Econ final

You purchase an annuity when interest rates are 8%. How much do you need to set aside so that you will earn $4,000 every year to pay for your vacation?

$50,000

(Table) In the table, what is the value of C?

$60

(Table) In the table, what is the value of B?

$70

A sweatshop in California can sell socks for 50 cents a pair, and 10 cents of the price covers all other costs. If a worker can produce 20 pairs of socks per hour, how much can the sweatshop owner afford to pay the worker?

$8 per hour

In competitive labor markets, the going wage is/are:

determined by the intersection of the market supply and market demand curves for labor.

If wages increase at a 5% rate and the quantity demanded of labor decreases 10%, then the demand curve for labor is:

elastic

An increase in college tuition will lead to:

fewer younger people going to college.

Assume that the going wage for a worker at a competitive firm is $50 a day. If the marginal revenue product for the sixth worker is $45 a day, the:

firm should hire fewer than six workers.

Boeing purchases thousands of specialized components to build commercial jets. For most of these transactions, Boeing is a:

monopsonist

The supply of land is:

not perfectly fixed since it can be improved, very inelastic, and more inelastic than other production inputs.

When economists say that education and earnings are positively correlated, they mean that:

people with a high school degree have higher average earnings than people without a high school degree.

For an individual firm with a good credit rating, the supply of loanable funds is:

perfectly elastic

Entrepreneurs:

receive profits as rewards for risks they assume in producing goods and services.

Your SAT scores may someday be a:

screening device

If a defense industry firm hires a history major, then the company is probably looking at the degree as a(n):

screening device.

Which of the following will not affect the elasticity of demand for labor?

the elasticity of supply for labor

The demand for labor is elastic if:

the percentage change in the quantity of labor demanded exceeds the percentage change in the wage rate

The demand for copper increases. As a result, in the industry, the:

wage rate increases and the quantity of workers supplied increases.

______ are examples of market failure caused by "spillovers" or unintended byproducts of a market transaction

Externalities

If someone offers to pay you $500 in year one, $1000 in year two, $1500 in year three, and $2000 in year four, what is the present value of this income stream if the going interest rate is 4%?

$4,448.44

A lower elasticity of demand of a product results in a:

lower elasticity of demand for the labor that produces the product.

XYZ Company is currently experiencing a backlog at its loading dock. A manager figures that if she were to hire an extra worker for $100 per day, then sales volumes would increase by $400, due to the removal of the congestion on the dock. The worker's marginal revenue product is:

$400

If someone offers to pay you $1,200 in three years and the going interest rate is 4%, what is the present value for this future payment?

$1066.80

If a firm requires investments to yield 25%, what would be an acceptable rate of return for the firm's latest investment?

30%

The cost of capital for a new project is $55,000. The project is expected to yield $20,000 in year one and $40,000 in year two. What is the approximate rate of return over this time period?

5.4%

Which of the following statements best illustrates the relationship of present value to future value?

A bird in the hand is worth two in the bush.

To determine if education is a good investment, one must compare the:

future earnings from education against its present costs.

According to human capital theory, younger workers:

have a lower opportunity cost of going to college, so will be more likely to attend college.

According to human capital theory, which of the following occurrences would increase the demand for college education?

higher subjective discount rate

The cost of sending a space shuttle into orbit is $4 billion. Total cost for the astronaut's salary is $300,000 per year. The demand curve for astronauts will probably be:

inelastic.