Chapter18 - Chapter18 TheMarketsfortheFactorsofProduction...

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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 ANSWER: a. capital TYPE: M DIFFICULTY: 1 SECTION: 18.1 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. ANSWER: d. land and capital. TYPE: M DIFFICULTY: 1 SECTION: 18.1 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. ANSWER: b. inputs used to produce goods and services. TYPE: M DIFFICULTY: 1 SECTION: 18.1 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) ANSWER: c. (iii) only TYPE: M DIFFICULTY: 1 SECTION: 18.1 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) ANSWER: a. (i) only TYPE: M DIFFICULTY: 1 SECTION: 18.1 41
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42 Chapter 18/The Markets for the Factors of Production 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. ANSWER: c. derived demand. TYPE: M DIFFICULTY: 1 SECTION: 18.1 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. ANSWER: d. wages. TYPE: M DIFFICULTY: 1 SECTION: 18.1 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 ANSWER: b. labor TYPE: M DIFFICULTY: 1 SECTION: 18.1 9. The basic tools of supply and demand apply to a. markets for goods and services and to markets for labor services. b.
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This note was uploaded on 10/22/2010 for the course BUSINESS BAIU09 taught by Professor Mr.ken during the Spring '10 term at American InterContinental University Dunwoody.

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Chapter18 - Chapter18 TheMarketsfortheFactorsofProduction...

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