Financial Investment Quiz! Trivia Test

In a monopsonistic market, the employer has market power and is the sole buyer of labor. The employer will continue to hire more workers until the marginal revenue product (MRP), which is the additional revenue generated by hiring an additional worker, equals the marginal labor cost (MLC), which is the additional cost of hiring an additional worker. This is because the employer wants to maximize their profit by balancing the additional revenue generated with the additional cost incurred. Therefore, the statement "revenue product equals marginal labor cost" accurately describes the hiring decision of a monopsonistic employer.

A decrease in the population can be expected to decrease the demand for land because with fewer people, there will be less need for housing, infrastructure, and other land-dependent activities. This will result in a decrease in the overall demand for land as there will be less competition for available land resources.

The supply of loanable funds being directly related to the rate of interest means that as the interest rate increases, the supply of loanable funds also increases. This is because higher interest rates incentivize individuals and institutions to save more and lend their funds, as they can earn a higher return on their investments. Conversely, when interest rates are low, the supply of loanable funds decreases as there is less incentive to save and lend money. Therefore, the relationship between the supply of loanable funds and the rate of interest is directly proportional.

When a firm uses its own funds to finance investment instead of borrowing, it incurs an opportunity cost of capital. This means that the firm is forgoing the potential earnings that could have been generated if the funds were invested elsewhere. By using its own funds, the firm misses out on the opportunity to earn a return on those funds, resulting in an opportunity cost. Therefore, although using its own funds may seem beneficial in terms of avoiding borrowing costs, it comes with the drawback of incurring an opportunity cost of capital.

The labor supply curve is usually upward sloping because as wages increase, individuals are more willing and able to supply more labor. This is because higher wages incentivize people to work more hours or enter the labor force. Additionally, as wages increase, the opportunity cost of leisure time also increases, further motivating individuals to supply more labor. As a result, the labor supply curve typically slopes upward, indicating that higher wages lead to an increase in the quantity of labor supplied.

Wage-related rent refers to the additional income or benefits that a worker can earn based on their unique capabilities or skills that are in high demand in the labor market. This means that if a worker possesses unique capabilities that are valued by employers, they have the potential to earn wage-related rent. Being in a union or being productive may contribute to higher wages, but the key factor in earning wage-related rent is having unique capabilities.

The correct answer is "has been increasing". This means that over the past several decades, the Gini coefficient for the U.S. has been on the rise. The Gini coefficient is a measure of income inequality, so an increasing Gini coefficient suggests that income inequality in the U.S. has been growing. This could be due to various factors such as changes in the economy, policies, or societal factors.

In a competitive labor market, the labor supply curve facing an individual employer is horizontal. This means that the employer can hire as many workers as they want at the prevailing market wage rate without affecting the wage rate. The reason for this is that in a competitive labor market, there are many potential workers available, and each worker is a price taker. This means that they are willing to supply their labor at the going market wage rate, and any increase in the number of workers hired by the employer does not affect the wage rate. Therefore, the labor supply curve facing the individual employer is horizontal.

In a monopsony labor market, there is only one employer who has control over the wages and employment level. As the employer increases the wage rate, more workers are willing to supply their labor. This is because higher wages incentivize individuals to enter the labor market or switch from other industries. Therefore, the labor supply curve facing an individual employer in a monopsony labor market is upward sloping.

An increase in productivity can shift the labor demand curve to the right because it means that firms can produce more output with the same amount of labor. This leads to an increased demand for labor as firms seek to hire more workers to take advantage of the higher productivity levels. As a result, the labor demand curve shifts to the right, indicating a higher quantity of labor demanded at each wage level.

When the product demand is inelastic, it means that changes in price have little impact on the quantity demanded. In this case, the demand for labor is also likely to be inelastic. This means that changes in wages or labor costs will have little effect on the demand for labor. The firm can still maintain a high level of labor demand even if wages increase, indicating that the labor demand is inelastic.

The idea that the poverty level for a family of four is about $20,000 per year is an example of an absolute measure of poverty. This is because it sets a specific threshold, regardless of other factors, below which a family is considered to be in poverty. The $20,000 amount is not relative to other income levels or economic conditions, but rather serves as a fixed standard for determining poverty.