Question 1

Ceteris paribus, a decrease in the demand for automobiles will

Accepted Answer

A)  increase the price of automobiles. 
B)  increase the quantity supplied of automobiles. 
C)  decrease the demand for automobile workers. 
D)  increase the demand for automobile workers. 
A)  increase the price of automobiles. 
B)  increase the quantity supplied of automobiles. 
C)  decrease the demand for automobile workers. 
D)  increase the demand for automobile workers.

Question 2

Table 12-2
  
-Refer to Table 12-2. This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor. Each baseball sells for $5 in a competitive market. What is the total revenue per day that the firm will earn if it employs five workers?

Accepted Answer

A)  $500. 
B)  $300. 
C)  $2200. 
D)  $2500. 
A)  $500. 
B)  $300. 
C)  $2200. 
D)  $2500.

Question 3

Assume the average salary for a college philosophy professor is $50,000. Suppose businesses decide they need in-house instructors to teach ethics to employees, and they begin hiring philosophy professors at a salary of $75,000. What are the short-term and long-term effects of this supposition?

Accepted Answer

As philosophy professors move into the c

Question 4

If the marginal physical product of more labor is twice as high as the marginal physical product of more machinery, a profit-maximizing firm will

Accepted Answer

A)  reduce the labor used and increase the machinery used if labor costs half as much as machinery. 
B)  reduce the labor used and increase the machinery used if labor and machinery cost the same amount. 
C)  reduce the labor used and increase the machinery used only if labor costs more than twice as much as machinery. 
D)  reduce the labor used and increase the machinery used only if labor costs exactly twice as much as machinery. 
A)  reduce the labor used and increase the machinery used if labor costs half as much as machinery. 
B)  reduce the labor used and increase the machinery used if labor and machinery cost the same amount. 
C)  reduce the labor used and increase the machinery used only if labor costs more than twice as much as machinery. 
D)  reduce the labor used and increase the machinery used only if labor costs exactly twice as much as machinery.

Question 5

Use the figure to answer the following question(s).
Figure 12-2  
-If an unanticipated increase in demand in Figure 12-2 shifts the demand for accountants from D1 to D2, how will the higher level of demand influence the wages of accountants in the short run and the long run?

Accepted Answer

A)  In the short run, wages will increase to W2, but the wage increase will be smaller in the long run. 
B)  In the short run, wages will be less than W2, but in the long run, they will rise to W2. 
C)  In the short run, wages will increase to W2, and in the long run, they will be even higher than W2. 
D)  Employment will increase, but the higher level of demand will not alter the wages of accountants. 
A)  In the short run, wages will increase to W2, but the wage increase will be smaller in the long run. 
B)  In the short run, wages will be less than W2, but in the long run, they will rise to W2. 
C)  In the short run, wages will increase to W2, and in the long run, they will be even higher than W2. 
D)  Employment will increase, but the higher level of demand will not alter the wages of accountants.

Question 6

Figure 12-3  
-Refer to Figure 12-3. This figure depicts labor demand and supply in a nonunionized labor market. The original equilibrium is at point A. If a labor union subsequently establishes a union shop and negotiates an hourly wage of $20, then the employment level

Accepted Answer

A)  increases from 6,000 to 10,000. 
B)  increases from 3,000 to 10,000. 
C)  decreases from 10,000 to 3,000. 
D)  decreases from 6,000 to 3,000. 
A)  increases from 6,000 to 10,000. 
B)  increases from 3,000 to 10,000. 
C)  decreases from 10,000 to 3,000. 
D)  decreases from 6,000 to 3,000.

Question 7

If the demand for computer scientists increases relative to their supply,

Accepted Answer

A)  the wages of computer scientists will decline. 
B)  a computer science major will be more attractive to college students. 
C)  the employment of computer scientists will fall. 
D)  there will be a surplus of computer scientists. 
A)  the wages of computer scientists will decline. 
B)  a computer science major will be more attractive to college students. 
C)  the employment of computer scientists will fall. 
D)  there will be a surplus of computer scientists.

Question 8

The optimal level of resource use comes when

Accepted Answer

A)  MRP exceeds input price. 
B)  MRP is less than input price. 
C)  MRP equals input price. 
D)  use of the resource exhausts the producer's funds. 
A)  MRP exceeds input price. 
B)  MRP is less than input price. 
C)  MRP equals input price. 
D)  use of the resource exhausts the producer's funds.

Question 9

What concept implies that a firm's marginal revenue product curve for labor will slope downward in the short run?

Accepted Answer

A)  diminishing marginal returns 
B)  the law of supply 
C)  the law of decreasing cost 
D)  the price equalization principle 
A)  diminishing marginal returns 
B)  the law of supply 
C)  the law of decreasing cost 
D)  the price equalization principle

Question 10

A firm's demand curve for labor shifts when the

Accepted Answer

A)  price of its output changes. 
B)  wage rate changes. 
C)  number of available workers changes. 
D)  All of the above are correct. 
A)  price of its output changes. 
B)  wage rate changes. 
C)  number of available workers changes. 
D)  All of the above are correct.

