incentive to guide production decisions but indicate the existence of barriers to entry in the long run 1.66 points Question 19 Entrepreneurs normally do all of the following except: Take the initiative in combining other resources to produce goods or services Make the basic nonroutine policy decisions for their organization Bear the risks involved in introducing new products or production innovations Get hired as a top executive in established corporations 1.66 points Question 20 Equilibrium price differentials for productive resources: Tend to be self-eliminating May be caused by differences in the quality of those resources Are eliminated when the allocation of resources is in a state of equilibrium Are unrelated to differences in nonmonetary benefits 1.66 points Question 21 Henry George claimed that land-rent taxes would not impair economic efficiency because: They do not result in a change in the amount of land available Landowners are as a group financially secure and able to pay the taxes The supply of land is infinitely elastic Rents represent a small part of income paid to American resource suppliers so taxes on wages and salaries are more disruptive 1.66 points Question 22 If a factor of production has no production cost and has a fixed supply then payments to that factor constitute what economists call: Abnormal profits Economic rent Normal profits Interest payments 1.66 points Question 23 If the desired real rate of interest is 5 percent and the expected rate of inflation is 15 percent what is the nominal rate of interest? 5 percent 10 percent 15 percent 20 percent 1.66 points Question 24 If the inflation rate is 10 percent what is a banks real rate of return on a loan of $100 at 10 percent interest? $100 $10 10 percent 0 percent 1.66 points Question 25 If the interest rate is 10% what is the present value of $25000 received two years from now? $20000 $20661 $30250 $30000 1.66 points Question 26 If the interest rate is 5% what is the future value of $5000 three years from now? $4310 $5500 $5010 $5788 1.66 points Question 27 If the wage rate in a purely competitive labor market increases it will cause the: Marginal resource cost curve for a single competitive firm in the industry to shift down Marginal resource cost curve for a single competitive firm in the industry to shift up Labor supply curve for a single competitive firm to shift downward Labor supply curve for the industry to shift rightward 1.66 points Question 28 In the table below a monopsonist has the marginal-revenue-product schedule for labor given in columns 1 and 2 and the supply schedule for labor is given by columns 1 and 3. Refer to the above table and information. What is the firms total labor costs if it hires 6 workers? $33 $48 $65 $84 1.66 points Question 29 In the table below a monopsonist has the marginal-revenue-product schedule for labor given in columns 1 and 2 and the supply schedule for labor is given by columns 1 and 3. Refer to the above table and information. What is the marginal labor cost of the fourth worker? $13 $15 $17 $19 1.66 points Question 30 Models that analyze how labor unions attempt to raise wage rates include the following except: Demand-enhancement model Exclusive union model Industrial union model Credit union model 1.66 points Question 31 Other things equal the interest rate on a loan will be larger: The less the risk involved The larger the amount of the loan The longer the length of the loan If loan interest is exempt from taxation 1.66 points Question 32 Other things equal the interest rate on a loan will be larger: The higher the risk involved The larger the amount of the loan The shorter the length of the loan If loan interest is exempt from taxation 1.66 points Question 33 Other things equal the interest rate on a loan will be smaller: The greater the risk involved The smaller the amount of the loan The longer the length of the loan If the loan interest is exempt from taxation 1.66 points Question 34 Productivity measures (such as output per worker-hour) and wage rates adjusted for inflation in the United States are: Inversely related Unrelated Directly but not closely related Directly and closely related 1.66 points Question 35 Pure rate of interest refers to the interest rate that: Borrowers pay to lenders in their own family or circle of close friends Serves solely as payment to lenders for giving up current use of their funds Is the difference between the actual rate and the theoretical rate Measures the compensation to lenders for taking on the risks involved 1.66 points Question 36 Real wages would rise if the: Prices of goods and services rose more rapidly than nominal-wage rates Prices of goods and services rose less rapidly than nominal-wage rates Prices of goods and services and wage rates both rose Prices of goods and services and wage rates both fell 1.66 points Question 37 Suppose a firm is considering the purchase of a machine which when used will increase its total revenues by $10000 for the year. The machine costs $8000 and has a useful life of one year. The interest rate is 20 percent. This investment should: Be undertaken because the rate of return is 2 percent greater than the interest rate Be undertaken because the rate of return is 5 percent greater than the interest rate Be undertaken because the rate of return is 7 percent greater than the interest rate Not be undertaken because the rate of return is 7 percent less than the interest rate 1.66 points Question 38 Suppose a single firm has the marginal revenue product schedule for a particular type of labor given in the left table. Assume there are 150 firms with the same marginal-revenue-product schedules for this particular type of labor. Refer to the above table and information. How many workers will be hired at equilibrium? 