Econ

2321 Words Oct 14th, 2013 10 Pages
Practice Test 18

Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.

____ 1. Labor markets are different from most other markets because labor demand is
a.
represented by a vertical line on a supply-demand diagram.
b.
represented by an upward-sloping line on a supply-demand diagram.
c.
such an elusive concept.
d.
derived.

____ 2. How much of the income in the United States is in the form of wages and fringe benefits?
a.
more than 90 percent
b.
about 75 percent
c.
about 50 percent
d.
less than 75 percent

____ 3. The value of the marginal product of any input is equal to the marginal product of that input multiplied by the
a.
additional revenue.
b.
…show more content…
Figure 18-4

____ 14. Refer to Figure 18-4. The shift of the labor demand curve from D1 to D2 could possibly be explained by
a.
technological progress.
b.
an increase in the price of firms ' output.
c.
an increase in the supply of a relevant factor of production other than labor.
d.
All of the above are correct.

____ 15. Owners of land are compensated according to the
a.
absolute level of production from the land.
b.
number of laborers the land can support.
c.
purchase price of the land stock.
d.
value of the marginal product of land.

____ 16. Because of diminishing returns, a factor in abundant supply has
a.
a high marginal product and a high rental price.
b.
a high marginal product and a low rental price.
c.
a low marginal product and a high rental price.
d.
a low marginal product and a low rental price.

____ 17. If the government designates certain areas within a community to be "wetlands," and therefore illegal to build upon, what happens to land not classified as "wetlands" within the community?
(i)
The price of non-wetland land will rise.
(ii)
The marginal product of non-wetland land will fall.
(iii)
The marginal product of non-wetland land will rise.

a.
(i) and (ii)
b.
(ii) and (iii)
c.
(i) and (iii)
d.
(ii) only

____ 18. With regard to capital, it is important to distinguish between
a.
the supply price of capital and the demand price of capital.
b.
the rental price

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