CHAPTER 20
Prices, Profits, and Exploitation
MULTIPLE CHOICE
156. In early economies, goods were often exchanged through a barter system. What is a barter
system?
a. prices are agreed after bargaining or negotiation between buyer and seller.
b. goods are exchanged through a central clearin
c. goods are exchanged for goods without the use of money.
d. goods are exchanged at fixed prices set by the government.
157. Assume that two goods exchange according to the average amount of labor that goes into
producing each of them. If it takes 2 hours to produce a pie and 1 hour to produce a cake,
then if Sam has 1 pie to sell
a. he could exchange his pie for 2 cakes
b. he could exchange is pie for ½ of a cake
c. he could exchange his pie for 1 cake.
d. he could exchange his pie for 2 other pies.
158. Assume that two goods exchange according to the average amount of labor that goes into
producing each of them. If it takes 2 hours to produce a pie and 1 hour to produce a cake,
then if Sam has 1 cake to sell
a. he could exchange his cake for 2 pies
b. he could exchange is cake for ½ of a pie
c. he could exchange his cake for 1 pie.
d. he could exchange his cake for 2 other cakes.
159. Suppose a pig farmer spends $20 per day on feed, equipment and buildings for each
worker. He pays his workers $40 per day. He sells the pigs for $ 100.
a. the pig farmer is making a profit of $20 per worker.
b. the pig farmer is making a profit of $40 per worker.
c. the pig farmer is making a profit of $60 per worker.
d. the pig farmer is not making a profit.
160. The most important factor determining division of the product between wages and profits is
a. the level of technology.
b. the amount of labor required to produce the product.
c. the bargaining power between employees and employers.
d. federal minimum wages.
161. The ter
a. the price of one good in terms of money.
b. the price of one good in terms of another good.
c. the price of one good exchanged within an extended family.
d. the price of one good today compared to its price at some point in the past.
162.
a. a device powered by human effort rather than by electric power.
b.
c. labor productivity.
d. the relative bargaining power of workers versus employers.
163. According to progressives, labor power is different from other commodities because
a. it is not produced by the capitalist firm.
b. it is sold by the capitalist firm.
c. it is bought and sold in a market.
d. its value does not depend on the relationship between buyer and seller.
APPENDIX 20.1
Rejection of Labor Theory and Consideration of Alternative Theories
164. What is the transformation problem?
a. How can the rate of exploitation determine employee compensation.
b. How can labor hours be transformed into money prices.
c. How can feudalism be transformed into capitalism.
d. How can necessary labor be transformed into surplus labor.
165. What is the rate of exploitation?
a. the ratio of surplus labor to total profit.
b. the ratio of surplus labor to necessary labor.
c. the ratio of surplus labor to exploited labor.
d. the ratio of surplus labor to cost of materials.
166. What is the definition of the rate of profit used in this chapter?
a. the profit divided by the cost of necessary labor.
b. the profit divided by surplus labor.
c. the profit divided by the costs per worker.
d. the price minus the cost of labor inputs.