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What is the most an investor would be willing to pay for a stock that will pay $210 next year and nothing before or after?


A) $200 regardless of the interest rate.
B) $200 if the interest rate is 5 percent per year.
C) $190.91 if the interest rate is 10 percent per year.
D) B and C.
E) None of the above.

F) D) and E)
G) C) and E)

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Use the table below to answer the following questions.  Wage rate  (dollars per  hour)   Quantity of  labour  supplied  (hours per  day)   Quantity of  labour  demanded  (hours per  day)  520060010300500154004002050030025600200\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Wage rate } \\\text { (dollars per } \\\text { hour) }\end{array} & \begin{array} { c } \text { Quantity of } \\\text { labour } \\\text { supplied } \\\text { (hours per } \\\text { day) }\end{array} & \begin{array} { c } \text { Quantity of } \\\text { labour } \\\text { demanded } \\\text { (hours per } \\\text { day) }\end{array} \\\hline 5 & 200 & 600 \\\hline 10 & 300 & 500 \\\hline 15 & 400 & 400 \\\hline 20 & 500 & 300 \\\hline 25 & 600 & 200 \\\hline\end{array} Table 18.3.1 -Refer to Table 18.3.1.Table 18.3.1 gives information about the labour market in Lantis,a community in which the labour market is perfectly competitive.The equilibrium wage rate is ________ an hour and the quantity of labour employed is ________ hours per day.


A) $25;600
B) $25;200
C) $15;400
D) $5;200
E) $5;600

F) All of the above
G) D) and E)

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If the supply of labour decreases,which of the following events will occur?


A) The wage rate will decrease and firms will increase the number of workers to the point at which the value of marginal product equals the new wage rate.
B) The wage rate will decrease and firms will decrease the number of workers to the point at which the value of marginal product equals the new wage rate.
C) The wage rate will increase and firms will decrease the number of workers to the point at which the value of marginal product equals the new wage rate.
D) The wage rate will increase and firms will decrease the number of workers to the point at which the value of marginal product is greater than the new wage rate.
E) The wage rate will increase and firms will decrease the number of workers to the point at which the value of marginal product is less than the new wage rate.

F) A) and B)
G) A) and C)

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If a union forms to face the monopsonist in Figure 18.3.2,the situation is one of


A) binding arbitration.
B) derived demand.
C) duopoly.
D) collusive oligopoly.
E) bilateral monopoly.

F) A) and B)
G) A) and C)

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If the price of the firm's output decreases,the value of marginal product curve


A) remains unchanged.
B) becomes more elastic.
C) becomes more inelastic.
D) shifts to the left.
E) shifts to the right.

F) C) and E)
G) None of the above

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Use the figure below to answer the following questions. Use the figure below to answer the following questions. Figure 18.3.1 -Refer to Figure 18.3.1.This figure shows the value of marginal product of labour curve,the labour supply curve,and the marginal cost of labour curve.If this labour market is controlled by a monopsony,the wage rate is A) $7 an hour. B) $6 an hour. C) $3 an hour. D) $5 an hour. E) zero,because the market would shut down. Figure 18.3.1 -Refer to Figure 18.3.1.This figure shows the value of marginal product of labour curve,the labour supply curve,and the marginal cost of labour curve.If this labour market is controlled by a monopsony,the wage rate is


A) $7 an hour.
B) $6 an hour.
C) $3 an hour.
D) $5 an hour.
E) zero,because the market would shut down.

F) B) and E)
G) A) and C)

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In the short run,the market supply of land is


A) relatively elastic.
B) relatively inelastic.
C) perfectly elastic.
D) perfectly inelastic.
E) either elastic or inelastic depending on the productivity of the land.

F) B) and E)
G) C) and E)

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A shift in a firm's demand curve for labour occurs when there is a change in the


A) wage rate.
B) opportunity cost of labour.
C) price of the output.
D) working-age population.
E) marginal cost of labour.

F) B) and E)
G) None of the above

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When the price of a firm's output increases


A) the supply of labour increases.
B) the firm hires less labour.
C) the marginal product of labour increases.
D) the firm's demand for labour curve shifts leftward.
E) the value of marginal product of labour increases.

