Question

1. When economists refer to land as a productive input for a firm, they are not only thinking about land itself but also the:

A.

buildings and machinery that are on the land and that serve as productive inputs.

B.

natural resources that come from the land such as oil, minerals, and trees.

C.

alternative uses for the land such as housing, agriculture or a site for needed infrastructure.

D.

gains that landowners receive from the use of their land in production.

2. Physical capital includes:

A.

all manufactured products used to produce goods and services.

B.

just the machinery required to produce a firm’s goods.

C.

only the buildings used for production.

D.

education and training received by a firm’s physical employees.

3. In addition to land and physical capital, economists consider _____ as factors of production.

A.

raw materials and electricity

B.

good ideas and natural resources

C.

human capital and innovation

D.

market intelligence and strong demand

4. The marginal revenue product of capital is the:

A.

additional revenue generated by selling an additional unit of product.

B.

firm’s average product multiplied by the firm’s average revenue per unit sold.

C.

additional physical output from an additional employee multiplied by the price of the product.

D.

marginal physical product of an additional unit of capital multiplied by the product’s price.

5. Economists use _____ to determine the value today of amounts to be received in the future.

A.

income averaging

B.

present value analysis

C.

gain calculations

D.

arithmetic sums

Answer 1

Ans:

1) Option B

natural resources that come from the land such as oil, minerals, and trees.

Explanation

The factors of production include land,labor,capital and entrepreneurship. Land includes any natural resource such as water,oil,natural gas and forests.

2) Option A

all manufactured products used to produce goods and services.

Explanation

Physical capital includes machinery,tools and buildings used to produce goods and services.

3) Option C

human capital and innovation

Explanation

The factors of production include land,labor,capital and entrepreneurship.

4) Option D

marginal physical product of an additional unit of capital multiplied by the product’s price.

Explanation

The marginal revenue product of capital is the additional revenue resulting from employing an additional unit of capital.

5) Option B

present value analysis

Explanation

Present value (PV) is the current value of future cash flows. Economists use present value analysis to determine the current value of amounts to be received in the future.