Economics Final Exam [Chap. 18,24]

Question 1 of 41

1

The most important factors of production are

Select one of the following:

labour, land, and capital.
water, earth, and knowledge.
money, stocks, and bonds.
management, finance, and marketing.

Explanation

Question 2 of 41

1

If a factor exhibits diminishing marginal product, hiring additional units of the factor will

Select one of the following:

cause a reduction in output.
have no effect on output.
increase the marginal product of the factor.
generate ever smaller amounts of output.

Explanation

Question 3 of 41

1

Refer to Figure 18-1. What is the marginal product of labour as the firm moves from using three workers to using four workers?

Select one of the following:

14
0
none of these answers
2
12

Explanation

Question 4 of 41

1

Refer to Figure 18-1. If the price of output is €4 per unit, what is the value of the marginal product of labour as the firm moves from using four workers to using five workers?

Select one of the following:

€60
€4
€12
€8
€56

Explanation

Question 5 of 41

1

Refer to Figure 18-1. If this profit-maximizing firm sells its output in a competitive market for €3 per unit and hires labour in a competitive market for €8/hour, then this firm should hire

Select one of the following:

four workers.
three workers.
two workers.
five workers.
one worker.

Explanation

Question 6 of 41

1

The value of the marginal product of labour is

Select one of the following:

the price of the output times the wage of labour.
the price of the output times the marginal product of labour.
none of these answers.
the wage of labour times the quantity of labour.
the wage of labour times the marginal product of labour.

Explanation

Question 7 of 41

1

For a competitive, profit-maximizing firm, the value-of-the-marginal-product curve for capital is the firm's

Select one of the following:

supply curve of capital.
demand curve for capital.
production function.
marginal cost curve.

Explanation

Question 8 of 41

1

An increase in the supply of labour

Select one of the following:

increases the value of the marginal product of labour and decreases the wage.
decreases the value of the marginal product of labour and decreases the wage.
decreases the value of the marginal product of labour and increases the wage.
increases the value of the marginal product of labour and increases the wage.

Explanation

Question 9 of 41

1

A decrease in the demand for fish

Select one of the following:

decreases the value of the marginal product of fishermen, reduces their wage, and reduces employment in the fishing industry.
increases the value of the marginal product of fishermen, increases their wage, and increases employment in the fishing industry.
decreases the value of the marginal product of fishermen, reduces their wage, and increases employment in the fishing industry.
increases the value of the marginal product of fishermen, increases their wage, and decreases employment in the fishing industry.

Explanation

Question 10 of 41

1

What will a decrease in the supply of fishermen do to the market for capital employed in the fishing industry?

Select one of the following:

increase the demand for fishing boats and decrease rental rates on fishing boats
decrease the demand for fishing boats and increase rental rates on fishing boats
decrease the demand for fishing boats and decrease rental rates on fishing boats
increase the demand for fishing boats and increase rental rates on fishing boats

Explanation

Question 11 of 41

1

An increase in the demand for apples will cause all but which of the following?

Select one of the following:

a decrease in the number of apple pickers employed
an increase in the value of the marginal product of apple pickers
an increase in the price of apples
an increase in the wage of apple pickers

Explanation

Question 12 of 41

1

A decrease in the supply of farm tractors will cause all but which of the following?

Select one of the following:

an increase in the rental rate for tractors
a decrease in the rental rate of farmland
an increase in the value of the marginal product of tractors
an increase in the wage of farm workers

Explanation

Question 13 of 41

1

If both input and output markets are competitive and firms are profit maximizing, then in equilibrium each factor of production earns

Select one of the following:

an amount equal to the price of output times total output.
the amount allocated by the political process.
an equal share of output.
the value of its marginal product.

Explanation

Question 14 of 41

1

An individual firm's demand for a factor of production

Select one of the following:

slopes downward because an increase in the production of output reduces the price at which the output can be sold in a competitive market, thereby reducing the value of the marginal product as more of the factor is used.
slopes downward due to the factor's diminishing marginal product.
slopes upward due to the factor's increasing marginal product.
is perfectly elastic (horizontal) if the factor market is perfectly competitive.

Explanation

Question 15 of 41

1

An increase in the demand for a firm's output

Select one of the following:

decreases the prosperity of the firm but increases the prosperity of the factors hired by the firm.
decreases the prosperity of both the firm and the factors hired by the firm.
increases the prosperity of both the firm and the factors hired by the firm.
increases the prosperity of the firm but decreases the prosperity of the factors hired by the firm.

Explanation

Question 16 of 41

1

A competitive, profit-maximizing firm should hire workers up to the point where

Select one of the following:

the wage, the rental price of capital, and the rental price of land are all equal.
the marginal product of labour equals zero and the production function is maximized.
the value of the marginal product of labour equals the wage.
the marginal product of labour equals the wage.

Explanation

Question 17 of 41

1

Which of the following is not true with regard to workers who have a high value of marginal product? These workers

Select one of the following:

have skills that are in relatively scarce supply.
produce output for which there is great demand.
are usually highly paid.
usually have little capital with which to work.

