ECON 1 FINAL NOTES ch 13,15,16,17

As a result of increasing its workforce from 9 workers to 10 workers, a firm's total revenue per day increases from $60,000 to $60,250 and its total cost per day increases from $58,500 to $58,700. The marginal profit of the 10th worker is

$50

When the rate of interest rises, the resulting change in the demand for capital is shown graphically by:

a leftward shift of the demand curve.

A bond that provides no interest payments but instead is issued at a value that is lower than its face value is called:

a zero-coupon bond.

A stock index measures the:

price movements of a group of stocks.

The face value of a bond is:

the amount repaid to the lender on maturity.

A firm decides to hire more equipment if:

the marginal revenue product of the additional unit of equipment is greater than the marginal factor cost.

To say that a firm is perfectly competitive in the labor market is to say that the firm can choose

the number of workers it hires, but it cannot choose the wage it pays its workers.

A group of stocks of individual firms that are placed into one investment pool by an investment company is commonly known as a:

mutual fund.

Stocks that offer a guaranteed fixed periodic payment or dividend are known as:

preferred stock.

Suppose that technological progress increases the productivity of teachers, and the demand for teachers increases. Which of the following accurately describes the labor market for teachers after the technological change? Equilibrium wages will

rise, and the equilibrium quantity of teachers employed will rise.

If the current shareholders begin to believe that the prices of the stocks are likely to rise in the future, the supply curve of shares will:

shift to the left.

The demand curve for capital:

shows the negative relation between price of capital and the quantity of capital demanded.

When the price of a stock rises significantly higher than what can be justified by the dividends the firm can be expected to pay in the future, a(n) _____ is said to have occurred.

stock market bubble

The price of stock is determined by:

the demand for and supply of a company's shares.

If the coupon-rate of a particular bond increases:

the demand for the bond increases.

It is said that a wage increase can have two opposing effects. Which of the following captures these two effects?

A backward-bending labor-supply curve

Which of the following events would lead to an increase in the supply of labor?

A country experiences an increase in immigrant labor.

Which of the following events could decrease the demand for labor?

A decrease in demand for the final product produced by labor

Why is the market supply curve of labor positively sloped though individual supply curves are backward-bending beyond a certain wage rate?

All the individual supply curves do not bend backward at one particular wage rate.

Which of the following is not a reason for compensating wage differentials?

An excess supply of workers in some industries

Why are bonds less risky than stocks?

Bondholders have a claim on the assets of the firm whereas the shareholders do not.

If an individual labor supply curve bends backward at some high wage, so does the market labor supply curve.​

False

An example of human capital is the purchase of a computer to help accountants.

False

An increase in the wage rate lowers the opportunity cost of leisure and induces people to enjoy more leisure.

False

If both demand for and supply of capital increase by equal amounts, then the equilibrium price of capital goes up, and the equilibrium quantity of capital increases.

False

The quantity of labor supplied by a particular wage earner will always increase as long as the wage rate increases.

False

John's Pizza Palace produces gourmet pizzas that sell for $20 each. Assume that labor is the only input that varies for the firm. If John hires 10 workers, he can produce and sell 600 pizzas per week. If he hires 11 workers, he can produce and sell 650 pizzas per week. John pays each of his workers $400 per week. Which of the following is correct?

For the 11th worker, the marginal revenue product is $1,000.

Which of the following is true of the NASDAQ Composite Index?

It mostly includes the stocks of technology and Internet-related companies.

Which of the following indexes includes the stocks of 500 companies that are widely owned and that represent all sectors of the U.S. economy?

Standard & Poor's 500

Which of the following best explains the shape of the individual labor-supply curve?

The individual labor-supply curve slopes upward at lower wage rates and then bends back at higher wage rates.

Most stock indexes use which of the following measures to weight the companies that participate in the index?

The market capitalization

Suppose that the wage paid to workers who detassel corn rises. Other things being equal, what happens in the market for workers who weed soybean fields, given that workers who detassel corn can easily work weeding soybean fields?

The supply for soybean workers decreases.

Why do skilled workers earn relatively higher wages than unskilled workers?

The supply of skilled workers is relatively less.

As the price of capital falls, the quantity of capital that producers are willing and able to offer falls.

True

The greater the opportunity cost of any particular occupation, the smaller the number of people who will select that occupation.

True

The labor-market-supply curve illustrates that, as the wage rate increases, the number of hours that each person is willing and able to work rises.

True

Assume the market for candles is competitive. Other things being equal, a decrease in the market price of candles

decreases the demand for workers who make candles and decreases their equilibrium wage.

The possible returns to a shareholder are:

dividend and an appreciation in the price of the stock.

The financial capital of a firm includes the:

equity and ​bonds issued by it.

Buying a newly issued bond implies:

lending money to the issuing firm.

The labor demand curve is based on the firm's:

marginal revenue product curve.

We observe a profit-maximizing firm hiring its 75th employee. It is possible to infer that, when 74 employees are hired, the

marginal revenue product of labor exceeds the wage.

The product of the stock price and the total outstanding shares of that stock is referred to as:

market capitalization.

The labor market is in equilibrium when:

the labor demand curve intersects the labor supply curve.

All of the following will shift the demand curve for capital, except:

the price of capital.

The maturity date of a bond is:

the specified time at which the borrower repays the loan.

The term compensating wage differential refers to:

the wage differences that arise from differences in the risk involved in different jobs.

A profit-maximizing, competitive firm will always hire an additional worker when the additional worker makes a positive contribution to

total profit

If the earnings of Chopo Co. are lower than expected, the forecasts will be revised downward and the price of the company's stock will decline.

true

Miguel receives a pay raise at his part-time job from $7.50 to $9 per hour. He used to work 10 hours per week, but now he decides to work 12 hours per week. For this price range, his labor supply curve is

upward sloping

A competitive firm will hire workers up to the point at which the marginal revenue product of labor equals the

wage