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ECO 305 EXAM QUESTIONS AND CORRECT ANSWERS 100% VERIFIED!!
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ECO 305 EXAM QUESTIONS AND CORRECTANSWERS 100% VERIFIED!!
The two most important factors of production are:
A. Goods and services
B. Labor and energy
C. Capital and labor
D. Saving and investment - ANSWER C. capital and labor
If an increase of an equal percentage in all factors of production results in an increase
in output of the same percentage, then a production function has the property called: -
ANSWER C. Constant returns to scale
A forms economic profit is:
A. The price of output minus the wage minus the rental price of capital
B. Revenue minus costs
C. Revenue plus capital costs
D. The price of output minus labor costs - ANSWER B. Revenue minus costs
A competitive firm:
A. Is small relative to the market in which it trades
B. Has to charge a lower price when it wants to sell more goods
C. Has several large competitors with whom it engages in fierce competition
D. Can set the wage at which it hires workers - ANSWER A. Is small relative to the
market in which it trades
A competitive profit maximizing firm hires labor until the:
, A. Marginal product of labor equals the wage
B. Price of output multiplied by the marginal product of labor equals the wage
C. Real wages equals the real rental price of capital
D. Wage equals the rental price of capital - ANSWER B. Price of output multiplied by
the marginal product of labor equals the wages
An increase in supply of capital will:
A. Increase the real rental price of capital
B. Decrease the real rental price of capital
C. Increase the productivity of capital
D. Decrease the real interest rate - ANSWER B. Decrease the real rental price of
capital
With a Cobb-Douglas production function, the share of output going to labor:
A. Decreases as the amount of labor increases
B. Increases as the amount of labor increases
C. Increases as the amount of capital increases
D. Is independent of the amount of labor - ANSWER D. Is independent of the amount of
labor
The marginal propensity to consume is:
A. Normally expected to be between zero and one
B. Equal to consumption divided by disposable income
C. Normally assumed to decrease as disposable income increases
D. Normally assumed to increase as disposable income increases - ANSWER D.
Normally assumed to increase as disposable income increases
In classical model with fixed output, the supply and demand for goods and services are
balanced by:
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