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Multiple Choice Quiz
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1
The demand for factors of production is known as a derived demand because it:
A)requires the use of calculus to find the derivative.
B)is derived from the mathematical models of production
C)is derived from the demand for the product being produced.
D)is derived from the market supply function.
2
The value of the marginal product is the additional value of the output resulting from an additional unit of input. It is calculated by multiplying:
A)output price times marginal product.
B)input price times marginal product.
C)output times marginal cost.
D)output times marginal revenue.
3
It is profitable for a firm to hire more workers when:
A)VMPL > wage.
B)VMPL is less than wage.
C)VMPL = wage.
D)VMPL is greater than price .
4
When the price of an input rises, the firm will experience:
A)a substitution effect.
B)an income effect.
C)both an output and a substitution effect.
D)both an income and an output effect.
5
A firm that is the only purchaser of a particular input is known as a:
A)monopolist.
B)price taker.
C)oligopolist.
D)monopsonist.
6
When the demand for a firm’s output shifts to the left:
A)price will remain unchanged.
B)VMPL will fall.
C)wage rates will rise.
D)output will rise.
7
The percentage of the working-age population that is willing and able to work is known as:
A)the unemployment rate.
B)the labour force.
C)the participation rate.
D)the labour supply.
8
The labour supply curve is generally upward-sloping because:
A)human capital is limited.
B)the marginal product of labour increases.
C)firms are profit maximizers.
D)the opportunity cost of leisure rises as the wage rate rises.
9
The concept of economic rent:
A)is the price of accommodations.
B)is similar to producer surplus in product markets.
C)is the same as supernormal profits.
D)is the same as accounting rents.
10
Professional baseball players are paid such high salaries because:
A)the derived demand is very high and supply is low.
B)team owners are crazy.
C)they are worth it.
D)the Major League Baseball Players Association is a powerful union.
11
The effectiveness of a labour union in raising the wage rate of its members depends upon:
A)the minimum wage.
B)the monopoly power of the employer.
C)the elasticity of the labour demand curve.
D)the elasticity of the labour supply curve.
12
Which of the following is considered investment in the economic sense?
A)purchasing 100 shares of Bombardier.
B)purchasing a Bombardier business jet.
C)buying low and selling high.
D)saving for retirement using mutual funds.
13
The cost of using capital services is known as:
A)the price of an asset.
B)a service charge.
C)the rental rate.
D)the interest rate.
14
The present value of $1000 to be received in 2 years is equal to:
A)$1000
B)$2000
C)$1000 / (1+i)
D)$1000 / (1+i)2
15
Long-run equilibrium in the market for capital assets requires that:
A)the asset price equals the present value of future rentals.
B)asset prices are higher than bond prices.
C)the rental rate is higher than the discount rate.
D)the rental rate is equal to the depreciation rate.





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