Tackle the Test: Multiple-Choice Questions

1. Question

   The implicit cost of capital that you own is

   A.

   the rental rate.

   B.

   greater than the rental rate.

   C.

   the original purchase price of the capital.

   D.

   greater than the original purchase price of the capital.

   E.

   zero because you already own it.

   The implicit cost of capital that you own is

2. Question

   Which of the following is true in relation to a very steep supply curve for land?

   
   

   
   

   1. It is relatively elastic.

      
      
   
   

   2. The quantity of land is very responsive to price changes.

      
      
   
   

   3. Finding new supplies of land is relatively expensive and difficult.
      

      
      
   
   

   A.

   I only

   B.

   II only

   C.

   III only

   D.

   I and II only

   E.

   I, II, and III

   Which of the following is true in relation to a very steep supply curve for land?

3. Question

   The explicit cost of land you don’t own is equal to the

   A.

   rental rate.

   B.

   interest rate.

   C.

   profit received from using that land.

   D.

   market wage rate.

   E.

   marginal product of land.

   The explicit cost of land you don’t own is equal to the

4. Question

   A firm will continue to employ more land until its marginal revenue product of land is

   A.

   zero.

   B.

   maximized.

   C.

   equal to the rental rate.

   D.

   equal to the wage rate.

   E.

   equal to the marginal revenue product of labor and capital.

   A firm will continue to employ more land until its marginal revenue product of land is

5. Question

   According to the marginal productivity theory of income distribution,

   A.

   each unit of a factor will be paid its marginal revenue product.

   B.

   as more of a factor is used, its marginal productivity increases.

   C.

   factors that receive higher payments are less productive.

   D.

   capital should receive the highest portion of factor income.

   E.

   each factor is paid the equilibrium marginal revenue product.

   According to the marginal productivity theory of income distribution,