Question 1

Profit-maximizing firms will expand their employment of each variable resource until

Accepted Answer

A)  the Marginal Revenue Product (MRP) of the resource is just equal to the price of the resource. 
B)  other firms realize they can't compete. 
C)  the MRP of the resource is below the cost of the resource. 
D)  the MRP of the resource is above the cost of the resource. 
A)  the Marginal Revenue Product (MRP) of the resource is just equal to the price of the resource. 
B)  other firms realize they can't compete. 
C)  the MRP of the resource is below the cost of the resource. 
D)  the MRP of the resource is above the cost of the resource.

Question 2

In the short run, the supply of a resource will generally be

Accepted Answer

A)  less elastic than in the long run. 
B)  more elastic than in the long run. 
C)  equally elastic as the supply of the resource in the long run. 
D)  inversely related to the elasticity of demand for the product that the resource helps produce. 
A)  less elastic than in the long run. 
B)  more elastic than in the long run. 
C)  equally elastic as the supply of the resource in the long run. 
D)  inversely related to the elasticity of demand for the product that the resource helps produce.

Question 3

Diane's Auto World installs tires on automobiles, light trucks, and sport utility vehicles. She is a profit-maximizing business owner whose firm operates in a competitive market. The marginal cost of installing a tire is $10. The marginal productivity of the last worker that Diane hired was 2 tires per hour. What is the maximum hourly wage that Diane was willing to pay the last worker hired?

Accepted Answer

A)  $5 
B)  $10 
C)  $20 
D)  There is insufficient information to answer this question. 
A)  $5 
B)  $10 
C)  $20 
D)  There is insufficient information to answer this question.

Question 4

The marginal product of labor is the

Accepted Answer

A)  value marginal product of labor multiplied by the price of the good produced. 
B)  total output of labor divided by the quantity of labor used. 
C)  additional output resulting from employing one additional unit of labor. 
D)  same as the marginal revenue product of labor in price-taker markets. 
A)  value marginal product of labor multiplied by the price of the good produced. 
B)  total output of labor divided by the quantity of labor used. 
C)  additional output resulting from employing one additional unit of labor. 
D)  same as the marginal revenue product of labor in price-taker markets.

Question 5

Table 12-3
  
-Refer to Table 12-3. What is the marginal product of the third worker?

Accepted Answer

A)  7 
B)  8 
C)  25 
D)  75 
A)  7 
B)  8 
C)  25 
D)  75

Question 6

The notion that the demand for inputs depends on the demand for outputs is termed

Accepted Answer

A)  inverse demand. 
B)  derived demand. 
C)  proportional demand. 
D)  complementary demand. 
A)  inverse demand. 
B)  derived demand. 
C)  proportional demand. 
D)  complementary demand.

Question 7

An unanticipated decline in the demand for legal services will

Accepted Answer

A)  increase both the wages of lawyers and the rate of return they can expect to derive from their legal education. 
B)  lead to a shortage in the market for legal services. 
C)  reduce the wages of lawyers but not the quantity of legal services supplied. 
D)  reduce the wages of lawyers and the rate of return on a legal education.. 
A)  increase both the wages of lawyers and the rate of return they can expect to derive from their legal education. 
B)  lead to a shortage in the market for legal services. 
C)  reduce the wages of lawyers but not the quantity of legal services supplied. 
D)  reduce the wages of lawyers and the rate of return on a legal education..

Question 8

If a firm is using a resource hired in a perfectly competitive market, and if the price of the resource exceeds the marginal revenue product of the resource,

Accepted Answer

A)  more of the resource should be used. 
B)  less of the resource should be used. 
C)  the firm should pay a lower price for the resource. 
D)  the firm should pay a higher price for the resource. 
E)  the firm is using the optimal amount of the resource 
A)  more of the resource should be used. 
B)  less of the resource should be used. 
C)  the firm should pay a lower price for the resource. 
D)  the firm should pay a higher price for the resource. 
E)  the firm is using the optimal amount of the resource

Question 9

Why is it more expensive to acquire a new house in an urban area than in a rural area if the costs of labor and building materials are the same?

