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Principles of Microeconomics Chap 12, 13, 14
Principles of Microeconomics Chap 12, 13, 14 Quiz 8
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Economics
Undergraduate 1
07/06/2014

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Term
If a factor of production has a fixed total supply, then payments to that factor constitute:
Definition
Economic rent
Term
If the payment to an input is a pure economic rent, then reducing that payment will:
Definition
Not influence the availability of the input
Term
Other things equal, the interest rate on a loan will be larger:
Definition
The higher the risk involved
Term
The demand curve for loanable funds represents the behavior of:
Definition
Borrowers
Term
The supply curve for loanable funds is upward-sloping because:
Definition
Lenders are more willing to lend at higher, rather than lower, interest rates
Term
A decrease in the supply of loanable funds and an increase in the demand for loanable funds will:
Definition
Increase the interest rate, but the quantity of funds loaned may either increase or decrease
Term
A firm considering whether to borrow money to purchase a capital good will compare the rate of interest for the loan with the:
Definition
Rate of return on the investment
Term
Which expression is used to calculate the present value of an amount of money?
Definition
Future Value/(1+interest rate)time
Term
If you pay $1,980 annually on an $18,000 loan and the rate of inflation is 3 percent, then the:
Definition
Real rate of interest is 8 percent
Term
In a purely competitive labor market, a profit-maximizing firm will hire labor up to the point where the marginal revenue product of labor equals the:
Definition
Wage rate or price of labor
Term
If the wage rate in a purely competitive labor market increases, it will cause the:
Definition
Marginal resource cost curve for a single competitive firm in the industry to shift up
Term
The reason that the supply curve for labor in a purely competitive market slopes upward is because:
Definition
Higher wages must be paid to bid workers away from other opportunities
Term
Professional sports leagues, like the NFL and the NBA, are good examples of monopsony because
Definition
They are the only employers of professional athletes in their respective sports
Term
Compared to a purely competitive firm, a monopsonist will pay:
Definition
Lower wage rates and hire fewer workers than the purely competitive firm
Term
The demand for a resource will increase if the:
Definition
Price of the product the firm is producing increases
Term
If a factor of production has many close substitutes, we would expect that its price elasticity of demand would be:
Definition
Greater than one
Term
A change in a factor's price will have a greater effect on the quantity of the factor demanded the
Definition
More elastic is the demand for the product the factor helps to make
Term
The strength of the demand for a resource depends on the following factors, except
Definition
Supply of the resource
Term
The demand for capital by a firm is based on the demand for the product that the capital produces. This relationship is referred to as:
Definition
Derived demand
Term
Resource pricing is important because:
Definition
resource prices are a major determinant of money incomes.
resource prices allocate scarce resources among alternative uses.
resource prices, along with resource productivity, are important to firms in minimizing their costs.
Term
When economists say that the demand for labor is a derived demand, they mean that it is:
Definition
related to the demand for the product or service labor is producing.
Term
The marginal revenue product schedule is:
Definition
the firm's resource demand schedule.
Term
If one worker can pick $30 worth of grapes and two workers together can pick $50 worth of grapes, the:
Definition
marginal revenue product of the second worker is $20.
Term
A profit-maximizing firm employs resources to the point where:
Definition
MRP = MRC.
Term
Refer to the above information. The MRP of the second barber is:
Definition
$108.
Term
Suppose the demand for strawberries rises sharply, resulting in an increased price of strawberries. As it relates to strawberry pickers, we could expect the:
Definition
MRP curve to shift to the right.
Term
Resource X has many close substitutes whereas resource Y has no close substitutes. Other things equal, we would expect:
Definition
the demand for resource X to be more elastic than the demand for resource Y
Term
Assume that the coefficient of elasticity of product demand is 0.5 in industry A and is 3.2 in industry B. Other things equal, labor demand will be:
Definition
more elastic in industry B than in A.
Term
Other things equal, the monopsonistic employer will pay a:
Definition
lower wage rate and hire fewer workers than will a purely competitive employer.
Term
A monopsonistic employer's marginal resource (labor) cost curve:
Definition
lies above the labor supply curve because the higher wage paid to an additional worker must also be paid to all other employed workers
Term
A craft union attempts to increase wage rates by:
Definition
shifting the labor supply curve to the left.
Term
If an exclusive union is successful in restricting the supply of labor, the:
Definition
wage rate will rise.
Term
If a single large employer bargains with an inclusive union, the resulting labor market model can best be described as:
Definition
a bilateral monopoly.
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