Briggs Econ 201 Final Exam HW Answers

Receiving revenues from capital projects in year 3 instead on year 2, will: A. change the interest rate is pays B. make more capital projects worthwhile C. make fewer capital projects worthwhile D. not change the number of capital projects the firm considers worthwhile

. make fewer capital projects worthwhile

The present value of $2500 that will be received three years from now is: A. 2500/(1+r)^3 B. 2500/(1 + r) C. 2500*(1+r)^3 D. 2500*(1 + r)*3

A. 2500/(1+r)^3

A firm has an average 10% rate of return on it's assets. What is the highest interest rate a firm would be willing to pay on a $10000 loan today due in two years, to buy capital that will return $6000 in each of the next two years? A. 4.1% B. 10% C. 5.9% D. 12.3%

A. 4.1%

If the demand for alarm clocks decreases, the effect on the alarm clock job market will be to A. Decrease the demand for labor and reduce equilibrium wages. B. Have no impact on equilibrium wages. C. Increase the demand for labor and increase equilibrium wages. D. Reduce the supply of labor and increase equilibrium wages.

A. Decrease the demand for labor and reduce equilibrium wages.

If Firm A has rate of return of 5% and Firm B has a rate of return of 3%, ______ will have a higher present value for $2500 received two years from now. A. Firm B B. Firm A C. It is unknown who D. Neither

A. Firm B

If a firm is producing at the kink in its demand curve and it decides to increase its price, according to the kinked demand model A. It will gain market share. B. Its market share will not be affected. C. It will lose market share to the firms that do not follow the price increase. D. It will not gain market share but will definitely increase profits

A. Its market share will not be affected.

The demand curve will be kinked if rival firms A. Match price reductions but not price increases. B. Match both price increase and price reductions. C. Match price increases but not price reductions. D. Do not match price changes at all.

A. Match price reductions but not price increases.

There are many corn farmers, each of whom produces the same product. The corn market can best be classified as A. Perfect competition. B. Monopoly. C. Brand loyalty. D. Price leadership.

A. Perfect competition.

The steepness of labor supply measures the A. Responsiveness of labor supplied to changes in the wage rate. B. Revenue received by firms per worker. C. Opportunity cost of labor. D. Responsiveness of the wage rate to changes in the labor supplied.

A. Responsiveness of labor supplied to changes in the wage rate.

If an additional unit of labor can produce 3 units per hour, product price is constant at $8 per unit, and the wage rate is $26 per hour, then A. The additional unit of labor should not be employed B. Product price must be reduced if profits are to be made. C. The employer should lower wages and accept less employment of labor. D. The additional unit of labor should be employed.

A. The additional unit of labor should not be employed

Students who major in computer science are paid a lot more when they graduate than those who major in philosophy because A. The marginal revenue product for computer science majors is more than the marginal revenue product for philosophy majors. B. There are more firms that hire philosophy majors than computer science majors. C. The search for the meaning of life is a growth industry. D. The derived demand for computer science majors is less than the derived demand for philosophy majors.

A. The marginal revenue product for computer science majors is more than the marginal revenue product for philosophy majors.

When firms are interdependent, A. The profit of one firm depends on how its rivals respond to its strategic decisions. B. They can act independently of one another. C. Then the market is perfectly competitive. D. One firm can ignore other companies in the market when making decisions.

A. The profit of one firm depends on how its rivals respond to its strategic decisions.

When there are more qualified applicants than job openings, this indicates that the A. Wages being offered are too high. B. Labor supply curve must be backward-bending. C. Economy must be in a recession. D. Available jobs must be very desirable and pay high wages.

A. Wages being offered are too high.

An increase in the interest rate a firm pays on loans, will: A. make fewer capital projects worthwhile B. not change the number of capital projects the firm considers worthwhile C. make more capital projects worthwhile D. change the rate of return on capital projects

A. make fewer capital projects worthwhile

The supply of capital is upward sloping because: A. savers save more at higher interest rates B. borrowers borrow less at higher interest rates C. borrowers borrow more at lower interest rates D. banks lend more at higher interest rates

A. savers save more at higher interest rates

The demand for agricultural land at a particular location will depend on A. the type of soil B. the demand for other land uses at the same location C. the quality of the schools in the area D. all of the above will determine the demand for agricultural land.