Explanation

Question 18 of 41

1

An increase in the price of automobiles shifts the demand for autoworkers to the

Select one of the following:

left and decreases the wage.
right and decreases the wage.
right and increases the wage.
left and increases the wage.

Explanation

Question 19 of 41

1

When capital is owned by the firm as opposed to being directly owned by households, capital income may take any of the following forms except

Select one of the following:

interest.
dividends.
increases in stocks of goods.
retained earnings.

Explanation

Question 20 of 41

1

Suppose that a war is fought with biological weapons. The weapons destroy people but not capital. What is likely to happen to equilibrium wages and rental rates after the war when compared to their values before the war?

Select one of the following:

Wages rise and rental rates fall.
Wages rise and rental rates rise.
Wages fall and rental rates rise.
Wages fall and rental rates fall.

Explanation

Question 21 of 41

1

Which of the following statements is true?

Select one of the following:

Indifference curves for perfect substitutes are bowed inward.
Indifference curves for perfect complements are shaped as right angles.
The typical indifference curve is a straight line.
The typical indifference curve is upward sloping.

Explanation

Question 22 of 41

1

All of the following are examples of compensating differentials, EXCEPT:

Select one of the following:

older, more experienced workers are paid more than younger workers.
coal miners are paid more than other workers with similar skills, due to higher risk.
night shift workers are paid more than day shift workers, due to workers desire to work daytime.
law professors are paid less than practicing lawyers, due to greater job satisfaction.

Explanation

Question 23 of 41

1

Which of the following is a good example of signaling in the labor market?

Select one of the following:

Traffic lights.
Changes in wages due to changes in the demand and the supply of labor.
Getting a college education to demonstrate the possession of high ability.
Showing a 'can do' attitude on the first day on a new job.

Explanation

Question 24 of 41

1

The theory of efficiency wages predicts that:

Select one of the following:

many firms will want to pay wages above the prevailing market equilibrium wages.
firms will pay their workers a wage exactly equal to the value of the marginal product of labor.
firms will seek to not pay their workers a single cent more than they have to.
labor unions will force firms to pay higher wages than they want to.

Explanation

Question 25 of 41

1

The property of diminishing marginal product applies:

Select one of the following:

only to workers in the short run.
applies to workers and any other variable inputs in the short run.
only to workers in the long run.
applies to workers and any other variable inputs in the long run.

Explanation

Question 26 of 41

1

If the supply curve for labor is backward bending, and if the wage of a worker increases, she might choose to work:

Select one of the following:

fewer hours per week, since she can earn the same income working fewer hours.
more hours per week, since she can earn the same income working fewer hours.
fewer hours per week, since every hour of leisure is cheaper than before.
more hours per week, since she needs to work more hours to earn the same income.

Explanation

Question 27 of 41

1

If there is a permanent increase in the demand for cars, car manufacturers will want to hire workers, which will cause wages in the industry to .

Select one of the following:

more, rise
more, drop
less, rise
less, drop

Explanation

Question 28 of 41

1

As firms gradually acquire ever more technology, machinery and equipment, workers' productivity gradually , and workers wages gradually .

Select one of the following:

rises, decrease
diminishes, decrease
diminishes, increase
rises, increase

Explanation

Question 29 of 41

1

The price paid for any factor of production tends to be equal to:

Select one of the following:

the wage rate.
the value of the marginal product of that input.
the price of the product sold by the firm that inputs.
the price of the product sold by the firm that buys the inputs.

Explanation

Question 30 of 41

1

Which price index measures the average price of things purchased by the typical family?

Select one of the following:

GDP deflator
producer price index
consumer price index
minimum wage

Explanation

Question 31 of 41

1

The good that receives the most weight in the CPI is the good that

Select one of the following:

consumers buy most frequently.
has experienced the greatest price increase.
has the highest price.
consumers spend the largest fraction of their income on.

Explanation

Question 32 of 41

1

Which of the following is a reason why the Consumer Price Index (CPI) is not calculated as a simple
average of all prices?

Select one of the following:

Some goods experience large price changes and the CPI would be too variable if
computed by a simple average.
Goods differ in their importance in the average consumer's budget.
Some goods never experience price changes and the CPI would not be variable enough if
computed as a simple average.
It would be difficult to compute a price index using a simple average of all prices.

Explanation

Question 33 of 41

1

Substitution bias

Select one of the following:

is one factor that causes the CPI to underestimate the inflation rate.
is caused by the poor quality of many imported products.
is one of the primary causes of inflation
involves consumer behaviour that helps explain why the CPI overestimates the inflation
rate.

Explanation

Question 34 of 41

1

Improvements in the quality of consumer goods and services over time

Select one of the following:

cause the CPI to overstate actual inflation.
cause the CPI to understate actual inflation
are accounted for in the CPI.
are insignificant and thus would not affect the CPI even if accounted for.

