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18 - Chapter 18 The Markets for the Factors of Production...

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Chapter 18 The Markets for the Factors of Production M ULTIPLE  C HOICE 1 . Which of the following best describes the economy’s stock of equipment and structures? a. capital b. aggregate demand c. long-term inventory d. aggregate stock 2 . Rent, interest, and profit are all forms of income paid to the owners of a. aggregate stock. b. aggregate demand. c. firms and non-for-profit organizations. d. land and capital. 3 . The factors of production are best defined as the a. output produced from raw materials. b. inputs used to produce goods and services. c. wages paid to the workforce. d. goods and services sold in the market. 4 . For a computer software firm, capital could be thought of as (i) the firm’s computer programmers. (ii) the wages the firm pays to its computer programmers. (iii) computer equipment. a. (i) only b. (ii) only c. (iii) only d. (i) and (iii) 5 . For a retail gasoline station, which of the following would qualify as capital? (i) the gas tanks and pumps (ii) the service attendants’ time (iii) the plot of land on which the station sits a. (i) only b. (iii) only c. (i) and (iii) d. (ii) and (iii) 6 . Because a firm’s demand for a factor of production is derived from its decision to supply a good in the market, we  call this type of demand a. differentiated demand. b. secondary demand. c. derived demand. d. hybrid demand-supply. 7 . Most of the total income earned in the U.S. economy is ultimately paid to households in the form of a. profit. b. rent. c. interest. d. wages.
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8 . In the United States economy, which of the following factors of production is considered to be the most important in terms of the magnitude of income earned by that factor of production? a. land b. labor c. profit d. capital 9 . The basic tools of supply and demand apply to a. markets for goods and services and to markets for labor services. b. markets for goods and services but not to markets for labor services. c. markets for goods and services but not to markets for factors of production. d. all markets except those in which demand is a derived demand. 10 . 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. 11 . Which of the following best illustrates the concept of “derived demand?” a. An increase in the wages of autoworkers will lead to an increase in the demand for robots in automobile  factories.
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