Question 1

Suppose a change in technology increases the marginal product of labor. The result is

Accepted Answer

A)  a downward movement along the demand for labor curve. 
B)  a rightward shift in the demand for labor curve. 
C)  a leftward shift in the demand for labor curve. 
D)  an upward movement along the demand for labor curve. 
A)  a downward movement along the demand for labor curve. 
B)  a rightward shift in the demand for labor curve. 
C)  a leftward shift in the demand for labor curve. 
D)  an upward movement along the demand for labor curve. B

Question 2

Ten cases of spring water are sold for $6 each, and the marginal product of the last unit of labor is 5. If the price of a case increases from $6 to $8, then the marginal revenue product of the last unit of labor would

Accepted Answer

A)  decrease by $10. 
B)  increase by $40. 
C)  decrease by $30. 
D)  increase by $10. 
E)  not change. 
A)  decrease by $10. 
B)  increase by $40. 
C)  decrease by $30. 
D)  increase by $10. 
E)  not change. D

Question 3

Suppose land suitable for wheat production is highly inelastic. An increase in the demand for wheat bread will most likely

Accepted Answer

A)  cause the prices of bread and wheat to increase but not affect the incomes paid to owners of wheat-growing land. 
B)  shift the demand curve for bread to the right and the supply curve for wheat to the left. 
C)  raise the price of land suitable for wheat production. 
D)  depress the incomes of owners of wheat growing land. 
A)  cause the prices of bread and wheat to increase but not affect the incomes paid to owners of wheat-growing land. 
B)  shift the demand curve for bread to the right and the supply curve for wheat to the left. 
C)  raise the price of land suitable for wheat production. 
D)  depress the incomes of owners of wheat growing land. C

Question 4

Which of the following is a correct statement about the labor market?

Accepted Answer

A)  Workers determine the supply of labor, and firms determine the demand for labor. 
B)  Workers determine the demand for labor, and firms determine the supply of labor. 
C)  Workers determine the supply of labor, and government determines the demand for labor. 
D)  The forces of supply and demand, while present in the labor market, have nothing to balance in that market. 
A)  Workers determine the supply of labor, and firms determine the demand for labor. 
B)  Workers determine the demand for labor, and firms determine the supply of labor. 
C)  Workers determine the supply of labor, and government determines the demand for labor. 
D)  The forces of supply and demand, while present in the labor market, have nothing to balance in that market.

Question 5

A decrease in the price of a resource would cause

Accepted Answer

A)  producers to substitute other inputs for the resource. 
B)  the cost of products made from the resource to fall. 
C)  producers to use more of the resource. 
D)  none of the above. 
E)  both b and c above. 
A)  producers to substitute other inputs for the resource. 
B)  the cost of products made from the resource to fall. 
C)  producers to use more of the resource. 
D)  none of the above. 
E)  both b and c above.

Question 6

Prices in resource markets

Accepted Answer

A)  provide users with information concerning the relative scarcity of resources. 
B)  encourage the use of a resource now if its price is expected to rise in the future. 
C)  provide suppliers with little incentive to develop more of those resources that are intensely demanded by users. 
D)  have little impact on productive decisions unless they are closely regulated by the government. 
A)  provide users with information concerning the relative scarcity of resources. 
B)  encourage the use of a resource now if its price is expected to rise in the future. 
C)  provide suppliers with little incentive to develop more of those resources that are intensely demanded by users. 
D)  have little impact on productive decisions unless they are closely regulated by the government.

Question 7

The marginal productivity principle says that a profit-maximizing firm should

Accepted Answer

A)  hire capital until its marginal product is zero. 
B)  hire labor until another worker costs more to hire than he can earn for the firm. 
C)  hire the quantities of capital and of labor at which their marginal products are equal. 
D)  hire capital until its marginal product is negative. 
A)  hire capital until its marginal product is zero. 
B)  hire labor until another worker costs more to hire than he can earn for the firm. 
C)  hire the quantities of capital and of labor at which their marginal products are equal. 
D)  hire capital until its marginal product is negative.