Explanation

Question 35 of 41

1

Factors that cause the CPI to exaggerate the inflation rate do NOT include

Select one of the following:

the tendency of consumers to substitute relatively cheaper goods for those that have
become relatively more expensive.
political pressure from unions and retirees on the providers of a country’s official
statistics to overstate the inflation rate
the introduction of new technologies that make it easier to obtain the same standard of
living
improvements over time on the quality of products

Explanation

Question 36 of 41

1

The CPI differs from the GDP deflator in that the CPI

Select one of the following:

uses base year quantities of goods to weight prices
uses current year quantities of goods to weight prices.
is not a weighted price index.
always indicates a higher rate of inflation than the GDP deflator.

Explanation

Question 37 of 41

1

If the consumer price index has a value of 115 today and the base year is 2000, then consumer prices
have

Select one of the following:

increased by 15 per cent since 2000.
increased by 1.5 per cent since 2000.
more than doubled since 2000
declined 15 per cent since 2000

Explanation

Question 38 of 41

1

Use this table to find the real wage in 2002

Select one of the following:

€8.06
€8.13
€13.00
€20.80

Explanation

Question 39 of 41

1

The real interest rate on a loan

Select one of the following:

is the amount that the consumer agrees to pay
is always the same as the nominal rate.
is the percentage increase in the lender's purchasing power that results from making the
loan.
decreases as the inflation rate increases.

Explanation

Question 40 of 41

1

When the inflation rate ends up being lower than expected,

Select one of the following:

everyone benefits because money is cheaper
everyone benefits because prices do not increase.
lenders of fixed rate mortgages generally benefit because they will make higher profits
than they had calculated.
borrowers with fixed rate loans will benefit because their purchasing power will not
decline as much.

	Created by Good Guy Beket over 5 years ago

Hell on Earth Economics [Teacher: Abdinova Makpal ; Final Exam + Quizzes] ▼ (Final Exam Prep) Quiz on Economics Final Exam [Chap. 18,24], created by Good Guy Beket on 28/12/2018.

Economics Final Exam [Chap. 18,24]

Question 1 of 41

The most important factors of production are

Select one of the following:

Explanation

Question 2 of 41

If a factor exhibits diminishing marginal product, hiring additional units of the factor will

Select one of the following:

Explanation

Question 3 of 41

Refer to Figure 18-1. What is the marginal product of labour as the firm moves from using three workers to using four workers?

Select one of the following:

Explanation

Question 4 of 41

Refer to Figure 18-1. If the price of output is €4 per unit, what is the value of the marginal product of labour as the firm moves from using four workers to using five workers?

Select one of the following:

Explanation

Question 5 of 41

Refer to Figure 18-1. If this profit-maximizing firm sells its output in a competitive market for €3 per unit and hires labour in a competitive market for €8/hour, then this firm should hire

Select one of the following:

Explanation

Question 6 of 41

The value of the marginal product of labour is

Select one of the following:

Explanation

Question 7 of 41

For a competitive, profit-maximizing firm, the value-of-the-marginal-product curve for capital is the firm's

Select one of the following:

Explanation

Question 8 of 41

An increase in the supply of labour

Select one of the following:

Explanation

Question 9 of 41

A decrease in the demand for fish

Select one of the following:

Explanation

Question 10 of 41

What will a decrease in the supply of fishermen do to the market for capital employed in the fishing industry?

Select one of the following:

Explanation

Question 11 of 41

An increase in the demand for apples will cause all but which of the following?

Select one of the following:

Explanation

Question 12 of 41

A decrease in the supply of farm tractors will cause all but which of the following?

Select one of the following:

Explanation

Question 13 of 41

If both input and output markets are competitive and firms are profit maximizing, then in equilibrium each factor of production earns

Select one of the following:

Explanation

Question 14 of 41

An individual firm's demand for a factor of production

Select one of the following:

Explanation

Question 15 of 41

An increase in the demand for a firm's output

Select one of the following:

Explanation

Question 16 of 41

A competitive, profit-maximizing firm should hire workers up to the point where

Select one of the following:

Explanation

Question 17 of 41

Which of the following is not true with regard to workers who have a high value of marginal product? These workers

Select one of the following:

Explanation

Question 18 of 41

An increase in the price of automobiles shifts the demand for autoworkers to the

Select one of the following:

Explanation

Question 19 of 41

When capital is owned by the firm as opposed to being directly owned by households, capital income may take any of the following forms except

Select one of the following:

Explanation

Question 20 of 41

Suppose that a war is fought with biological weapons. The weapons destroy people but not capital. What is likely to happen to equilibrium wages and rental rates after the war when compared to their values before the war?

If there is a permanent increase in the demand for cars, car manufacturers will want to hire workers, which will cause wages in the industry to .

As firms gradually acquire ever more technology, machinery and equipment, workers' productivity gradually , and workers wages gradually .

Which of the following is a reason why the Consumer Price Index (CPI) is not calculated as a simple
average of all prices?

If the consumer price index has a value of 115 today and the base year is 2000, then consumer prices
have