Question 1

Which of the following would be an example of capital for a retail gasoline station?
(i)the gas tanks and pumps
(ii)the service attendants' time
(iii)the plot of land on which the station sits

Accepted Answer

Capital refers to the tools, equipment, and facilities used in the production of goods and services. In this context, the gas tanks and pumps are considered capital as they are essential equipment for the operation of the gasoline station. The service attendants' time is labor, and the plot of land is a natural resource, not capital.

Question 2

Economic theory predicts a close relationship between productivity and real wages. Does history confirm this relationship?

Accepted Answer

The answer of Economic theory predicts a close relationship between...

Question 3

Explain how a firm values the contribution of workers to its profitability. Would a profit-maximizing competitive firm ever stop increasing employment as long as marginal product is rising? Explain your answer.

Accepted Answer

The answer of Explain how a firm values the contribution...

Question 4

According to the neoclassical theory of distribution, the wages paid to workers depend on the

Accepted Answer

The answer of According to the neoclassical theory of distribution,...

Question 5

Capital is paid according to the value of its marginal product

Accepted Answer

Capital is paid according to the value of its marginal product regardless of whether earnings from capital are distributed to households as dividends or whether they are kept within firms as retained earnings. This means that the return on investment in capital is determined by the productivity of the capital asset, and not by how earnings are distributed. This is in contrast to labor, where wages are determined by the value of the marginal product of labor.

Question 6

The equilibrium purchase price of an acre of land depends upon the current value of the marginal product of land and upon the __________.

Accepted Answer

The answer of The equilibrium purchase price of an acre...

Question 7

According to the neoclassical theory of distribution, the wages paid to workers

Accepted Answer

According to neoclassical theory, wages paid to workers reflect the market prices of the goods those workers produce. In other words, the value of the worker's labor is determined by the demand for the goods they produce, and therefore their wages are indirectly determined by supply and demand forces in the market.

Question 8

In the 1980s, the dangerous Ebola virus entered the United States through contaminated monkeys that were imported for use in medical experiments. Suppose this virus had not been contained but had spread to the general population. Assume that the virus is lethal in half of the people who are exposed to it. Describe the resulting effect on labor productivity.

Accepted Answer

The answer of In the 1980s, the dangerous Ebola virus...

Question 9

When you receive interest on your bank account, that income is part of the economy's __________ income.

Accepted Answer

The answer of When you receive interest on your bank...

Question 10

Describe the difference between a diminishing marginal product of labor and a negative marginal product of labor. Why would a profit-maximizing firm always choose to operate where the marginal product of labor is decreasing (but not negative)?

Accepted Answer

The answer of Describe the difference between a diminishing marginal...

Question 11

A recent flood in the Midwest has destroyed much of the farmland that lies in fertile regions near the rivers. Describe the effect of the flood on the marginal productivity of land, labor, and capital. How would the flood affect the price of inputs? Provide some examples.

Accepted Answer

The answer of A recent flood in the Midwest has...

Question 12

Using the theory of wage determination, explain why wages in developing countries, where levels of capital are small, are typically quite low.

Accepted Answer

The answer of Using the theory of wage determination, explain...

Question 13

Which of the following best describes the economy's stock of equipment and structures?

Accepted Answer

The economy's stock of equipment and structures is commonly referred to as "capital" in economics. This includes physical assets such as machinery, buildings, and equipment that are used in the production of goods and services.

Question 14

In economics, the term capital refers to

Accepted Answer

Capital refers to physical assets such as equipment and structures used in the production of goods and services. While money and stocks/bonds are financial assets, they are not typically classified as capital in the economic sense.

Question 15

Describe the difference between the purchase price of capital and the rental price of capital. If you know the value of marginal product from the flow of capital services, how would you determine the market price for the capital stock?

Accepted Answer

The answer of Describe the difference between the purchase price...

Question 16

Which of the following would be an example of capital for a computer software firm?
(i)the firm's computer programmers
(ii)the wages the firm pays to its computer programmers
(iii)computer equipment

Accepted Answer

Capital refers to physical assets used in production, such as computer equipment, not human resources or wages.

Question 17

According to the neoclassical theory of distribution, the wages paid to John Deere tractor assembly line workers are higher than those paid to fast food workers because assembly line workers

Accepted Answer

According to the neoclassical theory of distribution, wages are determined by the marginal productivity of labor, meaning that wages are higher for workers who produce goods or services that have a higher market value. Assembly line workers at John Deere produce tractors, which have a higher market value than the fast food produced by fast food workers. Therefore, the wages paid to John Deere assembly line workers are higher than those paid to fast food workers. It is not relevant whether the workers have college degrees, the stress level of their work environment, or their union membership status.

Question 18

Suppose XYZ Corporation is currently renting 300 units of capital at a rental price of $500 units per unit. The value of the marginal product of the 300^th unit of capital is $400. How can the corporation increase its profit?

Accepted Answer

The answer of Suppose XYZ Corporation is currently renting 300...

