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Economics Final Exam [Chap. 18,24]

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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.
Good Guy Beket
Quiz by Good Guy Beket, updated more than 1 year ago
Good Guy Beket
Created by Good Guy Beket over 5 years ago
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Resource summary

Question 1

Question
The most important factors of production are
Answer
  • labour, land, and capital.
  • water, earth, and knowledge.
  • money, stocks, and bonds.
  • management, finance, and marketing.

Question 2

Question
If a factor exhibits diminishing marginal product, hiring additional units of the factor will
Answer
  • cause a reduction in output.
  • have no effect on output.
  • increase the marginal product of the factor.
  • generate ever smaller amounts of output.

Question 3

Question
Refer to Figure 18-1. What is the marginal product of labour as the firm moves from using three workers to using four workers?
Image:
Screenshot 8 (binary/octet-stream)
Answer
  • 14
  • 0
  • none of these answers
  • 2
  • 12

Question 4

Question
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?
Image:
Screenshot 8 (binary/octet-stream)
Answer
  • €60
  • €4
  • €12
  • €8
  • €56

Question 5

Question
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
Image:
Screenshot 8 (binary/octet-stream)
Answer
  • four workers.
  • three workers.
  • two workers.
  • five workers.
  • one worker.

Question 6

Question
The value of the marginal product of labour is
Answer
  • 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.

Question 7

Question
For a competitive, profit-maximizing firm, the value-of-the-marginal-product curve for capital is the firm's
Answer
  • supply curve of capital.
  • demand curve for capital.
  • production function.
  • marginal cost curve.

Question 8

Question
An increase in the supply of labour
Answer
  • 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.

Question 9

Question
A decrease in the demand for fish
Answer
  • 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.

Question 10

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

Question 11

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

Question 12

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

Question 13

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

Question 14

Question
An individual firm's demand for a factor of production
Answer
  • 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.

Question 15

Question
An increase in the demand for a firm's output
Answer
  • 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.

Question 16

Question
A competitive, profit-maximizing firm should hire workers up to the point where
Answer
  • 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.

Question 17

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

Question 18

Question
An increase in the price of automobiles shifts the demand for autoworkers to the
Answer
  • left and decreases the wage.
  • right and decreases the wage.
  • right and increases the wage.
  • left and increases the wage.

Question 19

Question
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
Answer
  • interest.
  • dividends.
  • increases in stocks of goods.
  • retained earnings.

Question 20

Question
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?
Answer
  • Wages rise and rental rates fall.
  • Wages rise and rental rates rise.
  • Wages fall and rental rates rise.
  • Wages fall and rental rates fall.

Question 21

Question
Which of the following statements is true?
Answer
  • 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.

Question 22

Question
All of the following are examples of compensating differentials, EXCEPT:
Answer
  • 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.

Question 23

Question
Which of the following is a good example of signaling in the labor market?
Answer
  • 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.

Question 24

Question
The theory of efficiency wages predicts that:
Answer
  • 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.

Question 25

Question
The property of diminishing marginal product applies:
Answer
  • 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.

Question 26

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

Question 27

Question
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 ________.
Answer
  • more, rise
  • more, drop
  • less, rise
  • less, drop

Question 28

Question
As firms gradually acquire ever more technology, machinery and equipment, workers' productivity gradually ________, and workers wages gradually ________.
Answer
  • rises, decrease
  • diminishes, decrease
  • diminishes, increase
  • rises, increase

Question 29

Question
The price paid for any factor of production tends to be equal to:
Answer
  • 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.

Question 30

Question
Which price index measures the average price of things purchased by the typical family?
Answer
  • GDP deflator
  • producer price index
  • consumer price index
  • minimum wage

Question 31

Question
The good that receives the most weight in the CPI is the good that
Answer
  • consumers buy most frequently.
  • has experienced the greatest price increase.
  • has the highest price.
  • consumers spend the largest fraction of their income on.

Question 32

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

Question 33

Question
Substitution bias
Answer
  • 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.

Question 34

Question
Improvements in the quality of consumer goods and services over time
Answer
  • 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.

Question 35

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

Question 36

Question
The CPI differs from the GDP deflator in that the CPI
Answer
  • 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.

Question 37

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

Question 38

Question
Use this table to find the real wage in 2002
Image:
Screenshot 9 (binary/octet-stream)
Answer
  • €8.06
  • €8.13
  • €13.00
  • €20.80

Question 39

Question
The real interest rate on a loan
Answer
  • 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.

Question 40

Question
When the inflation rate ends up being lower than expected,
Answer
  • 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.

Question 41

Question
In general, a higher than anticipated inflation rate
Answer
  • helps everyone.
  • hurts everyone.
  • helps creditors and harms debtors
  • helps debtors and harms creditors.
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