A. the type of soil

The future value three years from now of $2500 received three years from now is: A. 2500*(1+r)^3 B. 2500 C. 2500 + 2500*(1+r)^2 D. 2500/(1 + r)

B. 2500

The marginal revenue product establishes A. A lower limit to the productivity of a worker. B. An upper limit to the wage rate an employer is willing and able to pay. C. A lower limit to profit on the sale of a unit of output. D. A lower limit to the wage rate demands of laborers.

B. An upper limit to the wage rate an employer is willing and able to pay.

As labor productivity increases, which of the following shifts in the labor market should occur? A. Supply of labor should shift to the left. B. Demand for labor should shift to the right. C. Demand for labor should shift to the left. D. Supply of labor should shift to the right.

B. Demand for labor should shift to the right.

The degree of pricing power exercised by a firm is related to all but A. The price elasticity of demand for the firm's product. B. The age of the industry. C. Its ability to influence the market price of its output. D. The number and proximity of competing firms.

B. The age of the industry.

An industry's pricing power depends primarily on A. How much firms spend on advertising. B. The number and size of the firms in the industry. C. Whether the market is a product market or a resource market. D. What types of products are produced in that industry.

B. The number and size of the firms in the industry.

Which of the following would not shift the market demand for labor, ceteris paribus? A. The number of employers. B. The wage paid to labor. C. The demand for final products. D. The productivity of labor.

B. The wage paid to labor.

In the market for capital, the price is defined as A. a profit rate B. an interest rate C. an opportunity cost D. a rate of return

B. an interest rate

Assume the apple market is competitive. If citizens want wages and the number of available jobs for apple pickers to increase, the best strategy would be to A. Buy more apples. B. Insist that the sellers raise the price of apples. C. Boycott apples until wages increased. D. Insist that the government establish a minimum wage for apple pickers.

Buy more apples

If $1000 is received in two years and $1000 is received in four years, the present value given a 10% rate of return is: A. $1826.44 B. $2000.00 C. $1509.46 D. $2674.10

C. $1509.46

If a chair can be sold for $80 and it takes a worker two hours to make a chair, the marginal revenue product of this worker is A. $80 per hour. B. $20 per hour. C. $40 per hour. D. $8 per hour.

C. $40 per hour.

The demand for labor and other inputs of production typically decline in a recession because those inputs A. Have become relatively scarcer than before the recession. B. Are no longer offered for sale in factor markets. C. Are derived from the demand for final output, which also declines in a recession. D. Have become more expensive than before the recession.

C. Are derived from the demand for final output, which also declines in a recession.

The demand for labor is downward-sloping because of A. Rising price. B. Falling MC. C. Diminishing returns to labor. D. Rising productivity.

C. Diminishing returns to labor.

A firm should hire an additional worker as long as the wage rate is A. Greater than the MRP. B. Greater than the MPP. C. Less than or equal to the MRP. D. Less than the MPP.

C. Less than or equal to the MRP.

If firms in a price leadership industry start cutting prices to capture a larger market share, the result will be A. Higher prices, increased output, and larger profits. B. Lower prices, decreased output, and larger profits. C. Lower prices, increased output, and smaller profits. D. Lower prices, increased output, and larger profits.

C. Lower prices, increased output, and smaller profits.

The change in total revenue associated with one additional unit of input measures A. Marginal Product. B. Cost efficiency. C. Marginal Revenue Product. D. Elasticity of labor supply.

C. Marginal Revenue Product.

If the wage rate increases, there will be a A. Rightward shift of the labor supply curve. B. Leftward shift of the labor supply curve. C. Movement up the labor supply curve to the right. D. Movement down the labor supply curve to the left.

C. Movement up the labor supply curve to the right.

The kinked demand curve explains the observation that in price leadership markets A. Practice product differentiation. B. Rivals do not match price reductions. C. Prices may not change even in the face of cost increases. D. Rivals match price increases.