Question 11

The rule for the optimal use of any input states that

Accepted Answer

A)  when MRP is less than price, profit will increase when more of that resource is utilized. 
B)  when MRP is greater than resource price, profit will increase when more of that resource is utilized. 
C)  when MRP equals price, profit will increase when less of that resource is utilized. 
D)  when MRP is greater than resource price, profit will increase when less of that resource is utilized. 
E)  resources should be used only if MRP exceeds product price. 
A)  when MRP is less than price, profit will increase when more of that resource is utilized. 
B)  when MRP is greater than resource price, profit will increase when more of that resource is utilized. 
C)  when MRP equals price, profit will increase when less of that resource is utilized. 
D)  when MRP is greater than resource price, profit will increase when less of that resource is utilized. 
E)  resources should be used only if MRP exceeds product price.

Question 12

The marginal revenue product of a resource

Accepted Answer

A)  is defined as the marginal product of the resource multiplied by the resource price. 
B)  simply means that a firm should add to its capital stock as long as competition requires it. 
C)  equals the extra output produced by an additional unit of the resource multiplied by the marginal revenue per unit of that output. 
D)  equals the average product of the resource multiplied by the cost of hiring an additional (marginal) unit of the resource. 
A)  is defined as the marginal product of the resource multiplied by the resource price. 
B)  simply means that a firm should add to its capital stock as long as competition requires it. 
C)  equals the extra output produced by an additional unit of the resource multiplied by the marginal revenue per unit of that output. 
D)  equals the average product of the resource multiplied by the cost of hiring an additional (marginal) unit of the resource.

Question 13

Table 12-3
  
-Refer to Table 12-3. Suppose that the firm pays its workers $75 per day. Each unit of output sells for $10. How many days of labor should the firm hire?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 14

Figure 12-3  
-Refer to Figure 12-3. This figure depicts labor demand and supply in a nonunionized labor market. The original equilibrium is at point A. If a labor union subsequently establishes a union shop and negotiates an hourly wage of $20, then there will be an excess

Accepted Answer

A)   supply of 3,000 workers. 
B)  demand of 7,000 workers. 
C)  supply of 4,000 workers. 
D)  supply of 7,000 workers. 
A)   supply of 3,000 workers. 
B)  demand of 7,000 workers. 
C)  supply of 4,000 workers. 
D)  supply of 7,000 workers.

Question 15

Farmer Ted owned a worn-out piece of farmland for growing cotton, which he had been unable to rent for years. Suddenly he was getting offers from cotton farmers to lease his land. What is the most likely explanation of this?

Accepted Answer

A)  The price of cotton went down. 
B)  The physical productivity of the land went up. 
C)  Taxes on the land went up. 
D)  The price of cotton went up. 
A)  The price of cotton went down. 
B)  The physical productivity of the land went up. 
C)  Taxes on the land went up. 
D)  The price of cotton went up.

Question 16

Cattle manure is an input often used in making fertilizer. Suppose a technique is discovered that can transform cattle manure into quality gasoline. What would happen in the fertilizer industry?

Accepted Answer

This alternative use for manure would ca

Question 17

Which of the following best illustrates the concept of "derived demand"?

Accepted Answer

A)  A decrease in the price of glass causes the demand for plastic to decrease. 
B)  An increase in the demand for bread leads to an increase in the demand for flour. 
C)  A decrease in the price of air travel leads to an increase in the quantity demanded of air travel. 
D)  An increase in the demand for peanut butter leads to an increase in the demand for jelly. 
A)  A decrease in the price of glass causes the demand for plastic to decrease. 
B)  An increase in the demand for bread leads to an increase in the demand for flour. 
C)  A decrease in the price of air travel leads to an increase in the quantity demanded of air travel. 
D)  An increase in the demand for peanut butter leads to an increase in the demand for jelly.

Question 18

One way to invest in human capital is by

Accepted Answer

A)  increasing your education. 
B)  avoiding on-the-job training programs. 
C)  doing nothing; it is impossible to improve your human capital. Human capital is solely determined by the abilities that you are born with. 
D)  investing in physical capital. 
A)  increasing your education. 
B)  avoiding on-the-job training programs. 
C)  doing nothing; it is impossible to improve your human capital. Human capital is solely determined by the abilities that you are born with. 
D)  investing in physical capital.

Question 19

A sudden increase in the demand for newly built homes will

Accepted Answer

A)  decrease the demand for lumber, bricks, and steel. 
B)  decrease the demand for construction workers and architects. 
C)  increase the marginal product of workers in the construction industry. 
D)  increase the demand for construction workers and architects. 
A)  decrease the demand for lumber, bricks, and steel. 
B)  decrease the demand for construction workers and architects. 
C)  increase the marginal product of workers in the construction industry. 
D)  increase the demand for construction workers and architects.

