Econ Chapter 16 & 18 HW

Suppose a person pays $80 of annual interest on a loan that has a 5 percent annual interest rate. The loan amount is

$1,600

Refer to the table, in which the values for columns (2) through (5) are in acres. If the relevant columns are (1), (2), and (4), land rent will be

$100 per acre

Harry owns a barbershop and charges $6 per haircut. By hiring one barber at $10 per hour, the shop can provide 24 haircuts per eight-hour day. By hiring a second barber at the same wage rate, the shop can now provide a total of 42 haircuts per day. The MRP of the second barber is

$108

Refer to the table representing Kara's bank account. Assuming that $2,000 was deposited into her account at the beginning of year 1, the value for cell A is

$200

Other things equal, an increase in the productivity of capital goods will

increase the demand for loanable funds and increase the equilibrium interest rate

Which of the following is correct?

real capital is a resouce, but money is not

In making an investment decision, a business firm is most interested in the

real interest rate

When economists say that the demand for labor is a derived demand, they mean that it is

related to the demand for the product or service labor is producing

In year 1 the price level is constant and the nominal rate of interest is 6 percent. But in year 2 the inflation rate is 3 percent. If the real rate of interest is to remain at the same level in year 2 as it was in year 1, then in year 2 the nominal interest rate must

rise by 3 percentage points

Refer to the graph. Other things equal, an increase in labor productivity would cause a

shift from D2 to D3

Refer to the graph. Other things equal, an increase in the price of a complementary resource would cause a

shift from D3 to D2

A competitive employer is using labor in such an amount that labor's MRP is $10 and its wage rate is $8. This firm

should hire more labor because this will increase profits

The labor demand curve of a purely competitive seller

slopes downward because of diminishing marginal productivity

A firm will employ more of an input whose relative price has fallen and, conversely, will use less of an input whose relative price has risen. Thus, a fall in the price of capital will increase the relative price of labor and thereby reduce the demand for labor. This describes the

substitution effect

An employer hiring in a competitive labor market should hire additional labor as long as

the MRP exceeds the wage rate

The demand for airline pilots results from the demand for air travel. This fact is an example of

the derived demand for labor

The data in the table reveal that

the firm is selling its product in an imperfectly competitive market

The marginal revenue product schedule is

the firm's resource demand schedule

Economic rent refers to the price paid for land and other natural resources that

are fixed in total supply

Refer to the table representing Kara's bank account. Assuming that $2,000 was deposited into her account at the beginning of year 1 and no further deposits or withdrawals were made, the value for cell E

$2,662

Assume labor is the only variable input and that an additional input of labor increases total output from 72 to 80 units. If the product sells for $6 per unit in a purely competitive market, the MRP of this additional worker is

$48

Refer to the table representing Kara's bank account. Assuming that $2,000 was deposited into her account at the beginning of year 1 and no further deposits or withdrawals were made, the value for cell D

$662

Harry owns a barbershop and charges $6 per haircut. By hiring one barber at $10 per hour, the shop can provide 24 haircuts per eight-hour day. By hiring a second barber at the same wage rate, the shop can now provide a total of 42 haircuts per day. The MRP of the second barber is

18 haircuts

The table gives marginal product data for resources a and b. The output of these independent resources sells in a purely competitive market at $1 per unit. Assume that the prices of a and b are $5 and $8, respectively, what is the least costly combination of resources for the firm to employ in producing 192 units of output?

3 of a and 4 of b

The table gives marginal product data for resources a and b. The output of these independent resources sells in a purely competitive market at $1 per unit. Assume that the prices of a and b are $15 and $20, respectively. To maximize profits, what combination of a and b should the employer hire?

3 of a and 5 of b

Refer to the diagram, if the supply of loanable funds is S o and the demand for loanable funds is D o, the equilibrium interest rate and quantity of funds borrowed will be

F and C

Suppose the demand for strawberries rises sharply, resulting in an increased price for strawberries. As it relates to strawberry pickers, we could expect the

MRP curve to shift to the right

A profit-maximizing firm employs resources to the point where

MRP=MRC

Which of the following will not shift the demand curve for labor?

a change in the wage rate

The "time-value of money" refers to the fact that

a given amount of money is more valuable the sooner it is obtained

Henry George's single-tax movement was based on the argument that

a high tax on land rent is justified because land rent performs no incentive function

In the market for loanable funds,

an increase in borrowing for investment will increase the interest rate

The fact that people prefer present consumption to future consumption results in

an upsloping supply of loanable funds curve

The demand for loanable funds is downsloping

because businesses find that more investments are profitable at low interest rates than at high interest rates

The labor demand curve of an imperfectly competitive seller is down sloping

because of both diminishing returns and the necessity to lower price to sell more output

which of the following statements best illustrates the time-value of money concept?

bob is willing to forgo receiving $100 today in order to receive $110 next month

The MRP curve is the resource demand curve for

both the purely competitive and imperfectly competitive seller

Refer to the diagrams. Assume that only wheat can be grown on the three grades of land shown in Figures (a), (b), and (c). Also assume that identical amounts of labor, capital, and other needed inputs are used in farming each grade of land. On the basis of these three figures, we

can say that the land in Figure (c) is most productive

The demand for land is

downsloping

When the elasticity coefficient for resource demand is greater than one, resource demand is

elastic

The supply curve of loanable funds is upsloping because

households are willing to save more at high interest rates than they are at low interest rates

The incentive function of prices

indicates that price increases bring forth more of that resource

The MRP curve for labor

is the firm's labor demand curve

If one worker can pick $30 worth of grapes and two workers together can pick $50 worth of grapes, the

marginal revenue product of the second worker is $20

For a firm selling its product in an imperfectly competitive market, the marginal revenue product of labor can be found by

multiplying marginal product by marginal revenue

For a firm selling its product in a purely competitive market, the marginal revenue product of labor can be found by

multiplying marginal product by product price

The purely competitive employer of resource A will maximize the profits from A by equating the

price of A with the MRP of A

Which of the following represents an uninsurable risk to a business firm?

the possibility thar an adverse change in consumer tastes will decrease the demand for the form's product

The equilibrium interest rate equates

the quantities demanded and supplied of loanable funds

"Present value" refers to the

value today of a specific amount of money to be received in the future