Question : 41) As additional units of labor hours employed, holding all : 1224068

Economics

41) As additional units of labor hours are employed, holding all other factors constant, along the production function,

A) real GDP increases at an increasing rate.

B) nominal GDP decreases at an increasing rate.

C) real GDP increases at a decreasing rate.

D) real GDP increase at a constant rate.

E) real GDP initially decreases and then starts to increase.

42) The idea that the production function exhibits _______implies that ________.

A) diminishing returns; the Lucas Wedge increases at output increases

B) diminishing returns; each additional unit of labor employed generates an ever-decreasing amount of real GDP

C) increasing returns; potential GDP is always increasing

D) increasing returns; output should increase steadily as technology grows

E) constant returns; each additional unit of labor employed generates an increasing amount of real GDP

43) As the quantity of labor employed increases, the production functions exhibits a

A) positive, linear relationship.

B) positive relationship, with each additional unit of labor producing less additional real GDP.

C) positive relationship, with each additional unit of labor producing more additional real GDP.

D) negative, linear relationship.

E) U-shaped curve.

44) Diminishing returns along a production function means that each additional hour of labor employed

A) produces a successively smaller additional amount of real GDP.

B) produces a successively larger additional amount of real GDP.

C) produces a constant additional amount of real GDP.

D) does not produce any additional real GDP.

E) forces the real wage rate to rise.

45) The production function shows that as employment increases, real GDP

A) increases at an increasing rate.

B) increases at a decreasing rate.

C) increases at a constant rate.

D) decreases at a decreasing rate.

E) increases until it reaches potential GDP and then it starts to decrease.

46) Diminishing returns, so that each additional hour of labor employed produces successively smaller additional amounts of real GDP, exist because

A) labor is not very productive.

B) extra labor produces more output.

C) all other factors are held fixed.

D) the price level rises as more workers are employed.

E) additional workers are paid higher wage rates.

47) As more labor is hired, moving along the production function, diminishing returns occur because

A) workers are overworked and so their productivity decreases.

B) the wage rate paid is too low and so workers decrease their work effort.

C) there are fixed quantities of other resources.

D) the real wage rate must increase in order to hire additional workers.

E) real GDP increases more rapidly the more workers are hired.

48) A reason a nation faces diminishing returns along a production function is because

A) unemployment always exists.

B) potential GDP is fixed.

C) the quantity of physical capital is fixed.

D) full employment is not possible.

E) the wage rate is fixed while moving along the production function.

49) ________ in the United States ________ in most European countries.

A) GDP per hour; is greater than GDP per hour

B) Average weekly hours; are greater than average weekly hours

C) The Okun Gap; is equal to the Okun Gap

D) The Lucas Wedge; is greater than the Lucas Wedge

E) Both A and B are true.

50) The gap in GDP between the United States and Europe can be explained by the fact that

A) U.S. labor is more productive than European labor.

B) prices are higher in the United States.

C) the Okun Gap is larger in the United States.

D) income taxes are higher in the United States.

E) equilibrium employment is higher in Europe.

51) Employing an additional 1 billion hours of labor increases real GDP by $12 billion. Employing another 1 billion hours beyond the first 1 billion increases real GDP by $11 billion. Hence we can conclude from this information that as employment increases, real GDP

A) increases at an increasing rate.

B) decreases at an increasing rate.

C) decreases at a decreasing rate.

D) increases at a decreasing rate.

E) falls from $12 billion to $11 billion as more workers are hired.

52) If adding an initial 100 billion labor hours per year increases real GDP by $3 trillion, diminishing returns informs us that an additional 100 billion labor hours per year will increase real GDP by

A) exactly $3 trillion.

B) less than $3 trillion.

C) more than $3 trillion.

D) either exactly $3 trillion or by less than $3 trillion, depending on whether the real wage rate remains constant or rises.

E) some amount but there is not enough information to tell by how much.

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July 1, 2023

21. The percentage-of-sales procedure arises from the idea that uncollectible amounts will vary with the volume of credit business. The firm estimates the appropriate percentage by studying its own experience or by inquiring into the experience of similar firms. Default rates generally fall within the range of .01% to .02% of credit sales.

22. The percentage-of-completion method measures the proportion of total work carried out during the accounting period either from engineers' estimates of the degree of completion or from the ratio of costs incurred to date to the total costs expected for the entire contract.

23. A common-size income statement expresses each expense and net income as a percentage of
A. assets.
B. revenues.
C. liabilities.
D. expenses.
E. shareholders’ equity.

24. If the firm has received a promise of payment but cannot measure this promise with reasonable reliability,
A. U.S. GAAP would permit revenue to be recognized, but IFRS would not permit revenue to be recognized.
B. U.S. GAAP would not permit revenue to be recognized, but IFRS would permit revenue to be recognized.
C. neither U.S. GAAP nor IFRS would permit revenue to be recognized.
D. U.S. GAAP and IFRS would permit revenue to be recognized.
E. none of the above

25. Which section includes income derived from a firm’s primary business activities as well as from activities peripherally related to operations? (The firm expects these sources of earnings to continue.)
A. income from continuing operations
B. income, gains, and losses from discontinued operations
C. extraordinary gains and losses
D. retained earnings
E. paid-in-capital

26. Operating risks
A. include variability in sales from changing economic conditions (cyclicality risk).
B. include variability in sales from short product life cycles (because of technological change or changes in consumer taste).
C. include variability of earnings that arises when the firm has a high proportion of fixed costs that do not change as sales change.
D. Answers a, b, and c are correct.
E. None of these answer choices is correct.

27. Ulrich Co. sells an asset to a buyer for a total sales price of $6,000 with a payment schedule of $2,000 in year 1, $2,000 in year 2, and $2,000 in year 3. The cost of the asset is $5,000. Under the cost-recovery-first method, what amount of net profit is recognized in year 3?
A. $2,000
B. $1,000
C. $666.67
D. $333.33
E. $0

28. Which of the following is true regarding income recognition?
A. The seller must have substantially performed its obligations to the customer (for example, by transferring ownership of goods to the customer).
B. The seller must have obtained an asset from the customer that it can reliably measure. If the asset is not cash, the seller must be reasonably certain of converting it into cash.
C. The firm recognizes expenses when it consumes assets.
D. If an event or transaction leads to the recognition of revenue, the firm matches the consumption of any assets (the expense), in time, with the revenue recognized.
E. all of the above

29. Cowden Properties

Cowden Properties sold a condominium to Ms. Roberts for $90,000. Cowden originally acquired the condo at a cost of $40,000 and made improvements to the unit totaling $20,000. The contract for sale required Ms. Roberts to pay the $90,000 as follows: