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| 1 | |
Which of the following is assumed in Ricardo's concept of economic rent? |
| | A) | A perfectly inelastic supply curve |
| | B) | A perfectly inelastic demand curve |
| | C) | A perfectly elastic supply curve |
| | D) | A perfectly elastic demand curve |
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| 2 | |
Which of the following statements best describes Schumpeter's view of profits? |
| | A) | Profits come in a steady stream in a capitalist economy as long as full employment is achieved. |
| | B) | Economic profits are zero in a capitalist economy in the long run. |
| | C) | The source of profits, whatever level they may be, is the result of entrepreneurial activity. |
| | D) | Profits occur only when the economy is in equilibrium. |
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| 3 | |
What is the most likely effect of an increase in the demand for a particular type of labour? |
| | A) | The wage rate for that type of labour will rise, and the quantity hired will decrease. |
| | B) | The wage rate for that type of labour will rise, and the quantity hired will also increase. |
| | C) | The wage rate for that type of labour will rise, but the quantity hired will remain unchanged. |
| | D) | The wage rate for that type of labour will fall, and the quantity hired will increase. |
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| 4 | |
The average wage rate in Canada has increased over the last 30 years. Which of the following is the most likely explanation? |
| | A) | The demand for labour has decreased. |
| | B) | The supply of labour has decreased. |
| | C) | The demand for labour has increased more than the supply of labour has decreased. |
| | D) | The demand for labour has increased more than the supply of labour has increased. |
| | E) | 5 |
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| 5 | |
All of the following statements, except one, are valid explanations for wage rate differentials. Which is the exception? |
| | A) | All individuals possess the same amount of human capital. |
| | B) | Different jobs involve different degrees of risk. |
| | C) | Some jobs have unpleasant characteristics that are absent in other jobs. |
| | D) | Some jobs have very attractive non-pecuniary benefits. |
| | E) | 5 |
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| 6 | |
Suppose that the MRPL for a competitive firm is currently $50 and the hourly cost of labour is $40. Which of the following is the correct action for the firm? |
| | A) | Since the firm must be profitable, it need not do anything. |
| | B) | The firm should hire more labour. |
| | C) | The firm should substitute labour for capital. |
| | D) | The firm should raise the wage rate of its labour. |
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| 7 | |
At what point will a competitive firm stop hiring additional labour? |
| | A) | When its total product is maximized |
| | B) | When the marginal product of labour is maximized |
| | C) | When the marginal revenue product of labour is maximized |
| | D) | When the marginal revenue product of labour is just equal to the wage rate |
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| 8 | |
Which of the following best illustrates the factor market? |
| | A) | The market for gasoline supplied by an oligopolistic firm |
| | B) | The market for shoes supplied by a monopolistic firm |
| | C) | The market for wheat supplied by a perfectly competitive firm |
| | D) | The market for labour, natural resources, capital, and enterprise |
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