F) B) and D)
G) All of the above

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Unions try to raise minimum wages because


A) they wish to encourage employment among the poor.
B) they wish to help those on minimum wages.
C) this will decrease the supply of labour in their industry.
D) this will increase the demand for labour in their industry.
E) none of the above.

F) B) and E)
G) A) and B)

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Choose the statement that is incorrect.


A) Capital consists of the tools,instruments,machines,buildings,and other constructions that have been produced in the past and that businesses now use to produce goods and services.
B) A market for capital services is a rental market.
C) The services of the capital that a firm owns and operates have an implicit price that arises from depreciation and interest costs.
D) Capital is a factor of production.
E) Most capital services are traded in a market.

F) A) and D)
G) A) and B)

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If the wage rate increases,the substitution effect gives a household the incentive to


A) raise its reservation wage.
B) increase leisure and decrease work.
C) increase work and decrease leisure.
D) increase both work and leisure.
E) decrease both work and leisure.

F) C) and D)
G) All of the above

Correct Answer

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Which one of the following would unions be most likely to support?


A) increased barriers to imports
B) eased immigration restrictions
C) a decrease in the minimum wage
D) decreasing demand for the goods their workers produce
E) decreasing the marginal product of its workers

F) A) and B)
G) A) and C)

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The labour supply curve may eventually become "backward bending" at high wages because


A) the income effect of the higher wage is dominated by the substitution effect.
B) the income effect of the higher wage dominates the substitution effect of the higher wage.
C) firms will demand added productivity from the workers as the wage reaches very high levels.
D) firms will demand longer hours in trade for the higher wages.
E) people get tired of working so many hours and refuse to increase their labour supply.

F) A) and B)
G) A) and E)

Correct Answer

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A decrease in the price of factors of production that are substitutes for labour shifts the labour


A) demand curve leftward.
B) demand curve rightward.
C) supply curve leftward.
D) supply curve rightward.
E) B and D.

F) C) and E)
G) All of the above

Correct Answer

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As the wage rate rises,a household will have a backward-bending supply of labour curve if


A) the income effect reinforces the substitution effect.
B) the wage rate rises above the reservation wage.
C) the substitution effect dominates the income effect.
D) the income effect dominates the substitution effect.
E) leisure is an inferior good.

F) C) and D)
G) A) and B)

Correct Answer

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To increase the demand for union labour,unions do all of the following except support


A) increases in the minimum wage.
B) increases in import restrictions.
C) immigration restrictions.
D) an increase in the supply of foreign workers.
E) training schemes and apprenticeship programs.

F) B) and E)
G) A) and B)

Correct Answer

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Use the figure below to answer the following questions. Use the figure below to answer the following questions. Figure 18.3.3 -Refer to Figure 18.3.3.For the monopsonist employer illustrated in this figure,the profit-maximizing wage rate is ________ and the quantity of labour hired is ________. A) $9 per hour;300 hours B) $8 per hour;350 hours C) $8 per hour;500 hours D) $7 per hour;400 hours E) $6 per hour;300 hours Figure 18.3.3 -Refer to Figure 18.3.3.For the monopsonist employer illustrated in this figure,the profit-maximizing wage rate is ________ and the quantity of labour hired is ________.


A) $9 per hour;300 hours
B) $8 per hour;350 hours
C) $8 per hour;500 hours
D) $7 per hour;400 hours
E) $6 per hour;300 hours

F) B) and C)
G) A) and E)

Correct Answer

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The four factors of production are


A) productive factors,neutral factors,entrepreneurial factors,and nonproductive factors.
B) men,women,animals,and children.
C) labour,capital,entrepreneurship,and land.
D) machines,factories,buildings,and farms.
E) labour,money,profits,and land.

F) A) and B)
G) A) and C)

Correct Answer

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Which of the following is a nonrenewable natural resource?


A) coal
B) land
C) water
D) trees
E) rain

F) C) and D)
G) A) and D)

Correct Answer

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