Question : 121) If the supply curve for a factor perfectly elastic, : 1384282

 

121) If the supply curve for a factor is perfectly elastic, the payments to the factor are

A) wholly economic rent.

B) wholly transfer earnings.

C) partly economic rent and partly transfer earnings.

D) neither economic rent nor transfer earnings.

E) an unnecessary tax on the factor.

122) The value of a factor in its best alternative use is called

A) intrinsic value.

B) alternative value.

C) transfer earnings.

D) economic earnings.

E) economic profit.

123) Suppose that the municipal government of Calgary decides to tax economic rent on a highly sought-after piece of land. The result would be

A) little or no effect on the supply of the land.

B) an increase in the supply of the land.

C) a reduction in the supply of land.

D) a shift of the entire tax onto the consumer.

E) a rise in the price of land.

124) John Smith plays baseball for $500 000 per year, but if he were not a baseball player, his next best alternative would be to earn $35 000 per year as a sales representative. By playing baseball, Smith is earning economic rent of

A) $535 000.

B) $500 000.

C) $465 000.

D) $35 000.

E) zero.

125) Which of the following would be least likely to earn economic rent?

A) an owner of land located on Yonge Street, near downtown Toronto

B) Celine Dion

C) Jim Murray, an auto-plant worker in Oshawa, Ontario

D) Robert Bateman, famous wildlife artist

E) a university professor who loves every bit of his job

126) Choose the statement that best describes the difference between “economic rent” and other factor payments.

A) Economic rent is unearned income of the factor whereas other payments are earned.

B) Economic rent is not a cost to the firm but other payments are.

C) A reduction in economic rent will not reduce the availability of the factor whereas reducing other payments of factors will reduce their availability.

D) There is no difference between economic rent and other factor payments.

E) Economic rent is the sum of all factor payments.

127) Consider the mobility of any factor of production. The more broadly we define the use of the factor, the ________ is the mobility of the factor and the ________ is the share of the factor payment that is economic rent.

A) lower; lower

B) lower; higher

C) higher; higher

D) higher; lower

128) Suppose Harrison Ford makes 2 movies per year and earns $10 million per movie. Suppose that if he weren’t making movies his next best alternative would be to earn $500 000 per year endorsing shampoo. By making movies, Harrison Ford

A) is earning economic rent of $20 500 000 per year.

B) is earning economic rent of $20 000 000 per year.

C) is earning economic rent of $19 500 000 per year.

D) is earning economic rent of $500 000 per year.

E) is not earning economic rent.

129) Steve Nash is a highly paid professional basketball player in the National Basketball Association. From the perspective of the whole NBA, Steve Nash’s economic rent would be ________, while from the perspective of his individual team it would be ________.

A) very small; very large

B) zero; impossible to calculate

C) close to his whole salary; very small

D) zero; close to his whole salary

E) very large; close to his whole salary

130) Refer to Figure 13-3.  This factor market is in equilibrium at point B.  Which of the following statements best describes factor payments at point B?

A) total income paid to the factor is $8

B) total factor earnings are $320

C) total factor earnings are $320 and the 40th unit earns zero rent

D) total factor earnings are $320 and the 40th unit earns economic rent of $8

E) economic rent to the 40th unit is $320

 

 

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