C. Prices may not change even in the face of cost increases.

The equilibrium interest rate in capital markets is determined by: A. borrowers B. savers C. banks D. none of the above

C. banks

If interest rates are set too low A. savers will flood the market with more savings B. there will be no shortages of capital C. banks will not be able to lend as much as they want to D. there will be a surplus of capital

C. banks will not be able to lend as much as they want to

Increased pollution levels will have the least effect on the demand for A. agricultural land B. residential land C. commercial land

C. commercial land

In venture capital markets, if the number of new goods coming to market is declining, then A. investors will want a higher percentage of the profits earned B. inventors will have to compete for a smaller pool of available funding. C. inventors will want a higher percentage of the profits earned. D. inventors will be forced to accept a lower percentage of the profits

C. inventors will want a higher percentage of the profits earned.

An increase in the rate a firm uses to bring future values into the present, all else constant, will: A. not change the number of capital projects the firm considers worthwhile B. make fewer capital projects worthwhile C. make more capital projects worthwhile D. decrease the interest rate is pays

C. make more capital projects worthwhile

Pricing power is the ability of a firm to A. Advertise. B. Charge any price it wants. C. Increase the number of substitute goods. D. Control the price and quantity supplied.

D. Control the price and quantity supplied.

If consumers decide to buy fewer strawberries, then the A. Quantity demanded of strawberry pickers will fall. B. Demand for strawberry pickers will rise. C. Quantity demanded of strawberry pickers will rise. D. Demand for strawberry pickers will fall.

D. Demand for strawberry pickers will fall.

Worker productivity diminishes as additional workers are hired because A. Later hires are not as skilled as earlier hires. B. Each worker has an increasingly larger amount of other inputs with which to work. C. Later hires do not work as hard as earlier hires. D. Each worker has an increasingly smaller amount of other inputs with which to work.

D. Each worker has an increasingly smaller amount of other inputs with which to work.

The only market structure in which there is significant interdependence among firms with regard to their pricing and output decisions is A. Monopoly. B. Brand loyalty. C. Perfect competition. D. Price leadership.

D. Price leadership.

Which one of the following is not a danger of experimenting with pricing for an price leadership firm? A. Retaliation. B. Firms matching price reductions. C. The uncertainty of competitor response. D. Product differentiation.

D. Product differentiation.

If there is an increase in the number of workers who want to work as accountants, there will be a A. Leftward shift of the labor supply curve. B. Movement up the labor supply curve to the right. C. Movement down the labor supply curve to the left. D. Rightward shift of the labor supply curve.

D. Rightward shift of the labor supply curve.

If the number of available workers of a particular type increases, which of the following shifts should occur in the labor market for the particular type of labor? A. Supply of labor should shift to the left. B. Demand for labor should shift to the left. C. Demand for labor should shift to the right. D. Supply of labor should shift to the right.

D. Supply of labor should shift to the right.

If an additional unit of labor can produce 4 units per hour, product price is constant at $5 per unit, and the wage rate is $19 per hour, then A. Product price must be reduced if profits are to be made. B. The employer should lower wages and accept less C. The additional unit of labor should not be employed D. The additional unit of labor should be employed.

D. The additional unit of labor should be employed.

The wage rate is A. Not related to the value of leisure because people need to relax. B. Not related to labor supply because people must work to survive. C. The opportunity cost of labor. D. The payment for labor.

D. The payment for labor.

The determinants of labor demand include A. The leisure-labor trade-off. B. Labor expectations. C. Labor shortages. D. Worker productivity.

D. Worker productivity.

If the economy is growing rapidly, the demand for capital will cause the equilibrium price to ____ and the equilibrium quantity to ____. A. fall; rise B. fall; fall C. rise; fall D. rise; rise

D. rise; rise

The willingness to work a certain amount of time at a given wage rate is known as A. Labor demand. B. Labor supply. C. Output supply. D. Output demand.

Labor Supply

For an upward-sloping labor supply curve, the quantity of labor supplied varies directly, ceteris paribus, with A. Payroll taxes. B. The value of leisure time. C. The derived demand for labor. D. The wage rate.

The Wage Rate