Question 8

If an advance in computer technology reduces the need for businesses to hire accountants, students majoring in accounting should expect

Accepted Answer

A)  a lower rate of return on their human capital investment. 
B)  an increase in their employment prospects. 
C)  a higher wage rate than they were expecting when they selected their major. 
D)  an increase in the demand for accountants. 
A)  a lower rate of return on their human capital investment. 
B)  an increase in their employment prospects. 
C)  a higher wage rate than they were expecting when they selected their major. 
D)  an increase in the demand for accountants.

Question 9

A technological advance that increases labor productivity will

Accepted Answer

A)  lower wages. 
B)  decrease the demand for labor as fewer workers are needed. 
C)  decrease the supply of labor as fewer workers are needed. 
D)  increase the demand for labor as MP rises. 
E)  decrease the demand for labor as MP falls. 
A)  lower wages. 
B)  decrease the demand for labor as fewer workers are needed. 
C)  decrease the supply of labor as fewer workers are needed. 
D)  increase the demand for labor as MP rises. 
E)  decrease the demand for labor as MP falls.

Question 10

Suppose a certain firm is able to produce 165 units of output per day when 15 workers are hired. The firm is able to produce 176 units of output per day when 16 workers are hired (holding other inputs fixed). Then the marginal product of the 16th worker is

Accepted Answer

A)  10 units of output. 
B)  11 units of output. 
C)  16 units of output. 
D)  176 units of output. 
A)  10 units of output. 
B)  11 units of output. 
C)  16 units of output. 
D)  176 units of output.

Question 11

The market where firms purchase factors of production is referred to as the

Accepted Answer

A)  product market. 
B)  resource market. 
C)  capital market. 
D)  foreign exchange market. 
A)  product market. 
B)  resource market. 
C)  capital market. 
D)  foreign exchange market.

Question 12

The value marginal product of a resource is

Accepted Answer

A)  the marginal product of the resource multiplied by the price of the product it helps to produce. 
B)  the price of the product times the price of the resource. 
C)  larger when the product price is smaller. 
D)  larger when the marginal product is smaller. 
A)  the marginal product of the resource multiplied by the price of the product it helps to produce. 
B)  the price of the product times the price of the resource. 
C)  larger when the product price is smaller. 
D)  larger when the marginal product is smaller.

Question 13

The Alpha Car Wash is known for the quality way in which every car is hand cleaned. The Beta Car Wash uses machines, so consumers are generally willing to pay a higher price for Alpha's services. The Auto Washers union at Alpha has just succeeded in obtaining a substantial wage increase. What will likely happen as a result?

Accepted Answer

Higher wages will cause the price of an

Question 14

Which of the following is an example of an investment in human capital?

Accepted Answer

A)  a law student who works as a waiter in the summer 
B)  on-the-job training received by an apprentice welder 
C)  payments into a retirement pension plan by a skilled laborer 
D)  all of the above are correct. 
A)  a law student who works as a waiter in the summer 
B)  on-the-job training received by an apprentice welder 
C)  payments into a retirement pension plan by a skilled laborer 
D)  all of the above are correct.

Question 15

Use the information in the table below to answer the following question(s). The firm hires labor competitively and sells its product in a competitive price-taker market.
  
-Refer to Table 12-6. If the market wage rate is $25 per day, how many workers should the firm hire if it wants to maximize profits?

Accepted Answer

A)  4 
B)  5 
C)  6 
D)  7 
A)  4 
B)  5 
C)  6 
D)  7

Question 16

Which of the following is the best example of an investment in human capital?

Accepted Answer

A)  on-the-job training received by an apprentice electrician 
B)  an increase in the number of hours worked per week by a worker in an unskilled laboring job 
C)  the purchase of company stock by a worker 
D)  payments into a retirement pension plan by a skilled laborer 
A)  on-the-job training received by an apprentice electrician 
B)  an increase in the number of hours worked per week by a worker in an unskilled laboring job 
C)  the purchase of company stock by a worker 
D)  payments into a retirement pension plan by a skilled laborer

Question 17

Use the figure to answer the following question(s).
Figure 12-1  
-If Figure 12-1 indicated the short-run and long-run supply curves for a resource, which of the following would probably be the long-run supply curve of the resource?

