Rent is defined as
A. the cost of using land.
B. the difference between revenues received for a product less the costs of inputs other than entrepreneurship.
C. the payments to an input less the amount needed to induce the factor to be supplied.
D. the cost of using factor inputs.
Answer: C
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Real GDP measures the
A) total profits earned by all businesses valued using prices from a single year. B) changes in the prices of output measured in dollars. C) general upward drift in prices. D) value of total production linked to prices of a single year.
In the presence of pollution, social welfare is maximized by
A) reducing output and pollution until marginal benefit of less pollution is equal to the marginal cost of less output. B) reducing output and pollution until the benefit curve (of less pollution) and cost curve (of less output) intersect. C) reducing output and pollution until the benefits of pollution reduction just cover the costs of output reduction. D) None of the above.
When a tax is imposed on a market:
A. the price the buyer pays is higher than the amount the seller receives. B. the buyers’ equilibrium tax-inclusive price increases and the equilibrium quantity decreases. C. fewer total transactions take place in the market. D. All of these are true.
The slope of an isoquant tells us
A) how much output increases when both inputs are increased. B) the increase in MPL when capital increases. C) the decrease in capital necessary to keep output constant when labor increases by one unit. D) the decrease in capital necessary to keep MPL constant when labor increases by one unit.