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1 | |
When considering how much of a resource to employ, a business takes account of: |
| | A) | the resource's marginal product. |
| | B) | the resource's marginal cost. |
| | C) | the marginal revenue provided by each new unit of output produced by the resource. |
| | D) | all of the above |
| | E) | none of the above |
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2 | |
The marginal revenue product of labour: |
| | A) | is the change in total revenue when hiring a new worker. |
| | B) | is found by multiplying average product by the marginal revenue of the extra units produced by the last worker hired. |
| | C) | is found by multiplying marginal product by the marginal cost of the extra units produced by the last worker hired. |
| | D) | is found by multiplying average product by the price of the extra units produced by the last worker hired. |
| | E) | is the change in total product when hiring a new worker |
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3 | |
The business's labour demand curve: |
| | A) | shows how many workers are demanded at each possible price of the business's output. |
| | B) | shows how many workers are demanded at each possible wage. |
| | C) | is the same as the business's marginal resource cost for labour. |
| | D) | is horizontal. |
| | E) | is vertical. |
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4 | |
The business's labour supply curve: |
| | A) | is the marginal revenue product curve for the business. |
| | B) | shows the price of the output sold by the business. |
| | C) | is vertical in a perfectly competitive labour market, meaning that the business is a "wage- taker". |
| | D) | shifts whenever the business's hiring decisions change. |
| | E) | is horizontal in a perfectly competitive labour market, meaning that the business is a "wage-taker" |
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5 | |
"Businesses should employ a resource up to the point where the resource's marginal revenue product equals its marginal resource cost." This is known as: |
| | A) | the law of diminishing marginal returns. |
| | B) | the law of diminishing marginal resource revenue. |
| | C) | the diminishing marginal revenue product rule. |
| | D) | the profit-maximizing resource rule. |
| | E) | the profit-maximizing employment rule. |
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6 | |
When equilibrium is reached in a perfectly competitive labour market: |
| | A) | the labour market demand and supply curves intersect. |
| | B) | the marginal revenue product and marginal resource cost for labour are equal for each business in the market. |
| | C) | each business in the market employs labour to the point where marginal revenue product equals the equilibrium wage rate. |
| | D) | the labour demand and supply curves for individual businesses in the market intersect. |
| | E) | all of the above |
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7 | |
If a business is a wage-taker in its labour market: |
| | A) | its labour supply curve is horizontal. |
| | B) | its labour supply curve could be elastic or inelastic. |
| | C) | its labour demand curve vertical. |
| | D) | it is also a price-taker in its product market. |
| | E) | its labour demand curve is horizontal. |
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8 | |
The demand for unskilled labour will increase if: |
| | A) | new machinery is introduced that replaces unskilled labour. |
| | B) | there is a fall in the price of a substitute resource for unskilled labour. |
| | C) | there is a decrease in the demand for the products that unskilled labour helps to produce. |
| | D) | there is a rise in the price of a complementary resource for unskilled labour. |
| | E) | there is a drop in the price of a complementary resource for unskilled labour. |
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9 | |
If there is a significant drop in the price of aircraft at the same time as the demand for air travel increases, then the demand for commercial air pilots will: |
| | A) | increase |
| | B) | Decrease |
| | C) | stay the same |
| | D) | be uncertain, given the two conflicting effects. |
| | E) | none of the above |
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10 | |
Highly skilled labour and capital are usually: |
| | A) | complementary resources, so that the demand for highly skilled labour decreases as production becomes more capital- intensive. |
| | B) | complementary resources, so that the demand for highly skilled labour increases as production becomes more capital- intensive. |
| | C) | substitute resources, so that the demand for highly skilled labour decreases as production becomes more capital- intensive. |
| | D) | substitute resources, so that the demand for highly skilled labour increases as production becomes more capital- intensive. |
| | E) | unrelated resources, so that the demand for highly skilled labour is not affected as production becomes more capital-intensive. |
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11 | |
Unskilled labour and capital are usually: |
| | A) | complementary resources, so that the demand for unskilled labour decreases as production becomes more capital- intensive. |
| | B) | complementary resources, so that the demand for unskilled labour increases as production becomes more capital- intensive. |
| | C) | substitute resources, so that the demand for unskilled labour decreases as production becomes more capital- intensive. |
