quiz 17

If the annual rate of interest is 6%, the present value of $100 to be paid every year for three years (beginning one year from now) is Question 4 options: A) $83.90. B) $251.88. C) $267.30. D) $283.02. E) $300.00.

C) $267.30. 100/1.06^1 + 100/1.06^2 + 100/1.06^3 94.3396 . + 88.9996 . + 83.9619

Each point on a supply curve shows the ________ acceptable price to firms for selling that unit; this price reflects ________ to firms from producing that unit. A) maximum; the additional cost B) maximum; the additional value C) minimum; the additional cost D) minimum; the additional value E) minimum; the equilibrium price

C) minimum; the additional cost

Consider the following pair of equations: Y = 20 - 2X; and Y = 5 + 3X. The intersection of these lines occurs at the point (X,Y) = Question 1 options: A) 5; 10. B) 10; 5. C) 3; 14. D) 15; -10. E) -10; 15.

C)3; 14.

Refer to Figure 7-1. Suppose each unit of labour represents one worker for one month. What is the maximum number of workers the firm could hire so that the final worker hired still raises the average product of the other workers?

C)9 since that's where MP=AP

Refer to Figure 11-3. A monopolistically competitive firm is said to be inefficient because in the long-run equilibrium Question 9 options: A) price is greater than LRAC at Q1. B) MC is greater than price. C) price is greater than MC at Q1. D) MC is greater than LRAC. E) LRAC at Q1 is not at its minimum.

E)LRAC at Q1 is not at its minimum.

To determine an individual profit-maximizing firm's maximum purchase price for a unit of capital it is necessary to

compute the present value of the stream of benefits produced by the unit of capital.

During recessions, individual investment in higher education typically ________ due to the relatively ________ opportunity cost of time spent in university. Question options: A) falls; low B) rises; high C) falls; high D) rises; low E) stays constant; constant

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Consider the following table for a firm. The first column shows the number of units of a variable factor of production employed by the firm. Refer to Table 13-2. Suppose the firm is a perfect competitor and faces a given price of the product equal to $2 per unit. The marginal revenue product of the 5th unit of the factor is

2 x 20 $40.

Marginal revenue product of labour for a competitive seller is A) the marginal revenue of the product multiplied by the output price. B) the change in total product from hiring one more worker. C) the output price multiplied by the quantity sold. D) equal to the marginal product of labour multiplied by the output price.

D) equal to the marginal product of labour multiplied by the output price. MRP = MP*P

Refer to Table 14.1. If the output price is $3, what is the marginal revenue product of the fifth unit of labour?

MRP = MP x P MPis the additional output by adding one worker so 50 (300 to 350) and price is 3$

Refer to Figure 14-5. Suppose this labour market is competitive. If a minimum wage of W4 is then imposed, the quantity of labour supplied would be

Q1 WRONG

Refer to Figure 14-5. Suppose this labour market is competitive. If a minimum wage of W3 is then imposed, the quantity of labour hired would be

Q2

Consider a small firm that is producing winter jackets. It can lease an additional sewing machine for one month for $1200. With this additional machine, the firm can produce an additional 7 jackets during that time period that it sells for $250 each. Hiring the marginal machine adds ________ to the firm's profit and so it should ________ the machine.

A) $550; lease bcuz it says priofit and not revenue so 1750-price of machine

Refer to Figure 14-5. Suppose this labour market is competitive. If a minimum wage of W4 is then imposed, the number of unemployed workers would be Question 5 options: A) 0Q1. B) 0Q3. C) Q5 - Q1. D) 0Q5. E) Q3 - Q1.

C) Q5 - Q1.

If Marlowe obtains 9 units of utility per dollar spent on apples and 6 units of utility per dollar spent on oranges, then Marlowe

D) should buy more apples and fewer oranges.

Other things equal, if a particular province has some non-monetary advantages, such as a temperate climate, the wage rate in that province will be Question options: A) the same as any other province. B) higher than national average and the market will be in disequilibrium. C) lower than national average and the market will be in disequilibrium. D) higher than national average and the market will be in equilibrium. E) lower than national average and the market will be in equilibrium.

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Refer to Figure 15.6. The middle 20 percent of households Question 9 options: A) earn 20 percent of the society's total income. B) earn 36 percent of the society's total income. C) earn 48 percent of the society's total income. D) earn 50 percent of the society's total income.

