Question 1

If the price of capital declines, the consequent output effect would be

Accepted Answer

A) greater, the more elastic the demand for the product. 
B) greater, the less elastic the demand for the product. 
C) negative. 
D) of consequence only if capital and labor are used in fixed proportions. 
A) greater, the more elastic the demand for the product. 
B) greater, the less elastic the demand for the product. 
C) negative. 
D) of consequence only if capital and labor are used in fixed proportions.

Question 2

If the substitution effect outweighs the output effect, an increase in the price of a substitute resource will increase the demand for labor.

Accepted Answer

A) True 
 B)False

Question 3

The rising demand for health-care industry workers is due to the following factors, except

Accepted Answer

A) aging of the U.S.population. 
B) rising income levels in the U.S. 
C) the continued presence of health insurance for U.S.consumers. 
D) decreasing prices of labor in the health-care industry. 
A) aging of the U.S.population. 
B) rising income levels in the U.S. 
C) the continued presence of health insurance for U.S.consumers. 
D) decreasing prices of labor in the health-care industry.

Question 4

The marginal productivity theory of income distribution suggests that

Accepted Answer

A) government should subsidize the most productive workers through a system of transfer payments. 
B) each individual receives income based on his or her contribution to total output. 
C) resource owners should receive income based on the idea of "from each according to his ability, to each according to his wants." 
D) resource owners should receive income based upon their needs. 
A) government should subsidize the most productive workers through a system of transfer payments. 
B) each individual receives income based on his or her contribution to total output. 
C) resource owners should receive income based on the idea of "from each according to his ability, to each according to his wants." 
D) resource owners should receive income based upon their needs.

Question 5

The prices of resources are an important factor in the determination of money income.

Accepted Answer

A) True 
 B)False

Question 6

If a factor of production has many close substitutes, we would expect that its price elasticity of demand would be

Accepted Answer

A) unity. 
B) zero. 
C) greater than one. 
D) less than one, but greater than zero. 
A) unity. 
B) zero. 
C) greater than one. 
D) less than one, but greater than zero.

Question 7

Two resource inputs, capital and labor, are complementary and used in fixed proportions.An increase in the price of capital will

Accepted Answer

A) increase the demand for labor. 
B) decrease the demand for labor. 
C) decrease the quantity demanded for labor. 
D) have no effect, because the relationship is fixed. 
A) increase the demand for labor. 
B) decrease the demand for labor. 
C) decrease the quantity demanded for labor. 
D) have no effect, because the relationship is fixed.

Question 8

The demand for computers is derived from the demand for the capital resources that are used to produce computers.

Accepted Answer

A) True 
 B)False

Question 9

The marginal revenue product curve for an input is downsloping because of the law of diminishing returns.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) As income goes up, the demand for farm products will increase by a smaller relative amount. 
B) A decline in the price of margarine will reduce the demand for butter. 
C) A decline in the demand for shoes will cause the demand for leather to decline. 
D) When the price of gasoline goes up, the demand for motor oil will decline. 
A) As income goes up, the demand for farm products will increase by a smaller relative amount. 
B) A decline in the price of margarine will reduce the demand for butter. 
C) A decline in the demand for shoes will cause the demand for leather to decline. 
D) When the price of gasoline goes up, the demand for motor oil will decline.

Question 11

In a given labor market, the demand for labor by employers will shift to the right or left with changes in all of the following, except

Accepted Answer

A) the demand for the products produced by the employers. 
B) the price of labor that the employers must pay. 
C) the prices of other resources that the firms must use. 
D) occupational trends affecting the particular labor in the market. 
A) the demand for the products produced by the employers. 
B) the price of labor that the employers must pay. 
C) the prices of other resources that the firms must use. 
D) occupational trends affecting the particular labor in the market.

Exam 16: The Demand for Resources

If the price of capital declines, the consequent output effect would be

If the substitution effect outweighs the output effect, an increase in the price of a substitute resource will increase the demand for labor.

The rising demand for health-care industry workers is due to the following factors, except

The marginal productivity theory of income distribution suggests that

The prices of resources are an important factor in the determination of money income.

If a factor of production has many close substitutes, we would expect that its price elasticity of demand would be

Two resource inputs, capital and labor, are complementary and used in fixed proportions.An increase in the price of capital will

The demand for computers is derived from the demand for the capital resources that are used to produce computers.

The marginal revenue product curve for an input is downsloping because of the law of diminishing returns.

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

In a given labor market, the demand for labor by employers will shift to the right or left with changes in all of the following, except

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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