Demand and Supply in Factor Markets - LOS d ～ logistics, operate, process, system, likely

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1.Lynxville Manufacturing has just implemented a new logistics system that will allow it to operate with a 30% smaller inventory of goods in process. What effects will the new process most likely have on Lynxville’s demand for physical capital and on its demand for financial capital?

Demand for Physical Capital

Demand for Financial Capital

 

A)                    Increase                           Increase

B)                    Increase                         Decrease

C)                    Decrease                       Decrease

D)                    Decrease                         Increase

2.Which of the following is least likely to be an example of a firm’s physical capital:

A)  undeveloped land.

B)  inventory of unfinished goods.

C)  proceeds from a bond issued to construct a new plant.

D)  productive machinery that has been fully depreciated.

3.Which of the following choices most accurately states the relationship between the demand for physical capital and the demand for financial capital? Greater demand for:

A)  financial capital causes greater demand for physical capital.

B)  physical capital implies less demand for financial capital.

C)  physical capital causes greater demand for financial capital.

D)  financial capital implies less demand for physical capital.

4.With regard to demand and supply in factor markets, which of the following statements is least likely to be correct?

A)  Marginal revenue is the gain from the sale of an additional unit, whereas marginal revenue product is the revenue gain from employing one more unit of a productive resource.

B)  The demand for financial capital and physical capital tends to be inversely related.

C)  The effect that a change in price for a factor of production other than labor will have on the demand for labor will depend upon whether it is a substitute or complement for labor.

D)  All else being equal, the supply of financial capital will increase as incomes or interest rates increase.

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答案和详解如下：

1.Lynxville Manufacturing has just implemented a new logistics system that will allow it to operate with a 30% smaller inventory of goods in process. What effects will the new process most likely have on Lynxville’s demand for physical capital and on its demand for financial capital?

Demand for Physical Capital

Demand for Financial Capital

 

A)                                        Increase      Increase

B)                                        Increase      Decrease

C)                                        Decrease     Decrease

D)                                        Decrease     Increase

The correct answer was C)

Goods in process are part of a firm’s physical capital. If the firm finds a way to operate with a lower inventory of goods in process, its demand for physical capital decreases which will subsequently cause a decrease in the firm's demand for financial capital.

2.Which of the following is least likely to be an example of a firm’s physical capital:

A)  undeveloped land.

B)  inventory of unfinished goods.

C)  proceeds from a bond issued to construct a new plant.

D)  productive machinery that has been fully depreciated.

The correct answer was C)

Physical capital includes a firm’s property, plant and equipment, and inventory of finished and unfinished goods. Money raised by issuing securities is a firm’s financial capital.

3.Which of the following choices most accurately states the relationship between the demand for physical capital and the demand for financial capital? Greater demand for:

A)  financial capital causes greater demand for physical capital.

B)  physical capital implies less demand for financial capital.

C)  physical capital causes greater demand for financial capital.

D)  financial capital implies less demand for physical capital.

The correct answer was C)

Demand for financial capital depends on the demand for physical capital. The greater the demand for physical capital, the greater the demand for the financial capital needed to purchase the physical capital.

4.With regard to demand and supply in factor markets, which of the following statements is least likely to be correct?

A)  Marginal revenue is the gain from the sale of an additional unit, whereas marginal revenue product is the revenue gain from employing one more unit of a productive resource.

B)  The demand for financial capital and physical capital tends to be inversely related.

C)  The effect that a change in price for a factor of production other than labor will have on the demand for labor will depend upon whether it is a substitute or complement for labor.

D)  All else being equal, the supply of financial capital will increase as incomes or interest rates increase.

The correct answer was B)

The demand for financial capital and for physical capital tends to be positively related. As firms seek to invest in new projects (physical capital) they seek additional financial capital to pay for the projects.