Chapter 12 Post Quiz
How Markets Determine Incomes

Matching Questions:

Match the terms on the left with the definition in the column on the right. Enter the lowercase letter of that definition in the box to the left of the question number.

	1. Income	a. Payments from government to citizens that are not made in exchange for current goods or services.
	2. National income	b. Refers to the firm's demand of inputs.
	3. Transfer payments	c. The additional revenue produced by an additional unit of labor.
	4. Wealth	d. The flow of wages, interest payments, and dividends.
	5. Derived demand	e. Firms add inputs up to the point where the marginal revenue product of the input equals the marginal cost or price of the input.
	6. Distribution theory	f. The supply curve of surgeons
	7. Marginal product of labor	g. Found where MR=MC.
	8. Maximizes profits	h. The sum of all the incomes of all individuals in a country.
	9. Substitution rule	i. States that the demands for the inputs to production are derived from the revenues that each input yields on its marginal product.
	10. Equilibrium price	j. States that if the price of one factor rises while other factor prices remain fixed, the firm will profit from substituting more of the other inputs for the more expensive factor.
	11. Relatively inelastic	k. The net value of assets owned at a given point in time.