**** earn 20 percent of the society's total income.

If the price of lattes, a normal good you enjoy, falls, A) both the income and substitution effects lead you to buy more lattes. B) the income effect which causes you to increase your latte consumption outweighs the substitution effect which causes you to reduce your latte consumption, resulting in more lattes purchased. C) the income and substitution effects offset each other, but the price effect leads you to buy more lattes. D) the substitution effect which causes you to increase your latte consumption outweighs the income effect which causes you to reduce your latte consumption, resulting in more lattes purchased.

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At a price of $100, Beachside Canoe Rentals rented 11 canoes. When it increased its rental price to $125, only 9 canoes were rented. Calculate the price elasticity of demand for canoe rentals. Question options: A)2 B)1.25 C)0.9 D)0.75

****** Q2-Q1 -------- x 100 Q1 ------------------------- = (9-11/11) 0.182 ---------------- = 18.2/25 P2-P1 (125-100/100) 0.25 --------- x 100 P1 0.728

Labour-market discrimination, which keeps one group of workers out of elite (E) occupations and limits them to ordinary (O) occupations, will have which of the following effects? A) a decrease in supply and higher wages in the E occupations B) more employment in the E occupations C) a decrease in supply and lower wages in the O occupations D) more unemployment in the E occupations E) a decrease in supply and higher wages in the O occupation

a decrease in supply and higher wages in the E occupations the supply curve actually becomes smaller in size and goes up as well as shifts to the left. page. 329

Certain professions limit the number of students who are eligible to enroll in their programs in university - engineering, architecture, dentistry, and law, for example. What is the predicted effect of such a policy in each of these professions? A) An increase in supply and a wage that is lower than it otherwise would be. B) A reduction in supply and a wage that is higher than it otherwise would be. C) A reduction in supply and a wage that is lower than it otherwise would be. D) These professions are a relatively small portion of the labour market and so there will be no detectible change in wages. E) An increase in supply and a wage that is higher than it otherwise would be.

)A reduction in supply and a wage that is higher than it otherwise would be.

Refer to Figure 10.14. Suppose the prevailing price is P1 and the firm is currently producing its loss-minimizing quantity. In the long-run equilibrium, Question 2 options: A) there will be more firms in the industry and total industry output remains constant. B) there will be fewer firms in the industry but total industry output increases. C) there will be more firms in the industry and total industry output increases. D) there will be fewer firms in the industry and total industry output decreases.**

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some types of discrimination in the labour market will be limited by A) entry of of discriminating firms into the market. B) an increase in the number of individuals discriminated against. C) the minimum wage. D) the desire of firms to maximize profits. E) greater monopoly power in the market.

yesss D) the desire of firms to maximize profits.

Refer to Table 14-1. In a competitive labour market, a legislated minimum wage imposed at $14 per hour would Question 10 options: A) have no effect on the competitive equilibrium level of employment. B) lead to unemployment of 300 hours/month. C) lead to unemployment of 500 hours/month. D) lead to an equilibrium wage lower than the competitive wage. E) have no effect on the competitive equilibrium wage.

yesss******** lead to unemployment of 500 hours/month.

The diagram below shows the MRP curve for a firm producing copper plumbing pipe. The factor of production being considered here is hours of labour. Refer to Figure 13-1. Suppose this firm initially has the marginal revenue product curve MRP1. One reason that the curve could shift to MRP2 is

an improvement in workers' human capital. A) a decrease in demand for the firm's output, copper plumbing pipe. B) an improvement in workers' human capital. C) a decrease in the market price of copper plumbing pipe. D) a decrease in the wage rate. E) an increase in the supply of labour.

Refer to Figure 15-2. The market for financial capital is initially in equilibrium at pointE1. If the marginal product of capital increases, all other things being equal, the

demand increases; MP will increase so MRP will increase as well. and MRP is the demand curve so demand curve shifts outward. investment demand curve will shift to I2 and the new equilibrium will be E4.

Refer to Figure 13-2. This factor market is in equilibrium at point B. Which of the following statements best describes factor payments at point B?

go up but whatever u bolded

Compensating differentials are

higher wages that compensate workers for unpleasant aspects of a job

Suppose a competitive firm pays a wage of $12 an hour and sells its product at $3 per unit. Assume that labour is the only input. If hiring another worker would increase output by five units per hour, then to maximize profits the firm should

hire them if it was 5 don't hire

Under perfect competition, the demand curve facing an individual firm is

infinitely price elastic.

