The profit-maximizing firm equates the marginal benefit of labor to the marginal

Question 1The profit-maximizing firm equates the marginal benefit of labor to the marginal __________.

  cost of labor

  profit

  units of labor

  production

 Question 2Salaries for professions (such as architect or medical doctor) that require a long period of study are typically higher than those for other jobs. The reasons for this are all of the following EXCEPT __________.

  future income is worth less than present income

  long periods of schooling incur greater current costs

  status deserves more reward in the form of wages

  students sacrifice a good deal of present income

 Question 3In a perfectly competitive labor market, if a firm’s unit of labor adds more to revenue than to cost, it would be profitable for the firm to __________.

  lower the price on each unit of product

  add more buildings to the firm’s plant

  add more capital to the firm

  purchase more units of labor

 Question 4Which of the following is NOT an example of an in-kind transfer?

  unemployment compensation

  food stamps

  Medicaid

  rent subsidies

 Question 5The typical American worker tends to have the highest personal income in __________.

  youth

  the 20s to 30s

  retirement years

  middle age

The answer can be found in Chapter 13, Section 13.1, Personal Distribution of Income.

Question 6The poverty measure used in the United States includes all but which of the following as income?

  Social Security payments

  Temporary Assistance for Needy Families

  food stamps

  unemployment compensation

 Question 7In many industrialized areas of the world, privatization has been the norm for about 30 years. In which of the following areas is this NOT the case?

  China

  France

  Latin America

  the United Kingdom

 Question 8Monopoly rent seeking is a(n) __________.

  efficient allocation of resources

  extra cost of monopoly

  benefit to society

  advantage for large corporations

The answer can be found in Chapter 14, Section 14.2, Rent Seeking.

Question 9The “rent” involved in rent seeking __________.

  represents a transfer from producer to government

  is artificially created by a government or quasigovernment unit

  represents a transfer from producer to consumer

  is artificially created by a monopoly or oligopoly

Question 10The commitment of scarce resources to capture returns created politically is called __________.

  rent seeking

  cost minimizing

  profit maximizing

  logrolling