Holt 7525-9 S15_IT

___ 13. Howie (from problem 12. above) has the highest rated radio show in his market.
Advertising rates for Howie’s show are very expensive. The high advertising rates:
a. are caused by Howie’s high salary
b. are the cause of Howie’s high salary
c. are caused by the high ratings for the show
d. Both b. and c. above
___ 14. Economic rent:
a. is an unnecessary payment
b. allocates resources to their most valuable use
c. provides incentive for resource owners to develop the productivity of their resources
d. Both b. and c. above
___ 15. The sources of economic profit include:
a. arbitrage
b. innovation
c. earning a normal return on very productive resources
d. Both a. and b. above
___ 16. In a market economy, profit:
a. acts as a signaling device
b. attracts entrepreneurs and resources into markets of growing consumer demand
c. is an unnecessary payment
d. Both a. and b. above
___ 17. An increase in home burglaries would lead to:
a. increased consumer demand for home security systems
b. increased profits in the home security business
c. an increased number of workers in the home security business
d. All of the above
___ 18. According to the book “Nudge”, choice architecture:
a. is the context in which people make decisions
b. can be designed to “nudge” people toward good decisions
c. Both of the above
d. Neither of the above
___ 19. According to the book “Nudge”, the best way to improve people’s decisions:
a. is for the government to mandate that certain decisions be made
b. is for the government to severely punish unapproved decisions
c. Both of the above
d. Neither of the above
___ 20. The present value of $1,000 to be received fifteen years in the future, assuming an
interest rate of 7% is:
a. $508.35
b. $481.02
c. $362.45
d. $258.42
___ 21. The present value of $1,000 to be received fifty years in the future, assuming an interest
rate of 10% is:
a. $8.52
b. $50.00
c. $87.20
d, $99.75
FOR REVIEW ONLY - NOT FOR DISTRIBUTION
Interest, Present Value, Rent, and Profit 26 - 12