Question 1

If the price of labor falls relative to the price of capital, and as a result the quantity of capital employed decreases, then it can be concluded that

Accepted Answer

A) the substitution effect is greater than the output effect. 
B) the output effect is greater than the substitution effect. 
C) the income effect is greater than the output effect. 
D) labor cannot be easily substituted for capital. 
A) the substitution effect is greater than the output effect. 
B) the output effect is greater than the substitution effect. 
C) the income effect is greater than the output effect. 
D) labor cannot be easily substituted for capital. A

Question 2

Income from inherited wealth and property resources provides strong support for the marginal productivity theory of income distribution.

Accepted Answer

A) True 
 B)False  False

Question 3

Which of the following decreases in labor demand is due to a change in product demand?

Accepted Answer

A) An increase in the price of paper increases the cost of making books, thus decreasing the demand for bookbinders. 
B) The widespread availability of news on the web reduces the demand for newspaper workers. 
C) An increase in the price of steel increases the cost of producing cars and trucks, thus decreasing the demand for automobile workers. 
D) A decline in productivity in retailing decreases the demand for retail sales workers. 
A) An increase in the price of paper increases the cost of making books, thus decreasing the demand for bookbinders. 
B) The widespread availability of news on the web reduces the demand for newspaper workers. 
C) An increase in the price of steel increases the cost of producing cars and trucks, thus decreasing the demand for automobile workers. 
D) A decline in productivity in retailing decreases the demand for retail sales workers. B

Question 4

A firm is producing 100 pencils per week.The production process requires labor and capital as inputs.Labor costs $6 per labor hour, and capital costs $12 per machine hour.Currently, the marginal product of labor is 18 pencils and the marginal product of capital is 36 pencils.To minimize the cost of producing this level of output, the firm should use

Accepted Answer

A) more capital and less labor. 
B) more labor and less capital. 
C) less labor and less capital. 
D) the current amounts of labor and capital. 
A) more capital and less labor. 
B) more labor and less capital. 
C) less labor and less capital. 
D) the current amounts of labor and capital.

Question 5

A profit-maximizing firm employs resources to the point where

Accepted Answer

A) MRC = MP. 
B) resource price equals product price. 
C) MRP = MRC. 
D) MP = product price. 
A) MRC = MP. 
B) resource price equals product price. 
C) MRP = MRC. 
D) MP = product price.

Question 6

A winner-takes-all market, like that for entertainers, exhibits huge differences between the top talents and the next tier of artists in all of the following aspects, except

Accepted Answer

A) marginal revenue product. 
B) talent. 
C) earnings. 
D) media hype. 
A) marginal revenue product. 
B) talent. 
C) earnings. 
D) media hype.

Question 7

Other things equal, the less competitive the market in which a firm sells its product, the less elastic will be its resource demand curve.

Accepted Answer

A) True 
 B)False

Question 8

The MRP curve is the resource demand curve for

Accepted Answer

A) neither the purely competitive nor the imperfectly competitive seller. 
B) the imperfectly competitive seller but not the purely competitive seller. 
C) the purely competitive seller but not the imperfectly competitive seller. 
D) both the purely competitive and imperfectly competitive seller. 
A) neither the purely competitive nor the imperfectly competitive seller. 
B) the imperfectly competitive seller but not the purely competitive seller. 
C) the purely competitive seller but not the imperfectly competitive seller. 
D) both the purely competitive and imperfectly competitive seller.

Question 9

If a 10 percent wage increase in a particular labor market results in a 5 percent decline in employment in that market, labor demand is

Accepted Answer

A) unit-elastic. 
B) elastic. 
C) inelastic. 
D) perfectly elastic. 
A) unit-elastic. 
B) elastic. 
C) inelastic. 
D) perfectly elastic.

Question 10

Resource X has many close substitutes, whereas resource Y has no close substitutes.Other things equal, we would expect

Accepted Answer

A) the demand for resource Y to be more elastic than the demand for resource X. 
B) resources X and Y to be close substitutes. 
C) resource X to be more expensive than resource Y. 
D) the demand for resource X to be more elastic than the demand for resource Y. 
A) the demand for resource Y to be more elastic than the demand for resource X. 
B) resources X and Y to be close substitutes. 
C) resource X to be more expensive than resource Y. 
D) the demand for resource X to be more elastic than the demand for resource Y.

Question 11

"Income receivers should be paid in accordance with the value of output each produces." This statement is consistent with the

Accepted Answer

A) monopoly theory of income distribution. 
B) marginal productivity theory of income distribution. 
C) least-cost, but not profit-maximizing, combination of inputs. 
D) concept of compensating wage differences. 
A) monopoly theory of income distribution. 
B) marginal productivity theory of income distribution. 
C) least-cost, but not profit-maximizing, combination of inputs. 
D) concept of compensating wage differences.

Question 12

As the baby boomers in America grow old, the demand for health care workers increases.This would be an example of which determinant of labor demand?

Accepted Answer

A) an increase in labor productivity 
B) an increase in product demand 
C) a decrease in the price of another resource 
D) an increase in the price of another resource 
A) an increase in labor productivity 
B) an increase in product demand 
C) a decrease in the price of another resource 
D) an increase in the price of another resource

Question 13

If the demand for a product produced by an input decreases, the demand for the input will also decrease.

