TRUE OR FALSE. Always assume "Other things equal."

1. Only changes in demand determine economic rent.

2. Henry George advocated that the only tax in our economy should be on income.

3. In the real world land has alternative uses, and owners of land must be paid their

opportunity cost for someone else to use the land.

4. It is possible for professional athletes and movie actors to earn an economic rent.

5. In the market for loanable funds, an increase in the supply of money will raise the equilibrium rate of interest.

6. The greater the risk, the higher will be the rate of interest on a loan.

7. The longer a loan is outstanding, the lower the interest rate on the loan.

8. In economics money is considered one of the four major economic resources.

9. The present value (or today's value) of $1000 to be received one year from now would be

less than $1000.

10. Usury laws represent an example of a price ceiling on interest rates.

11. Profit is a reward to an entrepreneur for taking insurable risks.

12. Of the major categories of income received by the four factors of production,

the largest category is for interest.

COMPLETION. 2 points each. [4 POINTS TOTAL]

1. Economic rent is paid to a resource that is perfectly ___________________ in supply.

2. ______________________ will ration entrepreneurship.

EXTRA CREDIT. 3 points each.

1. An economic profit is any profit above a __________________ profit.

2.____________________________________________________ is one way American culture tends to differ from other nations' cultures.

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