Accepted Answer

A)  Q2 
B)  Q3 
C)  Sb 
D)  Sa 
A)  Q2 
B)  Q3 
C)  Sb 
D)  Sa

Question 18

Use the table to answer the following question.   If the market wage rate is $150 per worker, how many workers should be employed if the firm wants to maximize profit?

Accepted Answer

A)  3 
B)  4 
C)  5 
D)  6 
A)  3 
B)  4 
C)  5 
D)  6

Question 19

Other things equal, when the supply of workers is scarce, one would predict that market wages would be

Accepted Answer

A)  relatively high. 
B)  relatively low. 
C)  determined solely by factors that affect demand. 
D)  determined outside the domain of economic theory. 
A)  relatively high. 
B)  relatively low. 
C)  determined solely by factors that affect demand. 
D)  determined outside the domain of economic theory.

Question 20

The demand for a resource depends largely on the

Accepted Answer

A)  demand for the products that it produces. 
B)  price of the resource. 
C)  supply of the resource. 
D)  cost of producing the resource. 
A)  demand for the products that it produces. 
B)  price of the resource. 
C)  supply of the resource. 
D)  cost of producing the resource.

Suppose a change in technology increases the marginal product of labor. The result is

Ten cases of spring water are sold for $6 each, and the marginal product of the last unit of labor is 5. If the price of a case increases from $6 to $8, then the marginal revenue product of the last unit of labor would

Suppose land suitable for wheat production is highly inelastic. An increase in the demand for wheat bread will most likely

Which of the following is a correct statement about the labor market?

A decrease in the price of a resource would cause

Prices in resource markets

The marginal productivity principle says that a profit-maximizing firm should

If an advance in computer technology reduces the need for businesses to hire accountants, students majoring in accounting should expect

A technological advance that increases labor productivity will

Suppose a certain firm is able to produce 165 units of output per day when 15 workers are hired. The firm is able to produce 176 units of output per day when 16 workers are hired (holding other inputs fixed). Then the marginal product of the 16th worker is

The market where firms purchase factors of production is referred to as the

The value marginal product of a resource is

Which of the following is an example of an investment in human capital?

Which of the following is the best example of an investment in human capital?

Use the figure to answer the following question(s). Figure 12-1 -If Figure 12-1 indicated the short-run and long-run supply curves for a resource, which of the following would probably be the long-run supply curve of the resource?

Use the table to answer the following question. If the market wage rate is $150 per worker, how many workers should be employed if the firm wants to maximize profit?

Other things equal, when the supply of workers is scarce, one would predict that market wages would be

The demand for a resource depends largely on the

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Gaining From International Trade

Filters

Exam 12: The Supply of and Demand for Productive Resources

Suppose a change in technology increases the marginal product of labor. The result is

Ten cases of spring water are sold for $6 each, and the marginal product of the last unit of labor is 5. If the price of a case increases from $6 to $8, then the marginal revenue product of the last unit of labor would

Suppose land suitable for wheat production is highly inelastic. An increase in the demand for wheat bread will most likely

Which of the following is a correct statement about the labor market?

A decrease in the price of a resource would cause

Prices in resource markets

The marginal productivity principle says that a profit-maximizing firm should

If an advance in computer technology reduces the need for businesses to hire accountants, students majoring in accounting should expect

A technological advance that increases labor productivity will

Suppose a certain firm is able to produce 165 units of output per day when 15 workers are hired. The firm is able to produce 176 units of output per day when 16 workers are hired (holding other inputs fixed). Then the marginal product of the 16th worker is

The market where firms purchase factors of production is referred to as the

The value marginal product of a resource is

Which of the following is an example of an investment in human capital?

Which of the following is the best example of an investment in human capital?

Use the figure to answer the following question(s). Figure 12-1 -If Figure 12-1 indicated the short-run and long-run supply curves for a resource, which of the following would probably be the long-run supply curve of the resource?

Use the table to answer the following question. If the market wage rate is $150 per worker, how many workers should be employed if the firm wants to maximize profit?

Other things equal, when the supply of workers is scarce, one would predict that market wages would be

The demand for a resource depends largely on the

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Gaining From International Trade

Filters