Question 1

The equation MPL / PL = MPC / PC

Accepted Answer

A) designates the MR = MC level of output. 
B) assumes imperfect competition in the hiring of labor and capital. 
C) is a sufficient condition for the maximization of profits. 
D) is a necessary, but not sufficient, condition for the maximization of profits. 
A) designates the MR = MC level of output. 
B) assumes imperfect competition in the hiring of labor and capital. 
C) is a sufficient condition for the maximization of profits. 
D) is a necessary, but not sufficient, condition for the maximization of profits.

Question 2

Suppose the productivity of labor increases and at the same time the price of capital, which is complementary to labor, increases.As a result, the demand for labor

Accepted Answer

A) will increase. 
B) will decrease. 
C) may either increase or decrease. 
D) will not change. 
A) will increase. 
B) will decrease. 
C) may either increase or decrease. 
D) will not change.

Question 3

Elasticity of resource demand is measured by dividing "percentage change in resource price" by "percentage change in resource quantity."

Accepted Answer

A) True 
 B)False

Question 4

If the wage rate increases,

Accepted Answer

A) a purely competitive producer will hire less labor, but an imperfectly competitive producer will not. 
B) an imperfectly competitive producer will hire less labor, but a purely competitive producer will not. 
C) a purely competitive producer and an imperfectly competitive producer will both hire less labor. 
D) an imperfectly competitive producer may find it profitable to hire either more or less labor. 
A) a purely competitive producer will hire less labor, but an imperfectly competitive producer will not. 
B) an imperfectly competitive producer will hire less labor, but a purely competitive producer will not. 
C) a purely competitive producer and an imperfectly competitive producer will both hire less labor. 
D) an imperfectly competitive producer may find it profitable to hire either more or less labor.

Question 5

Other things equal, the relationship between the relative importance of a given type of labor in a firm's total costs and the elasticity of demand for that labor is such that the

Accepted Answer

A) demand for labor will be elastic only if labor accounts for less than 50 percent of total costs. 
B) demand for labor will be elastic only if labor accounts for 50 percent or more of total costs. 
C) larger the labor cost to total cost ratio, the smaller will be the elasticity of labor demand. 
D) larger the labor cost to total cost ratio, the greater will be the elasticity of labor demand. 
A) demand for labor will be elastic only if labor accounts for less than 50 percent of total costs. 
B) demand for labor will be elastic only if labor accounts for 50 percent or more of total costs. 
C) larger the labor cost to total cost ratio, the smaller will be the elasticity of labor demand. 
D) larger the labor cost to total cost ratio, the greater will be the elasticity of labor demand.

Question 6

Resource prices are important because they affect resource allocation and income distribution.

Accepted Answer

A) True 
 B)False

Question 7

Other things being equal, if a once-competitive firm attains a high degree of monopoly power in its product market, then its resource demand will

Accepted Answer

A) become perfectly inelastic. 
B) remain perfectly elastic. 
C) become more elastic. 
D) become more inelastic. 
A) become perfectly inelastic. 
B) remain perfectly elastic. 
C) become more elastic. 
D) become more inelastic.

Question 8

The marginal productivity theory of resource demand suggests that those resources whose productivity levels are high will end up getting a higher share of the economy's income.

Accepted Answer

A) True 
 B)False

Question 9

In which of the cases given below will the elasticity of demand for workers who produce yo-yos be most inelastic? The price elasticity of demand for yo-yos is

Accepted Answer

A) 5, and labor's share of total costs is 20 percent. 
B) 5, and labor's share of total costs is 75 percent. 
C) .1, and labor's share of total costs is 20 percent. 
D) .1, and labor's share of total costs is 75 percent. 
A) 5, and labor's share of total costs is 20 percent. 
B) 5, and labor's share of total costs is 75 percent. 
C) .1, and labor's share of total costs is 20 percent. 
D) .1, and labor's share of total costs is 75 percent.

Question 10

The labor demand curve of a firm that sells its product in a purely competitive market

Accepted Answer

A) is horizontal or perfectly elastic. 
B) is downsloping and flatter than the labor demand curve of a firm that sells its product in an imperfectly competitive (or monopolistic) market. 
C) is upsloping. 
D) is downsloping and steeper than the labor demand curve of a firm that sells its product in an imperfectly competitive (or monopolistic) market. 
A) is horizontal or perfectly elastic. 
B) is downsloping and flatter than the labor demand curve of a firm that sells its product in an imperfectly competitive (or monopolistic) market. 
C) is upsloping. 
D) is downsloping and steeper than the labor demand curve of a firm that sells its product in an imperfectly competitive (or monopolistic) market.

Question 11

Which of the following occupations is among the 10 projected most rapidly declining U.S.occupations in terms of percentage decreases?

Accepted Answer

A) medical assistants 
B) veterinarians 
C) college professors 
D) postal service mail sorters and processors 
A) medical assistants 
B) veterinarians 
C) college professors 
D) postal service mail sorters and processors

Question 12

Producers should hire resources until the total output of each is equal.

Accepted Answer

A) True 
 B)False

Question 13

(Consider This) In the market for superstars,

Accepted Answer

A) earnings reflect pricing power rather than marginal revenue product. 
B) small differences in talent get magnified into huge differences in pay. 
C) entry and exit rarely occur. 
D) product demand is typically highly elastic. 
A) earnings reflect pricing power rather than marginal revenue product. 
B) small differences in talent get magnified into huge differences in pay. 
C) entry and exit rarely occur. 
D) product demand is typically highly elastic.