Question 19

Describe the process by which the market for capital and the market for land reach equilibrium. As part of your description, elaborate on the role of the stock of the resource versus the flow of services from the resource.

Accepted Answer

The answer of Describe the process by which the market...

Question 20

The U.S. economy experienced a significant slowdown in productivity growth that lasted from about 1973 to about __________.

Accepted Answer

The answer of The U.S. economy experienced a significant slowdown...

Quiz 18: The Markets for the Factors of Production

Which of the following would be an example of capital for a retail gasoline station? (i) the gas tanks and pumps (ii) the service attendants' time (iii) the plot of land on which the station sits

Economic theory predicts a close relationship between productivity and real wages. Does history confirm this relationship?

Explain how a firm values the contribution of workers to its profitability. Would a profit-maximizing competitive firm ever stop increasing employment as long as marginal product is rising? Explain your answer.

According to the neoclassical theory of distribution, the wages paid to workers depend on the

Capital is paid according to the value of its marginal product

The equilibrium purchase price of an acre of land depends upon the current value of the marginal product of land and upon the __________.

According to the neoclassical theory of distribution, the wages paid to workers

When you receive interest on your bank account, that income is part of the economy's __________ income.

Describe the difference between a diminishing marginal product of labor and a negative marginal product of labor. Why would a profit-maximizing firm always choose to operate where the marginal product of labor is decreasing (but not negative)?

A recent flood in the Midwest has destroyed much of the farmland that lies in fertile regions near the rivers. Describe the effect of the flood on the marginal productivity of land, labor, and capital. How would the flood affect the price of inputs? Provide some examples.

Using the theory of wage determination, explain why wages in developing countries, where levels of capital are small, are typically quite low.

Which of the following best describes the economy's stock of equipment and structures?

In economics, the term capital refers to

Describe the difference between the purchase price of capital and the rental price of capital. If you know the value of marginal product from the flow of capital services, how would you determine the market price for the capital stock?

Which of the following would be an example of capital for a computer software firm? (i) the firm's computer programmers (ii) the wages the firm pays to its computer programmers (iii) computer equipment

According to the neoclassical theory of distribution, the wages paid to John Deere tractor assembly line workers are higher than those paid to fast food workers because assembly line workers

Suppose XYZ Corporation is currently renting 300 units of capital at a rental price of $500 units per unit. The value of the marginal product of the 300^th unit of capital is $400. How can the corporation increase its profit?

Describe the process by which the market for capital and the market for land reach equilibrium. As part of your description, elaborate on the role of the stock of the resource versus the flow of services from the resource.

The U.S. economy experienced a significant slowdown in productivity growth that lasted from about 1973 to about __________.

Quiz 18: The Markets for the Factors of Production

Which of the following would be an example of capital for a retail gasoline station? (i) the gas tanks and pumps (ii) the service attendants' time (iii) the plot of land on which the station sits

Economic theory predicts a close relationship between productivity and real wages. Does history confirm this relationship?

Explain how a firm values the contribution of workers to its profitability. Would a profit-maximizing competitive firm ever stop increasing employment as long as marginal product is rising? Explain your answer.

According to the neoclassical theory of distribution, the wages paid to workers depend on the

Capital is paid according to the value of its marginal product

The equilibrium purchase price of an acre of land depends upon the current value of the marginal product of land and upon the __________.

According to the neoclassical theory of distribution, the wages paid to workers

When you receive interest on your bank account, that income is part of the economy's __________ income.

Describe the difference between a diminishing marginal product of labor and a negative marginal product of labor. Why would a profit-maximizing firm always choose to operate where the marginal product of labor is decreasing (but not negative)?

A recent flood in the Midwest has destroyed much of the farmland that lies in fertile regions near the rivers. Describe the effect of the flood on the marginal productivity of land, labor, and capital. How would the flood affect the price of inputs? Provide some examples.

Using the theory of wage determination, explain why wages in developing countries, where levels of capital are small, are typically quite low.

Which of the following best describes the economy's stock of equipment and structures?

In economics, the term capital refers to

Describe the difference between the purchase price of capital and the rental price of capital. If you know the value of marginal product from the flow of capital services, how would you determine the market price for the capital stock?

Which of the following would be an example of capital for a computer software firm? (i) the firm's computer programmers (ii) the wages the firm pays to its computer programmers (iii) computer equipment

According to the neoclassical theory of distribution, the wages paid to John Deere tractor assembly line workers are higher than those paid to fast food workers because assembly line workers

Suppose XYZ Corporation is currently renting 300 units of capital at a rental price of $500 units per unit. The value of the marginal product of the 300th unit of capital is $400. How can the corporation increase its profit?

Describe the process by which the market for capital and the market for land reach equilibrium. As part of your description, elaborate on the role of the stock of the resource versus the flow of services from the resource.

The U.S. economy experienced a significant slowdown in productivity growth that lasted from about 1973 to about __________.

Suppose XYZ Corporation is currently renting 300 units of capital at a rental price of $500 units per unit. The value of the marginal product of the 300^th unit of capital is $400. How can the corporation increase its profit?