Accepted Answer

A) True 
 B)False

Question 14

Assume that an appliance manufacturer is employing variable resources X and Y in such amounts that the MRPs of the last units of X and Y employed are $100 and $60, respectively.Resource X can be hired at $50 per unit and resource Y at $20 per unit.The firm

Accepted Answer

A) should hire more of both X and Y. 
B) should hire more of Y and less of X. 
C) is producing with the least-costly combination of X and Y but could increase its profits by employing more of X and less of Y. 
D) is using the least-costly combination of X and Y but could increase its profits by employing less of both X and Y. 
A) should hire more of both X and Y. 
B) should hire more of Y and less of X. 
C) is producing with the least-costly combination of X and Y but could increase its profits by employing more of X and less of Y. 
D) is using the least-costly combination of X and Y but could increase its profits by employing less of both X and Y.

Question 15

In percentage terms, which of the following occupations is expected by the U.S.Bureau of Labor Statistics to be the fastest growing from 2014 to 2024?

Accepted Answer

A) wind turbine service technicians 
B) statisticians 
C) nurse practitioners 
D) postal service sorters and processors 
A) wind turbine service technicians 
B) statisticians 
C) nurse practitioners 
D) postal service sorters and processors

Question 16

Wage Rate Quantity of Labor Demanded $16 800
14 1,000
12 1,200
10 1,600
8 1,800
Refer to the given data.Over the $10 to $8 range of wage rates, the demand for labor is

Accepted Answer

A) perfectlyelastic. 
B) elastic. 
C) unit-elastic. 
D) inelastic. 
A) perfectlyelastic. 
B) elastic. 
C) unit-elastic. 
D) inelastic.

Question 17

A firm will be hiring labor and capital in profit-maximizing amounts when

Accepted Answer

A) MRP capital/price of capital equals MRP labor/price of labor. 
B) MRP capital/MRP labor equals price of labor/price of capital. 
C) MRP capital/price of capital equals MRP labor/price of labor equals 1. 
D) the MRP of the last unit hired of both labor and capital are the same. 
A) MRP capital/price of capital equals MRP labor/price of labor. 
B) MRP capital/MRP labor equals price of labor/price of capital. 
C) MRP capital/price of capital equals MRP labor/price of labor equals 1. 
D) the MRP of the last unit hired of both labor and capital are the same.

Question 18

A firm will employ more of an input whose relative price has fallen and, conversely, will use less of an input whose relative price has risen.Thus, a fall in the price of capital will increase the relative price of labor and thereby reduce the demand for labor.This describes the

Accepted Answer

A) output effect. 
B) substitution effect. 
C) idea of derived demand. 
D) law of diminishing returns. 
A) output effect. 
B) substitution effect. 
C) idea of derived demand. 
D) law of diminishing returns.

Question 19

The demand for sewing machine operators is expected by the U.S.Bureau of Labor Statistics to decline sharply from 2014 to 2024, largely due to

Accepted Answer

A) "labor-saving" technological change. 
B) a decline in the wages paid to this type of labor. 
C) an increase in the cost per unit of this type of labor. 
D) weakening demand for machine-sewn products. 
A) "labor-saving" technological change. 
B) a decline in the wages paid to this type of labor. 
C) an increase in the cost per unit of this type of labor. 
D) weakening demand for machine-sewn products.

Question 20

Marginal product is

Accepted Answer

A) the output of the least skilled worker. 
B) a worker's output multiplied by the price at which each unit can be sold. 
C) the amount an additional worker adds to the firm's total output. 
D) the amount any given worker contributes to the firm's total revenue. 
A) the output of the least skilled worker. 
B) a worker's output multiplied by the price at which each unit can be sold. 
C) the amount an additional worker adds to the firm's total output. 
D) the amount any given worker contributes to the firm's total revenue.

Exam 16: The Demand for Resources

If the price of labor falls relative to the price of capital, and as a result the quantity of capital employed decreases, then it can be concluded that

Income from inherited wealth and property resources provides strong support for the marginal productivity theory of income distribution.

Which of the following decreases in labor demand is due to a change in product demand?

A profit-maximizing firm employs resources to the point where

A winner-takes-all market, like that for entertainers, exhibits huge differences between the top talents and the next tier of artists in all of the following aspects, except

Other things equal, the less competitive the market in which a firm sells its product, the less elastic will be its resource demand curve.

The MRP curve is the resource demand curve for

If a 10 percent wage increase in a particular labor market results in a 5 percent decline in employment in that market, labor demand is

Resource X has many close substitutes, whereas resource Y has no close substitutes.Other things equal, we would expect

"Income receivers should be paid in accordance with the value of output each produces." This statement is consistent with the

As the baby boomers in America grow old, the demand for health care workers increases.This would be an example of which determinant of labor demand?

If the demand for a product produced by an input decreases, the demand for the input will also decrease.

Assume that an appliance manufacturer is employing variable resources X and Y in such amounts that the MRPs of the last units of X and Y employed are $100 and $60, respectively.Resource X can be hired at $50 per unit and resource Y at $20 per unit.The firm

In percentage terms, which of the following occupations is expected by the U.S.Bureau of Labor Statistics to be the fastest growing from 2014 to 2024?

Wage Rate Quantity of Labor Demanded $16 800 14 1,000 12 1,200 10 1,600 8 1,800 Refer to the given data.Over the $10 to $8 range of wage rates, the demand for labor is

A firm will be hiring labor and capital in profit-maximizing amounts when

A firm will employ more of an input whose relative price has fallen and, conversely, will use less of an input whose relative price has risen.Thus, a fall in the price of capital will increase the relative price of labor and thereby reduce the demand for labor.This describes the

The demand for sewing machine operators is expected by the U.S.Bureau of Labor Statistics to decline sharply from 2014 to 2024, largely due to

Marginal product is

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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