Question 14

The elasticity of resource demand measures the

Accepted Answer

A) responsiveness of workers to changes in wage rates. 
B) responsiveness of producers to changes in resource prices. 
C) ratio of marginal revenue product to resource price. 
D) sensitivity of marginal revenue product to changes in product price. 
A) responsiveness of workers to changes in wage rates. 
B) responsiveness of producers to changes in resource prices. 
C) ratio of marginal revenue product to resource price. 
D) sensitivity of marginal revenue product to changes in product price.

Question 15

Other things equal, the resource demand curve of an imperfectly competitive seller will

Accepted Answer

A) lie below its marginal revenue product curve. 
B) be subject to increasing marginal productivity. 
C) be less elastic than that of a purely competitive seller. 
D) be more elastic than that of a purely competitive seller. 
A) lie below its marginal revenue product curve. 
B) be subject to increasing marginal productivity. 
C) be less elastic than that of a purely competitive seller. 
D) be more elastic than that of a purely competitive seller.

Question 16

Those who advocate the marginal productivity theory of income distribution argue that

Accepted Answer

A) government policy should be used to redistribute income based on need. 
B) family income should be based on a family's demand for products. 
C) resource markets will set incomes based on workers' contributions to the output of scarce goods and services. 
D) monopoly and monopsony power do not affect resource payments of the overall distribution of income. 
A) government policy should be used to redistribute income based on need. 
B) family income should be based on a family's demand for products. 
C) resource markets will set incomes based on workers' contributions to the output of scarce goods and services. 
D) monopoly and monopsony power do not affect resource payments of the overall distribution of income.

Question 17

Suppose a firm hires both labor (L) and capital (C) under purely competitive conditions.The price of labor is PL, and that of capital is PC.The marginal product of labor is MPL, and that of capital is MPC.The firm sells its product competitively at a price of PX.If MPC / PC > MPL / PL, the firm

Accepted Answer

A) may be maximizing profits, but it is not minimizing costs. 
B) may be minimizing costs, but it is not maximizing profits. 
C) is neither minimizing costs nor maximizing profits. 
D) is minimizing costs and maximizing profits. 
A) may be maximizing profits, but it is not minimizing costs. 
B) may be minimizing costs, but it is not maximizing profits. 
C) is neither minimizing costs nor maximizing profits. 
D) is minimizing costs and maximizing profits.

Question 18

If MRP of labor < wage rate, a firm should hire more workers.

Accepted Answer

A) True 
 B)False

Question 19

The marginal revenue product of an economic resource for a firm operating in purely competitive product and resource markets

Accepted Answer

A) is the marginal product of the resource divided by the price of the final product. 
B) is the increase in total revenue resulting from the addition of one more unit of the resource. 
C) is equal to the average revenue product at the lowest point of the average revenue product curve. 
D) decreases as the quantity of output decreases. 
A) is the marginal product of the resource divided by the price of the final product. 
B) is the increase in total revenue resulting from the addition of one more unit of the resource. 
C) is equal to the average revenue product at the lowest point of the average revenue product curve. 
D) decreases as the quantity of output decreases.

Question 20

Other things equal, if wage rates increase by 20 percent, the greatest decline in employment will occur when labor costs are a

Accepted Answer

A) large proportion of total costs and product demand is elastic. 
B) small proportion of total costs and product demand is elastic. 
C) large proportion of total costs and product demand is inelastic. 
D) small proportion of total costs and product demand is inelastic. 
A) large proportion of total costs and product demand is elastic. 
B) small proportion of total costs and product demand is elastic. 
C) large proportion of total costs and product demand is inelastic. 
D) small proportion of total costs and product demand is inelastic.

Exam 16: The Demand for Resources

The equation MPL / PL = MPC / PC

Suppose the productivity of labor increases and at the same time the price of capital, which is complementary to labor, increases.As a result, the demand for labor

Elasticity of resource demand is measured by dividing "percentage change in resource price" by "percentage change in resource quantity."

If the wage rate increases,

Other things equal, the relationship between the relative importance of a given type of labor in a firm's total costs and the elasticity of demand for that labor is such that the

Resource prices are important because they affect resource allocation and income distribution.

Other things being equal, if a once-competitive firm attains a high degree of monopoly power in its product market, then its resource demand will

The marginal productivity theory of resource demand suggests that those resources whose productivity levels are high will end up getting a higher share of the economy's income.

In which of the cases given below will the elasticity of demand for workers who produce yo-yos be most inelastic? The price elasticity of demand for yo-yos is

The labor demand curve of a firm that sells its product in a purely competitive market

Which of the following occupations is among the 10 projected most rapidly declining U.S.occupations in terms of percentage decreases?

Producers should hire resources until the total output of each is equal.

(Consider This) In the market for superstars,

The elasticity of resource demand measures the

Other things equal, the resource demand curve of an imperfectly competitive seller will

Those who advocate the marginal productivity theory of income distribution argue that

Suppose a firm hires both labor (L) and capital (C) under purely competitive conditions.The price of labor is PL, and that of capital is PC.The marginal product of labor is MPL, and that of capital is MPC.The firm sells its product competitively at a price of PX.If MPC / PC > MPL / PL, the firm

If MRP of labor < wage rate, a firm should hire more workers.

The marginal revenue product of an economic resource for a firm operating in purely competitive product and resource markets

Other things equal, if wage rates increase by 20 percent, the greatest decline in employment will occur when labor costs are a

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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