| | D) | substitute resources, so that the demand for unskilled labour increases as production becomes more capital- intensive. |
| | E) | unrelated resources, so that the demand for unskilled labour is not affected as production becomes more capital-intensive. |
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12 | |
The most important determinant of wages is: |
| | A) | regional disparities. |
| | B) | labour productivity. |
| | C) | worker seniority. |
| | D) | job conditions. |
| | E) | worker experience. |
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13 | |
Education has a positive impact on wages because: |
| | A) | educated workers start their careers at a relatively late age. |
| | B) | educated workers are available in greater supply than uneducated workers. |
| | C) | educated workers tend to have more experience than uneducated workers. |
| | D) | education can make workers more productive. |
| | E) | educated workers start their careers at a relatively early age. |
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14 | |
Wages tend to be higher for: |
| | A) | workers who face no discrimination. |
| | B) | workers in occupations with dangerous or unattractive working conditions. |
| | C) | older workers. |
| | D) | workers in unionized occupations. |
| | E) | all of the above |
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15 | |
Industrial unions: |
| | A) | organize workers within a particular occupation. |
| | B) | raise members' wages by restricting labour supply. |
| | C) | are found only in highly skilled occupations. |
| | D) | are often referred to as inclusive unions. |
| | E) | are often referred to as exclusive unions. |
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16 | |
Craft unions: |
| | A) | organize workers within a particular occupation. |
| | B) | raise members' wages by setting wage rates in an entire industry. |
| | C) | are found largely in unskilled or semiskilled occupations. |
| | D) | are often referred to as inclusive unions. |
| | E) | none of the above |
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17 | |
In economics, rent is defined as: |
| | A) | the payment for the use of any productive resource that is available in plentiful quantities. |
| | B) | a payment to lease living accommodation. |
| | C) | the payment for use of a productive resource that is available only in a fixed amount. |
| | D) | any payment for the use of land or buildings for either consumption or investment purposes. |
| | E) | any payment made to lease commercial property. |
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18 | |
Which of the following will cause the rent for wine vineyards in a certain region to decrease? |
| | A) | The supply of this land decreases. |
| | B) | The supply of this land increases. |
| | C) | Wine prices rise. |
| | D) | Wine prices fall. |
| | E) | none of the above |
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19 | |
Which of the following will cause the rent for wheat-growing land in a certain region to increase? |
| | A) | Changes in climate make wheat-growing land less productive. |
| | B) | The supply of land available for wheat production decreases. |
| | C) | The price of wheat drops. |
| | D) | The supply of land available for wheat production increases. |
| | E) | none of the above |
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20 | |
Interest is best viewed as: |
| | A) | the return earned by entrepreneurs. |
| | B) | the return earned by businesses who own capital resources. |
| | C) | the payment by a borrower for the use of the lender's money. |
| | D) | the payment by a lender for the use of the borrower's money. |
| | E) | the return earned by labour. |
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21 | |
Which of the following is not a factor in determining the interest rate on a particular loan? |
| | A) | the collateral that the borrower pledges as security |
| | B) | the period over which the loan is to be repaid |
| | C) | the size of the loan |
| | D) | the risk that the borrower will not pay back the loan |
| | E) | the risk that the lender will go out of business |
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22 | |
Which of the following is not a positive function of profit in private market? |
| | A) | Profit gives business owners the chance to work less than other members of society. |
| | B) | Profit provides a return for entrepreneurship. |
| | C) | Profit gives a measure of effectiveness in the running of businesses. |
| | D) | Profit can be used by businesses as a source of funds for the purchase of new assets. |
| | E) | All the above choices are positive functions of profit. |
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23 | |
In David Ricardo's theory of rent: |
| | A) | the rent on farmland tends to decline as a country's population increases. |
| | B) | the rent on existing farmland tends to drop as less productive land is brought into production. |
| | C) | the rent on farmland is a surplus found by subtracting the total revenue made from land from all other costs. |
| | D) | the rent on farmland tends to fall as whenever there is an increase in the price of the product that it produces. |
| | E) | the rent on farmland is a surplus found by subtracting all other costs from the total revenue made from land. |
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