Accepted Answer

A quick glance to the demand side might

Question 10

Suppose a company sells its product for $5.00. It's industrial engineers have informed management that hiring one additional worker will increase output by five units per hour. The company should hire the additional worker only if the wage rate is

Accepted Answer

A)  $5.00 or less per hour. 
B)  $1.00 or more per hour. 
C)  $25.00 or less per hour. 
D)  none of the above. 
A)  $5.00 or less per hour. 
B)  $1.00 or more per hour. 
C)  $25.00 or less per hour. 
D)  none of the above.

Question 11

The supply of a resource, such as oil, is likely to be

Accepted Answer

A)  equally elastic in both the short and long run. 
B)  more elastic in the long run than in the short run. 
C)  more elastic in the short run than in the long run. 
D)  determined by the demand for the resource. 
A)  equally elastic in both the short and long run. 
B)  more elastic in the long run than in the short run. 
C)  more elastic in the short run than in the long run. 
D)  determined by the demand for the resource.

Question 12

If a profit-maximizing firm hires an additional unit of labor, what must be true about labor's wage and marginal revenue product?

Accepted Answer

A)  Its wage always equals its marginal revenue product. 
B)  Its wage is always greater than its marginal revenue product. 
C)  Its wage is always total revenue minus marginal revenue product. 
D)  Its wage is always less than or equal to its marginal revenue product. 
A)  Its wage always equals its marginal revenue product. 
B)  Its wage is always greater than its marginal revenue product. 
C)  Its wage is always total revenue minus marginal revenue product. 
D)  Its wage is always less than or equal to its marginal revenue product.

Question 13

The figure below depicts a production function for a firm that produces cookies.
Figure 12-4  
-Refer to Figure 12-4. As the number of workers increases,

Accepted Answer

A)  total output increases, but at a decreasing rate. 
B)  marginal product increases, but at a decreasing rate. 
C)  marginal product increases at an increasing rate. 
D)  total output decreases. 
A)  total output increases, but at a decreasing rate. 
B)  marginal product increases, but at a decreasing rate. 
C)  marginal product increases at an increasing rate. 
D)  total output decreases.

Question 14

When the supply of workers is plentiful, one would predict that market wages would be

Accepted Answer

A)  determined solely by factors that affect supply. 
B)  determined solely by factors that affect demand. 
C)  low, other things equal. 
D)  high, other things equal. 
A)  determined solely by factors that affect supply. 
B)  determined solely by factors that affect demand. 
C)  low, other things equal. 
D)  high, other things equal.

Question 15

Which of the following events could increase the demand for labor?

Accepted Answer

A)  a decrease in output price. 
B)  a decrease in the amount of capital available for workers to use. 
C)  an increase in the marginal productivity of workers. 
D)  All of the above are correct. 
A)  a decrease in output price. 
B)  a decrease in the amount of capital available for workers to use. 
C)  an increase in the marginal productivity of workers. 
D)  All of the above are correct.

Question 16

If steel workers obtain a substantial wage increase, employment in the steel industry will be most likely to fall if

Accepted Answer

A)  the demand curve for steel is highly inelastic. 
B)  the demand curve for steel is highly elastic. 
C)  the demand curve for steel workers is highly inelastic. 
D)  there are no good substitutes for steel. 
A)  the demand curve for steel is highly inelastic. 
B)  the demand curve for steel is highly elastic. 
C)  the demand curve for steel workers is highly inelastic. 
D)  there are no good substitutes for steel.

Question 17

A decrease in the demand for a product will cause output of that product to

Accepted Answer

A)  increase and the demand for and prices of the resources used to produce the product to rise. 
B)  decrease and both the demand for and prices of the resources used to produce the product to fall. 
C)  decline; the demand for the resources used to produce the product will remain constant. 
D)  increase; the price of resources used to produce the product will rise if their supply is elastic but fall if supply is inelastic. 
A)  increase and the demand for and prices of the resources used to produce the product to rise. 
B)  decrease and both the demand for and prices of the resources used to produce the product to fall. 
C)  decline; the demand for the resources used to produce the product will remain constant. 
D)  increase; the price of resources used to produce the product will rise if their supply is elastic but fall if supply is inelastic.