300 450 600 750 1.66 points Question 39 Suppose a single firm has the marginal revenue product schedule for a particular type of labor given in the left table. Assume there are 150 firms with the same marginal-revenue-product schedules for this particular type of labor. Refer to the above table and information. How would the imposition of a $9 minimum wage rate change the total amount of labor hired in this market? Employment would decrease by 150 to 600 workers total Employment would increase by 150 to 750 workers total Employment would decrease by 150 to 750 workers total Employment would increase by 150 to 900 workers total 1.66 points Question 40 Suppose that the quantity of a certain type of farmland available is 400000 acres and the demand for this land is given in the table below. Refer to the above information and table. If landowners were taxed at a rate of $150 per acre for their land what would be the economic rent on this land after taxes and how many acres would be rented? $50 and 400000 acres $400 and 50000 acres $150 and 400000 acres $250 and 50000 acres 1.66 points Question 41 Suppose the wage rate is $5 and the marginal revenue product (MRP) of the seventh worker at a yo-yo factory is also equal to $5. The labor market was originally purely competitive but is then monopsonized without changing the MRP of the seventh worker. That means: More workers will be hired but they will be paid lower wages More workers will be hired and they will be paid higher wages Fewer workers will be hired and they will be paid lower wages Fewer workers will be hired and they will be paid higher wages 1.66 points Question 42 Taking unauthorized work breaks would be an example of: Compensating differences Noncompeting groups Piece rate incentives Shirking 1.66 points Question 43 The basic explanation for high real wages in the United States and other industrially advanced economies is that the: Labor supply has increased more rapidly than labor demand in these nations Labor demand has increased more rapidly than labor supply in these nations Unemployment in these nations has remained relatively stable over the years Inflation rate in these nations has been higher than the rate of increase in nominal wages 1.66 points Question 44 The demand curve for loanable funds represents the behavior of: Lenders Savers Borrowers Bankers 1.66 points Question 45 The individual firm which hires labor under competitive conditions faces a labor supply curve which: Slopes downward to the right Is perfectly elastic Is perfectly inelastic Is of unit elasticity 1.66 points Question 46 The labor market for teachers in a small isolated community that has one school district would be best described as a(n): Natural monopoly Bilateral monopoly Monopsony Oligopsony 1.66 points Question 47 The major reason that presidents of major corporations receive an average salary of over $1 million a year while police officers receive an average salary of about $56000 a year can best be explained by: Discrimination Lack of job information Compensating differences Noncompeting labor groups 1.66 points Question 48 The prices paid to a productive resource usually perform an incentive function except with what resource? Land Labor Capital Entrepreneurial ability 1.66 points Question 49 The principal-agent problem as it applies to labor employment refers to: Employer and workers wanting the firm to survive and thrive Firms having the profit motive while workers may be shirking on the job Employers having a problem finding qualified workers Workers facing a problem finding employment 1.66 points Question 50 The reason that unskilled construction workers typically receive higher wages than retail sales clerks is best explained by: Discrimination Geographic immobilities Compensating differences Noncompeting labor groups 1.66 points Question 51 The schedule shows various interest rates the associated quantity demanded of loanable funds and the quantity supplied of loanable funds in billions of dollars at those interest rates. Refer to the above table and information. What is the equilibrium interest rate? 4 percent 6 percent 8 percent 10 percent 1.66 points Question 52 The supply curve for a productive resource wherein price provides an incentive function is: Vertical Horizontal Upsloping to the right Downsloping to the right 1.66 points Question 53 The supply curve for loanable funds is upward-sloping because: Lenders are more willing to lend at lower rather than higher interest rates Lenders are more willing to lend at higher rather than lower interest rates Borrowers are more willing to borrow at lower rather than higher interest rates Borrowers are more willing to borrow at higher rather than lower interest rates 1.66 points Question 54 Use the following demand schedule and possible supply schedules A-D to answer the question. Refer to the above schedules. Suppose that price influences the availability of the economic resource and the equilibrium price is $2. Which resource supply schedule would apply in this case? A B C D 1.66 points Question 55 Which expression is used to calculate the present value of an amount of money? Future Value x (1 + interest rate) time Future Value/(1 + interest rate) time Future Value x (1 + time) interest rate (1 + interest rate) time /Future Value 1.66 points Question 56 Which of the following economic effects of unions tends to improve efficiency? Featherbedding Strike or lockout Union wage advantage Voice mechanism 1.66 points Question 57 Which of the following interest rates is usually the highest? 30-year mortgage rate 20-year Treasury bond rate Consumer credit-card rate Prime rate of banks 1.66 points Question 58 Which of the following resource payments is considered by economists as surplus payments? Wages for labor Rent for land Interest for capital Profits for entrepreneurship 1.66 points Question 59 Which of the following will increase the supply of loanable funds? An increase in the: Rates of return on potential investments Productivity of business firms Demand for business products Savings of households 1.66 points Question 60 Which would usually not be an entrepreneurial function? Introducing a new product in a business Assuming uninsurable risks of owning a business Combining and directing resources in an uncertain business environment Managing the accounting department of a Fortune 500 corporation Show less
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