Question 1

Capital, labor, and land
A)have derived demands.
B)are factors of production.
C)are inputs used in the production of goods and services.
D)All of the above are correct.

Accepted Answer

Capital, labor, and land are all factors of production, meaning they are the resources used to produce goods and services. They also have derived demands, meaning their demand is based on the demand for the outputs they help produce. Therefore, D - All of the above are correct.

Question 2

Suppose that Chloe opens a dog grooming business in a local shopping center. Which of the following would be an example of a factor of production used by Chloe?
(i)her employees' time
(ii)brushes, combs, scissors, and clippers
(iii)shampoo, water, and flea prevention treatments
(iv)Chloe's time spent on bookkeeping and bill paying
A)(i) only
B)(i) and (ii) only
C)(i), (ii), and (iii) only
D)(i), (ii), (iii), and (iv)

Accepted Answer

All listed items are factors of production: labor (employees' and Chloe's time), capital (tools and equipment), and materials (shampoo, water, treatments).

Question 3

Which of the following is an example of a firm's derived demand?
A)Workers with higher levels of education earn more, on average, than workers with lower levels of education.
B)Factors that decrease the demand for labor will decrease the equilibrium wage.
C)A tractor manufacturer's demand for assembly-line workers is inseparably linked to the supply of tractors.
D)All of the above are correct.

Accepted Answer

Derived demand refers to the demand for a good or service that arises from the demand for another good or service. In this case, the demand for assembly-line workers is derived from the demand for tractors produced by the manufacturer. Therefore, choice C is the correct answer. Choice A refers to the correlation between education level and wages, which is not necessarily an example of derived demand. Choice B refers to the relationship between labor demand and wages, but does not specifically refer to derived demand.

Question 4

Which of the following is an example of a firm's derived demand?
A)The wage that a worker earns is a function of her human capital.
B)A firm's demand for college textbook study guide authors is inseparably linked to the supply of college textbooks.
C)Factors that increase the demand for labor will increase the equilibrium wage.
D)All of the above are correct.

Accepted Answer

Derived demand refers to the demand for a factor of production (e.g. labor) that is based on the demand for the good or service that the factor helps to produce. Option B is the only one that specifically refers to the demand for a factor (college textbook study guide authors) being derived from the demand for the good or service (college textbooks) that the factor helps to produce. Options A and C are related to labor demand in general but do not explicitly refer to any specific factor or product.

Question 5

Because workers in the U.S. economy receive most of the total income earned, which of the following factors of production is considered to be the most important?
A)profit
B)wages
C)interest
D)labor

Accepted Answer

Workers in the U.S. economy receive most of the total income earned, suggesting that labor is the most important factor of production.

Question 6

Suppose that a college professor is creating an exam in her university office. Which of the following would be an example of a factor of production used by the professor?
(i)the professor's time
(ii)a computer software program into which the professor types the exam questions
(iii)the physical space of the professors office where she works when creating the exam
(iv)the interest on the professor's home mortgage
A)(i) only
B)(i) and (ii) only
C)(i), (ii), and (iii) only
D)(i), (ii), (iii), and (iv)

Accepted Answer

Factors of production include resources used in the creation of goods and services. The professor's time, the computer software, and the physical office space are all resources used in creating the exam. The interest on the home mortgage is not directly related to the production of the exam.

Question 7

Which of the following is an example of a factor of production?
A)rent
B)interest
C)land
D)Social Security payments

Accepted Answer

Factors of production are resources used in the production of goods and services. The factors of production include land, labor, capital, and entrepreneurship. Rent and interest are types of income earned from the factors of production, while Social Security payments are a type of government transfer payment and not a factor of production.

Question 8

The inputs used to produce goods and services are called
A)profit factors.
B)marginal products.
C)labor demands.
D)factors of production.

Accepted Answer

The inputs used to produce goods and services are referred to as factors of production which includes land, labor, capital, and entrepreneurship.

Question 9

Which of the following is not an example of a factor of production?
A)labor
B)interest
C)land
D)capital

Accepted Answer

Labor, land, and capital are all examples of factors of production. Interest, on the other hand, is an outcome of capital rather than a factor of production itself.

Question 10

Total income in the United States is comprised of
A)wages only.
B)wages and fringe benefits only.
C)rents, profits, and interest payments only.
D)wages, fringe benefits, rents, profits, and interest payments.

Accepted Answer

Total income in the United States is comprised of wages, fringe benefits, rents, profits, and interest payments, which are the major sources of income for individuals, businesses, and households. This includes not only the wages and salaries earned by workers but also the income derived from ownership of assets such as rents from real estate, profits from businesses, and interest payments from investments.

Question 11

Approximately how much of the income in the United States is earned by workers in the form of wages and fringe benefits?
A)25 percent
B)50 percent
C)67 percent
D)90 percent

Accepted Answer

According to the Bureau of Economic Analysis, in 2020, compensation of employees (including wages and fringe benefits) accounted for approximately 66.7% of the gross domestic product (GDP) in the United States.

Question 12

The factors of production are best defined as the
A)output produced from raw materials.
B)inputs used to produce goods and services.
C)wages paid to the workforce.
D)goods and services sold in the market.

Accepted Answer

Factors of production refer to the inputs used in the production process, which include land, labor, capital, and entrepreneurship. Thus, option B is the best choice as it accurately defines the factors of production as inputs used to produce goods and services. The other options do not accurately describe the factors of production.

Quiz 18: The Markets for the Factors of Production

Capital, labor, and land

Which of the following is an example of a firm's derived demand?

Which of the following is an example of a firm's derived demand?

Because workers in the U.S. economy receive most of the total income earned, which of the following factors of production is considered to be the most important?

Which of the following is an example of a factor of production?

The inputs used to produce goods and services are called

Which of the following is not an example of a factor of production?

Total income in the United States is comprised of

Approximately how much of the income in the United States is earned by workers in the form of wages and fringe benefits?

The factors of production are best defined as the