Question 18

An increase in the price of a resource would cause

Accepted Answer

A)  producers to substitute other inputs for the resource. 
B)  consumers to increase consumption of the goods that increase in price as the result of the higher resource price. 
C)  an increase in the demand for products that use the resource intensely. 
D)  a reduction in the price of goods produced with the resource. 
A)  producers to substitute other inputs for the resource. 
B)  consumers to increase consumption of the goods that increase in price as the result of the higher resource price. 
C)  an increase in the demand for products that use the resource intensely. 
D)  a reduction in the price of goods produced with the resource.

Question 19

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

Accepted Answer

A)  an increase in the number of hours worked per week by a worker in an unskilled laboring job 
B)  the purchase of company stock by a worker 
C)  a summer internship at a law firm for someone going to law school 
D)  payments into a retirement pension plan by a skilled laborer 
A)  an increase in the number of hours worked per week by a worker in an unskilled laboring job 
B)  the purchase of company stock by a worker 
C)  a summer internship at a law firm for someone going to law school 
D)  payments into a retirement pension plan by a skilled laborer

Question 20

The derived demand curve for a resource is downward sloping because

Accepted Answer

A)  the demand for products that utilize the resource is directly related to the price of the resource. 
B)  the marginal productivity of resources will decline as their price increases. 
C)  as the price of a resource rises, other resources will be less desirable than the higher priced resource. 
D)  other resources will be substituted for a resource that increases in price. 
A)  the demand for products that utilize the resource is directly related to the price of the resource. 
B)  the marginal productivity of resources will decline as their price increases. 
C)  as the price of a resource rises, other resources will be less desirable than the higher priced resource. 
D)  other resources will be substituted for a resource that increases in price.

Profit-maximizing firms will expand their employment of each variable resource until

In the short run, the supply of a resource will generally be

The marginal product of labor is the

Table 12-3 -Refer to Table 12-3. What is the marginal product of the third worker?

The notion that the demand for inputs depends on the demand for outputs is termed

An unanticipated decline in the demand for legal services will

If a firm is using a resource hired in a perfectly competitive market, and if the price of the resource exceeds the marginal revenue product of the resource,

Why is it more expensive to acquire a new house in an urban area than in a rural area if the costs of labor and building materials are the same?

Suppose a company sells its product for $5.00. It's industrial engineers have informed management that hiring one additional worker will increase output by five units per hour. The company should hire the additional worker only if the wage rate is

The supply of a resource, such as oil, is likely to be

If a profit-maximizing firm hires an additional unit of labor, what must be true about labor's wage and marginal revenue product?

The figure below depicts a production function for a firm that produces cookies. Figure 12-4 -Refer to Figure 12-4. As the number of workers increases,

When the supply of workers is plentiful, one would predict that market wages would be

Which of the following events could increase the demand for labor?

If steel workers obtain a substantial wage increase, employment in the steel industry will be most likely to fall if

A decrease in the demand for a product will cause output of that product to

An increase in the price of a resource would cause

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

The derived demand curve for a resource is downward sloping because

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

Profit-maximizing firms will expand their employment of each variable resource until

In the short run, the supply of a resource will generally be

The marginal product of labor is the

Table 12-3 -Refer to Table 12-3. What is the marginal product of the third worker?

The notion that the demand for inputs depends on the demand for outputs is termed

An unanticipated decline in the demand for legal services will

If a firm is using a resource hired in a perfectly competitive market, and if the price of the resource exceeds the marginal revenue product of the resource,

Why is it more expensive to acquire a new house in an urban area than in a rural area if the costs of labor and building materials are the same?

Suppose a company sells its product for $5.00. It's industrial engineers have informed management that hiring one additional worker will increase output by five units per hour. The company should hire the additional worker only if the wage rate is

The supply of a resource, such as oil, is likely to be

If a profit-maximizing firm hires an additional unit of labor, what must be true about labor's wage and marginal revenue product?

The figure below depicts a production function for a firm that produces cookies. Figure 12-4 -Refer to Figure 12-4. As the number of workers increases,

When the supply of workers is plentiful, one would predict that market wages would be

Which of the following events could increase the demand for labor?

If steel workers obtain a substantial wage increase, employment in the steel industry will be most likely to fall if

A decrease in the demand for a product will cause output of that product to

An increase in the price of a resource would cause

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

The derived demand curve for a resource is downward sloping because

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