ECN 104 Lecture 11: McConnellBrueFlynnBarbiero-12e_Ch13 - Copy
6 Jun 2018
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Chapter13Rent,Interest,andProfit
Copyright(c)2010McGraw-HillRyersonLimited[Typetext] Page1
CHAPTER 13
Rent, Interest, and Profit
Topic Question numbers
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13.1 Economic rent 1-25
Perfectly inelastic supply 1-13
Equilibrium rent and changes in demand 14-17
Land rent: A surplus payment 18-20
Productivity differences and rent differences 21-24
Alternative uses of land 25
13.2 Interest: The price of money 26-102
Loanable funds theory of interest 26-45
Extending the model 46-59
Time value of money 60-76
Range of interest rates 77-78
Pure rate of interest 79-80
Role of the interest rate 81-102
13.3 Economic profit 103-116
Role of the entrepreneur 103-107
Sources of economic profit 108-115
Functions of profit 116
The last word 117-122
True-false 123-135
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Chapter13Rent,Interest,andProfit
Copyright(C)2010McGraw-HillRyersonLimited
1. Economic or pure rent is:
A) a payment made for the use of housing, factory buildings, or capital goods.
B) a payment for resources used in the production of "free goods."
C) a payment for the use of those resources whose supply is perfectly elastic.
D) the price paid for the use of land and other non-reproducible resources.
Ans: D Level: Easy Main Topic: 13.1 Economic rent Page: 311-312
Subtopic: Perfectly inelastic supply Type: Definition
2. Economic rent is:
A) nonexistent in a static, perfectly competitive economy.
B) the price paid for a resource which has a perfectly inelastic supply.
C) the price paid for a resource which has a perfectly elastic supply.
D) equal to the pure rate of interest if all markets are perfectly competitive.
Ans: B Level: Easy Main Topic: 13.1 Economic rent Page: 312
Subtopic: Perfectly inelastic supply Type: Definition
3. Which of the following statements is correct?
A) Economic profits can properly be regarded as the salaries received by the hired
managers of corporations.
B) Economic rent is a price paid for productive resources whose supply is perfectly
inelastic.
C) Economic profits would be nonexistent in a dynamic, perfectly competitive
economy.
D) Economic or pure profit is the minimum return which entrepreneurs must receive to
continue in a particular line of production.
Ans: B Level: Easy Main Topic: 13.1 Economic rent Page: 312
Subtopic: Perfectly inelastic supply Type: Definition
4. Economic rent refers to the price paid for land and other natural resources which:
A) are fixed in total supply.
B) vary directly with their market prices.
C) vary inversely with their market prices.
D) are available in nearly unlimited quantities.
Ans: A Level: Easy Main Topic: 13.1 Economic rent Page: 312
Subtopic: Perfectly inelastic supply Type: Definition
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Chapter13Rent,Interest,andProfit
Copyright(C)2010McGraw-HillRyersonLimited
5. If a factor of production has price elasticity of supply equal to zero, then payments to that
factor constitute:
A) wages.
B) economic rent.
C) normal profits.
D) interest payments.
Ans: B Level: Easy Main Topic: 13.1 Economic rent Page: 312
Subtopic: Perfectly inelastic supply Type: Definition
6. The total amount paid to a factor of production is economic rent in the diagram below:
A) A.
B) B.
C) C.
D) D.
Ans: C Level: Moderate Main Topic: 13.1 Economic rent Page: 312
Subtopic: Perfectly inelastic supply Type: Graphic
7. The supply of land is:
A) almost perfectly inelastic.
B) negatively sloped.
C) relatively elastic.
D) perfectly elastic.
Ans: A Level: Easy Main Topic: 13.1 Economic rent Page: 312
Subtopic: Perfectly inelastic supply Type: Application
8. Landowners will not receive any rent so long as:
A) there is any tax on land.
B) the supply and demand curves for land intersect.
C) the supply curve of land is perfectly inelastic.
D) the supply curve lies entirely to the right of the demand curve.
Ans: D Level: Difficult Main Topic: 13.1 Economic rent Page: 312
Subtopic: Perfectly inelastic supply Type: Graphic
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Document Summary
Copyright ( c ) 2010 mcgraw-hill ryerson limited[type text] Ans: d level: easy main topic: 13. 1 economic rent page: 311-312. Subtopic: perfectly inelastic supply type: definition h: which of the following statements is correct? z. Economic profits can properly be regarded as the salaries received by the hired managers of corporations. Economic rent is a price paid for productive resources whose supply is perfectly inelastic. Economic profits would be nonexistent in a dynamic, perfectly competitive economy. l. Economic or pure profit is the minimum return which entrepreneurs must receive to continue in a particular line of production. z. Subtopic: perfectly inelastic supply type: definition e d: economic rent refers to the price paid for land and other natural resources which: D) are fixed in total supply. vary directly with their market prices. vary inversely with their market prices. are available in nearly unlimited quantities.