Consider the physical equipment that a printing company would purchase in order to print glossy magazines. The equipment itself is considered a(n) ________, while the printing services the equipment provides is considered a(n) ________.

stock; flow

The difference between temporary factor-price differentials and equilibrium factor-price differentials is that

temporary differentials lead to, and are eliminated by, factor mobility whereas equilibrium differentials do not. Temp kills itself, bcuz of elasticity of supply and factor mobility Accountants in Toronto vs waterloo Toronto Demand increases Supply in Waterloo decreases if wages for accountants go up in Toronto

Researchers are trying to identify the causes of rising income inequality in various economies. Important forces that are almost certainly contributing are:1) globalization2) rising rates of personal income tax3) skill-biased technological change Question 8 options: A) 2 only B) 2 and 3 only C) 1 and 3 only D) 1 and 2 only E) 1 on

C) 1 and 3 only

Which of the following would cause an increase in the equilibrium wage?

C) The demand for labour increases faster than the supply of labour. since you need more workers so u will raise price to attract them

Consider the market for pilots. What is likely to happen to the equilibrium wage and quantity of pilots if the government enforces a lower mandatory retirement age, say from age 65 to age 62? Question 9 options: Question 9 options: A) The equilibrium wage and the equilibrium quantity of pilots rise. B) The equilibrium wage rises and the equilibrium quantity of pilots falls. C) The equilibrium wage and the equilibrium quantity of pilots fall. D) The equilibrium wage falls and the equilibrium quantity of pilots rises.

B) The equilibrium wage rises and the equilibrium quantity of pilots falls.

Which of the following concepts is most similar to the concept of "transfer earnings"?

opportunity cost

The monopolist could maximize its profits by

raising price and lowering output.

Refer to Figure 14-7. Which point shows that the bottom 60% of families earn just under 40% of total income?

C

Refer to Figure 6-8. The movement of the budget line from ab to ac could be caused by

a decrease in the price of food.

The price elasticity of supply of hot dog buns is estimated to be 1.5. Holding everything else constant, this means that a 10 percent decrease in the price of hot dog buns will cause the quantity of hot dog buns supplied to decrease by A) 15 percent. B) approximately 5 percent. C) 1.5 percent. D) approximately 25 percent.

10.5 x 1.5= 15.75

18 .When demand is unit-elastic, a change in price causes total revenue to stay the same because

Question 1 options: A) buyers are buying the same quantity. B) the change in profit is offset by the change in production cost. C) total revenue never changes with price changes. D) the percentage change in quantity demanded exactly offsets the percentage change in price.

Refer to Figure 15.7. Which country has the more unequal distribution of income?

Question 12 options: A) Islandia B) Syldavia C) They may have the same absolute income distribution although their relative income distribution is different. D) There is insufficient information to answer the question.

Consider a manufacturing plant as an example of physical capital. Factor mobility with regard to this physical capital refers to A) the ease with which this plant can be relocated to another location. B) the ease with which this plant can be converted to a different use. C) only the long-run concept of mobility because it is physical capital. D) the elasticity of supply of the labour employed in the plant. E) the ease with which the labour employed at the plant can be retrained to produce a different product.

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Wage differentials due to cross-worker differences in human capital Question 12 options: A) are an example of economic distortions due to monopoly power. B) will persist in competitive equilibrium. C) are not justifiable on efficiency grounds. D) are not an important source of observed wage differentials. E) exist because of distortions in labour markets.

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How will an increase in labour productivity affect equilibrium in the labour market? Question 7 options: A) The demand for jobs will increase and the equilibrium wage and quantity of labour will increase. B) The demand for labour will decrease because fewer workers will be needed to produce the same output. The equilibrium wage and quantity of labour will decrease. C) The demand for labour will increase and the equilibrium wage and quantity of labour will increase. D) The supply of labour will increase and the equilibrium wage and quantity of labour will increase.

********* C) The demand for labour will increase and the equilibrium wage and quantity of labour will increase.

44) If Country A has a comparative advantage in the production of good X relative to Country B, A) then Country A also has an absolute advantage in the production of this good. B) then Country A also has an absolute advantage in the production of some good other than X. C) then the opportunity cost of producing X in Country A is higher than in Country B. D) then the opportunity cost of producing X in Country A is lower than in Country B. E) we do not have enough information to say anything about relative opportunity costs.

Answer: D

Labour-market discrimination, which keeps one group of workers out of elite (E) occupations and limits them to ordinary (O) occupations, will have which of the following effects? an increase in supply and lower wages in the E occupations B) an increase in supply and lower wages in the O occupations C) a decrease in supply and lower wages in the O occupations D) a decrease in supply and lower wages in the E occupations E) an increase in supply and higher wages in the E occupations

B) an increase in supply and lower wages in the O occupations since O supply stays sime size and just shifts to the right bcuz more ppl who are unable to work elite join this market, eq price goes down since theres now too much supply

If Canada's Lorenz curve began changing such that it bends further from the diagonal line and becomes more curved, this would be an indication that Question 9 options: A) average Canadian family income is falling. B) the distribution of income in Canada is becoming more unequal. C) the distribution of income in Canada is becoming more equal. D) average Canadian family income is rising. E) data collection on Canadian household incomes is improving.

