45. The distinguishing feature of the land market is that the a. supply is highl
ID: 1213890 • Letter: 4
Question
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.
__B__ 51. Discounting is the process of
a.
cutting prices to get rid of surplus stocks.
b.
finding the present value of future dollars.
c.
finding the future value of present dollars.
d.
giving special concessions to special customers.
____ 52. A decision to supply labor or not to supply it is also a decision to
a.
earn the highest possible wage.
b.
demand or forgo a certain amount of leisure.
c.
be as productive as possible.
d.
join the union.
____ 53. The income effect of a wage increase is expected to increase
a.
supply of labor.
b.
supply of goods and services.
c.
demand for leisure.
d.
demand for labor.
____ 54. The substitution effect of a wage increase
a.
probably leads most workers to want to work more.
b.
certainly leads all workers to want to work more.
c.
probably leads most workers to want to work less.
d.
certainly leads most firms to want to employ more workers.
____ 55. The shortened work week coupled with rising hourly wages in the U.S. economy shows that
a.
the income effect has been dominant.
b.
the substitution effect does not exist at all.
c.
the U.S. worker is no longer productive.
d.
workers have become increasingly lazy.
____ 56. The labor supply curve starts to bend backward at the point where
a.
the total utility of leisure exceeds the total disutility of labor.
b.
the marginal utility of additional income becomes zero.
c.
the income effect comes to dominate the substitution effect.
d.
the substitution effect comes to dominate the income effect.
a.
supply is highly inelastic.
b.
supply is highly elastic.
c.
demand is highly inelastic.
d.
demand is highly elastic.
Explanation / Answer
45) a
46) c
47) c
48) b
49) d
50) c
51) a
52) a
53) a
54) b
55) a
56) b
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