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Which of the following is true about location rents

  Which of the following is true about location rents?

a.They are illegal in many inner-city locations.

b.They are found by taking the shaded area below the transport cost curve.

c.They arise from differential costs in transporting food to the marketplace.

d.They arise when the MRP is lower than the cost of transporting food to the
marketplace.

e.They would not exist if all land were of similar quality.

132.              Suppose Szmul Hecht’s farm A is 10 miles from the marketplace, while Frantisek Bass’s
                            farm is twice as far away. Ceteris paribus, we know then that the

a.present value of Hecht’s farm is lower than the present value of Bass’s farm

b.differential rent Hecht receives is greater than the differential rent Bass receives

c.differential rent Hecht receives is less than the differential rent Bass receives

d.location rent Hecht receives is less than the location rent Bass receives

e.present value of Hecht’s farm is higher than the present value of Bass’s farm

133.              The existence of wage-related rent

a.is explained by the fact that people have different opportunity costs

b.is explained by the fact that some people who work also own land

c.indicates that wage rates can be higher than rents

d.is a contradiction because workers’ incomes derive from labor

e.result from the different productivities of workers

134.              Which of the following statements is true about profit-related income?

a.It results from hiring workers below the marginal contributions they make to the
enterprise.

b.It consists of rents derived from the sole ownership of capital.

c.It is the reward for undertaking the uncertainties of enterpreneurship.

d.It equals the entrepreneur’s opportunity costs of labor and money capital.

e.It is the same as wage-related rents, except it is the entrepreneur who gets it.

135.              Stockholders of a corporation can be regarded as entrepreneurs because they

a.are ultimately the ones who hire or fire managers

b.take the risks associated with corporate enterprise

c.are compensated for the opportunity costs they incur when they invest their capital in
the corporation

d.are involved in the major management operations of the corporation

e.invest their time and effort in managing the corporation

136.              Recently, there has been talk about reforming the tax system. Some advocate replacing
                            the current income tax with a consumption tax. The income tax taxes  interest earned on
                            savings directly, while a consumption tax doesn’t. The most likely effect on savings, if
                            there is a shift to the consumption tax, would be to

a.raise interest rates

b.shift the supply curve of loanable funds to the left

c.encourage higher consumption

d.shift the supply curve of loanable funds to the right

e.discourage savings

137.              Recently, there has been talk about reforming the tax system. Some advocate replacing
                            the current income tax with a consumption tax. The income tax taxes  interest earned on
                            savings directly, while a consumption tax doesn’t. Assuming the demand curve for
                            loanable funds is unchanged, which of the following would most likely occur?

a.a decline in the interest rate and an increase in the quantity of loanable funds
demanded and supplied

b.an increase in the interest rate and a decrease in the quantity of loanable funds
demanded and supplied

c.no effect on the interest rate, but a decline in the quantity of loanable funds
demanded and supplied

d.an increase in both the interest rate and quantity of loanable funds demanded and
supplied

e.an increase in the interest rate but no effect on the quantity of loanable funds

Dec 12 2019 View more View Less

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