41. At high levels of interest, borrowers will borrow ____ and suppliers will su
ID: 1213679 • Letter: 4
Question
41. At high levels of interest, borrowers will borrow ____ and suppliers will supply ____.
a.
more; less
b.
less; more
c.
less; less
d.
more; more
____ 42. Firms should stop borrowing funds
a.
as soon as the bank raises the interest rate.
b.
when the MRP of borrowed funds is equal to the cost of borrowing.
c.
whenever the future of the firm looks gloomy.
d.
if their debts are more than 25 percent of the value of the firm.
____ 43. Usury laws typically regulate
a.
interest rates paid on savings.
b.
interest rates charged on loans.
c.
rents charged on land.
d.
economic rent earned in all factor markets.
Figure 19-3
____ 44. Which panel in Figure 19-3 represents the case of an effective usury law?
a.
1
b.
2
c.
3
d.
4
____ 45. The distinguishing feature of the land market is that the
a.
supply is highly inelastic.
b.
supply is highly elastic.
c.
demand is highly inelastic.
d.
demand is highly elastic.
____ 46. Economic rents are earned whenever
a.
demand for a factor is perfectly inelastic.
b.
a factor receives a reward that exceeds its cost.
c.
a factor earns a reward that is greater than the amount needed to keep the factor in its present employment.
d.
a factor's supply curve intersects its demand curve at a point where demand is inelastic.
____ 47. The theory of land rent holds that
a.
all plots of land are identical.
b.
all land yields a positive rent return.
c.
rent on any piece of land will equal the difference between the cost of producing the output on that land and the cost of producing it on marginal land.
d.
competition for superior plots of land will force the rent on those lands to a marginal return of zero.
____ 48. The income of Alex Rodriguez (New York Yankees star baseball player) above the minimum payment needed to acquire the type of service he performs is
a.
pure profit.
b.
economic rent.
c.
marginal rent.
d.
competitive rent.
____ 49. Which factor receives the profit from production?
a.
land
b.
labor
c.
capital
d.
entrepreneurship
____ 50. Invention is the discovery of a new process or idea. Innovation is
a.
the continuing search for inventions.
b.
copying ideas from rival firms.
c.
putting an invention to work.
d.
basic research.
a.
more; less
b.
less; more
c.
less; less
d.
more; more
Explanation / Answer
41.
less; more
because higher borrwing costs discourage investment and cosnumption, so less borrowing.
At Hhigher interest rate, the banks margins increase, so they supply more
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