Question 20

Table 12-2
  
-Refer to Table 12-2. This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor. Each baseball sells for $5 in a competitive market. If the firm is maximizing the marginal product of labor, what is the firm's marginal revenue product?

Accepted Answer

A)  140 baseballs. 
B)  $300. 
C)  $400. 
D)  $700. 
A)  140 baseballs. 
B)  $300. 
C)  $400. 
D)  $700.

Ceteris paribus, a decrease in the demand for automobiles will

Table 12-2 -Refer to Table 12-2. This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor. Each baseball sells for $5 in a competitive market. What is the total revenue per day that the firm will earn if it employs five workers?

Assume the average salary for a college philosophy professor is $50,000. Suppose businesses decide they need in-house instructors to teach ethics to employees, and they begin hiring philosophy professors at a salary of $75,000. What are the short-term and long-term effects of this supposition?

If the marginal physical product of more labor is twice as high as the marginal physical product of more machinery, a profit-maximizing firm will

Use the figure to answer the following question(s). Figure 12-2 -If an unanticipated increase in demand in Figure 12-2 shifts the demand for accountants from D₁ to D₂, how will the higher level of demand influence the wages of accountants in the short run and the long run?

Figure 12-3 -Refer to Figure 12-3. This figure depicts labor demand and supply in a nonunionized labor market. The original equilibrium is at point A. If a labor union subsequently establishes a union shop and negotiates an hourly wage of $20, then the employment level

If the demand for computer scientists increases relative to their supply,

The optimal level of resource use comes when

What concept implies that a firm's marginal revenue product curve for labor will slope downward in the short run?

A firm's demand curve for labor shifts when the

The rule for the optimal use of any input states that

The marginal revenue product of a resource

Table 12-3 -Refer to Table 12-3. Suppose that the firm pays its workers $75 per day. Each unit of output sells for $10. How many days of labor should the firm hire?

Figure 12-3 -Refer to Figure 12-3. This figure depicts labor demand and supply in a nonunionized labor market. The original equilibrium is at point A. If a labor union subsequently establishes a union shop and negotiates an hourly wage of $20, then there will be an excess

Farmer Ted owned a worn-out piece of farmland for growing cotton, which he had been unable to rent for years. Suddenly he was getting offers from cotton farmers to lease his land. What is the most likely explanation of this?

Cattle manure is an input often used in making fertilizer. Suppose a technique is discovered that can transform cattle manure into quality gasoline. What would happen in the fertilizer industry?

Which of the following best illustrates the concept of "derived demand"?

One way to invest in human capital is by

A sudden increase in the demand for newly built homes will

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

Ceteris paribus, a decrease in the demand for automobiles will

Table 12-2 -Refer to Table 12-2. This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor. Each baseball sells for $5 in a competitive market. What is the total revenue per day that the firm will earn if it employs five workers?

Assume the average salary for a college philosophy professor is $50,000. Suppose businesses decide they need in-house instructors to teach ethics to employees, and they begin hiring philosophy professors at a salary of $75,000. What are the short-term and long-term effects of this supposition?

If the marginal physical product of more labor is twice as high as the marginal physical product of more machinery, a profit-maximizing firm will

Use the figure to answer the following question(s). Figure 12-2 -If an unanticipated increase in demand in Figure 12-2 shifts the demand for accountants from D1 to D2, how will the higher level of demand influence the wages of accountants in the short run and the long run?

Figure 12-3 -Refer to Figure 12-3. This figure depicts labor demand and supply in a nonunionized labor market. The original equilibrium is at point A. If a labor union subsequently establishes a union shop and negotiates an hourly wage of $20, then the employment level

If the demand for computer scientists increases relative to their supply,

The optimal level of resource use comes when

What concept implies that a firm's marginal revenue product curve for labor will slope downward in the short run?

A firm's demand curve for labor shifts when the

The rule for the optimal use of any input states that

The marginal revenue product of a resource

Table 12-3 -Refer to Table 12-3. Suppose that the firm pays its workers $75 per day. Each unit of output sells for $10. How many days of labor should the firm hire?

Figure 12-3 -Refer to Figure 12-3. This figure depicts labor demand and supply in a nonunionized labor market. The original equilibrium is at point A. If a labor union subsequently establishes a union shop and negotiates an hourly wage of $20, then there will be an excess

Farmer Ted owned a worn-out piece of farmland for growing cotton, which he had been unable to rent for years. Suddenly he was getting offers from cotton farmers to lease his land. What is the most likely explanation of this?

Cattle manure is an input often used in making fertilizer. Suppose a technique is discovered that can transform cattle manure into quality gasoline. What would happen in the fertilizer industry?

Which of the following best illustrates the concept of "derived demand"?

One way to invest in human capital is by

A sudden increase in the demand for newly built homes will

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

Use the figure to answer the following question(s). Figure 12-2 -If an unanticipated increase in demand in Figure 12-2 shifts the demand for accountants from D₁ to D₂, how will the higher level of demand influence the wages of accountants in the short run and the long run?