B) the distribution of income in Canada is becoming more unequal. not D because tax actually increases equality so makes it closer.

Why might the invention of effective robots and further advances in automation increase the wages of highly skilled workers? Question 6 options: A) the loss of jobs for lower skilled workers will increase the supply of highly skilled workers. B) the use of robots and automation will increase the productivity of highly skilled workers, increasing demand for them. C) government regulation will require firms to hire more highly skilled workers in the future. D) The increase in the availability of substitutes for highly skilled workers will decrease demand for highly skilled workers.

B) the use of robots and automation will increase the productivity of highly skilled workers, increasing demand for them

Refer to Figure 15-2. The market for financial capital is initially in equilibrium at pointE1. If the government then institutes a policy that encourages individuals to increase their desired saving,

B) the equilibrium interest rate falls and the amount of investment increases.

The sugar industry in Canada is effectively a duopoly with two large firms competing with each other for market share. Suppose the two firms collude and successfully restrict joint output to that of a profit-maximizing monopolist. As a result, they each realize an increase in their profits. Why would this collusive agreement be difficult to sustain? A) Because each firm has an incentive to break the agreement by increasing output in order to increase their own profits. B) Because each firm has an incentive to break the agreement by further restricting output in order to increase the price, thereby increasing their own profits. C) Because the firm with the lower long-run average costs will be able to capture all sales, driving the second firm out of the market. D) Because a non-cooperative outcome is inevitable in which output is further restricted and each firm's profit is reduced.

Because each firm has an incentive to break the agreement by increasing output in order to increase their own profits.

In a Lorenz curve diagram, the size of the area between the Lorenz curve and the diagonal line represents A) the dollar incomes of the bottom 40% of families. B) the percentage of income received by the bottom 20% of families. C) the degree of inequality in the distribution of income. D) complete income equality. E) the percentage of income received by the top 5% of families.

C) the degree of inequality in the distribution of income.

We can think about the interest rate as the "price" of capital because Question 3 options: A) the interest rate represents the value the firm avoids paying to lenders by purchasing the capital instead. B) the interest rate determines the MRP of the capital, which determines its price. C) the interest rate determines the equilibrium level of investment demand. D) firms use financial capital to purchase physical capital and the interest rate is the "price" of financial capital. E) this is the amount the firm earns by purchasing the capital.

D) firms use financial capital to purchase physical capital and the interest rate is the "price" of financial capital. p.364

If at a particular wage rate in a competitive labour market the quantity demanded of labour is less than quantity supplied of labour, then Question 8 options: A) the supply curve for labour will shift to the right. B) a black market for labour will form, with firms offering workers very high wages. C) the demand curve for labour will shift to the right. D) some workers will begin to accept lower wages and induce employers to hire more workers. E) there will be a shortage of labour, thereby increasing the equilibrium wage rate.

D) some workers will begin to accept lower wages and induce employers to hire more workers.

Economists observe clear evidence of a union wage premium but do not observe the clear union effect on employment levels predicted from theory. One explanation for this is

Economists observe clear evidence of a union wage premium but do not observe the clear union effect on employment levels predicted from theory. One explanation for this is Question 6 options: A) that the labour supply curve, in the presence of a union, is very inelastic, which implies only a very small effect on employment. B) that the labour supply curve shifts to the right in the collective bargaining process, thereby eliminating any employment effect. C) that union-based advertising for the product increases demand for the product, shifts the demand curve to the right and eliminates any employment effect. D) the union's ability, through the collective bargaining process, to pressure firms to hire more workers than they otherwise would at the union wage. E) both C and D are correct. featherbedding and advertising p.338

*******The demand and supply curves shown below apply to a competitive market for a factor used in the production of widgets. Refer to Figure 13-2. This factor market is in equilibrium at point B. Which of the following statements best describes factor payments at point B?

Question options: A) total of economic rent plus transfer earnings is $320 B) total factor earnings are $320 and the 40th unit earns zero rent C) total factor earnings are $320 and the 40th unit earns economic rent of $8 D) economic rent to the 40th unit is $320 E) total income paid to the factor is $8 total factor earnings are $320 and the 40th unit earns economic rent of $8 40 x 8 = 320$ zero