EDUC 301 Quiz: educ301-multiplechoice
22 May 2018
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Chapter 18
The Markets for the Factors of Production
MULTIPLE CHOICE
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
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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. 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.
ANSWER: a. markets for goods and services and to markets for labor services.
TYPE: M DIFFICULTY: 2 SECTION: 18.1
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.
ANSWER: d. derived.
TYPE: M DIFFICULTY: 1 SECTION: 18.1
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.
b. An automobile producer's decision to supply more cars will lead to an increase in the demand for
automobile production workers.
c. An automobile producer's decision to supply more minivans results from a decrease in the demand for
station wagons.
d. An increase in the price of gasoline will lead to an increase in the demand for small cars.
ANSWER: b. An automobile producer's decision to supply more cars will lead to an increase in the demand for
automobile production workers.
TYPE: M DIFFICULTY: 2 SECTION: 18.1
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12. The term “factor market“ applies to the market for
a. labor.
b. capital.
c. land.
d. All of the above are correct.
ANSWER: d. All of the above are correct.
TYPE: M DIFFICULTY: 1 SECTION: 18.1
13. Factor markets are different from product markets in an important way, because
a. equilibrium is the exception, and not the rule, in factor markets.
b. the demand for a factor of production is a derived demand.
c. the demand for a factor of production is likely to be upward sloping, in violation of the law of demand.
d. All of the above are correct.
ANSWER: b. the demand for a factor of production is a derived demand.
TYPE: M DIFFICULTY: 2 SECTION: 18.1
14. 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
ANSWER: b. about 75 percent
TYPE: M DIFFICULTY: 1 SECTION: 18.1
15. Factor market analysis could not be complete without some characterization of
a. product-market demand.
b. the marginal productivities of the different factors.
c. market prices for final goods and services.
d. All of the above are correct.
ANSWER: d. All of the above are correct.
TYPE: M DIFFICULTY: 2 SECTION: 18.1
Use the following information to answer questions 16 through 22.
Gertrude Kelp owns three boats, which participate in commercial fishing for fresh Pacific salmon off the coast of
Alaska. As part of her business she hires a captain and several crewmembers for each boat. In the market for fresh
Pacific salmon, there are thousands of firms like Gertrude’s. While Gertrude usually catches a significant number of
fish each year, her contribution to the entire harvest of salmon is negligible relative to the size of the market.
16. Based on the given information, it is likely that Gertrude’s firm has
a. some influence over the wages paid to crewmembers, but no influence over the price of salmon.
b. some influence over the price of salmon, but no influence over the wages paid to crewmembers.
c. some influence over both the price of salmon and over the wages paid to crewmembers.
d. no influence over either the price of salmon or over the wages paid to crewmembers.
ANSWER: d. no influence over either the price of salmon or over the wages paid to crewmembers.
TYPE: M DIFFICULTY: 2 SECTION: 18.1
17. When Gertrude participates in the labor market to hire crewmembers for her boats, she is most likely
considered a
a. demander of labor services.
b. supplier of labor services.
c. buyer of capital.
d. demander of capital.
ANSWER: a. demander of labor services.
TYPE: M DIFFICULTY: 1 SECTION: 18.1
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Document Summary
Type: m difficulty: 1 section: 18. 1: capital, aggregate demand, aggregate stock capital long-term inventory. Rent, interest, and profit are all forms of income paid to the owners of: aggregate stock, aggregate demand, firms and non-for-profit organizations, land and capital. Type: m difficulty: 1 section: 18. 1 land and capital. The factors of production are best defined as the: output produced from raw materials, inputs used to produce goods and services, wages paid to the workforce, goods and services sold in the market. Type: m difficulty: 1 section: 18. 1 inputs used to produce goods and services. the firm"s computer programmers. the wages the firm pays to its computer programmers. For a computer software firm, capital could be thought of as (i) (ii) (iii) computer equipment: (i) only, (ii) only, (iii) only, (i) and (iii) Type: m difficulty: 1 section: 18. 1 (iii) only the gas tanks and pumps the service attendants" time.
