Pre-Test Chap 14 e18 - Pre-Test Chap 14 e18 Student: _ 1....

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Pre-Test Chap 14 e18 Student: ___________________________________________________________________________ 1. If a firm buys a new computer system that costs $12,000 a year it can reduce the firm's cost by $900 a year. The firm should borrow funds and purchase this machine if it can negotiate an annual interest rate on the loan between: A. 6 and 7 percent B. 8 and 9 percent C. 10 and 12 percent D. 13 and 14 percent Use the following demand schedule and possible supply schedules, A-D, to answer the next question(s). 2. Refer to the above schedules. Price will influence the availability of the economic resource and the equilibrium price will be $2 with resource supply schedule: A. A B. B C. C D. D 3. All of the following statements about economic profits are correct, except that they: A. Act as a signal to producers who make decisions about how to allocate scarce resources B. Are influenced by the degree of monopoly power C. Represent a reward for risk taking D. Are an explicit cost of production Answer the next question(s) using the following table. Figures are in billions of dollars.
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4. Refer to the above table. If the government passes a usury law that sets the interest rate 4% below the market equilibrium, the interest rate will be: A. 6 percent B. 8 percent C. 10 percent D. 12 percent 5. Long-term loans usually carry lower annual interest rates than short-term loans. This statement is: A. True, because more money can be made with long-term loans B. True, because the opportunity cost of a long-term loan is greater than a short-term one C. False, because the lender requires more compensation for the greater risk with a longer term loan D. False, because the demand for long-term loans is greater than for short-term loans 6. David Ricardo, a nineteenth-century economist, wrote, "The price of corn is not high because a rent is paid, but a rent is paid because the price of the corn is high." Which of the following correctly explains Ricardo's assertion? A. The high rents landowners charge tenant farmers cause high corn prices B. If landowners weren't so greedy and lowered the rents they charge tenant farmers, the price of corn would fall C. If the price of corn rises because of increased demand for corn, land rents will rise to absorb most of the extra revenue received by
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This note was uploaded on 05/23/2010 for the course ECON 101 taught by Professor Keep during the Spring '10 term at Glendale Community College.

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Pre-Test Chap 14 e18 - Pre-Test Chap 14 e18 Student: _ 1....

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