Question 1

The demand for capital by a firm is based on the demand for the product that the capital produces.This relationship is referred to as

Accepted Answer

A) product demand. 
B) derived demand. 
C) resource utilization. 
D) cost minimization. 
A) product demand. 
B) derived demand. 
C) resource utilization. 
D) cost minimization.

Question 2

When the elasticity coefficient for resource demand is greater than one, resource demand is

Accepted Answer

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

Question 3

The marginal revenue product of labor is measured in dollars per unit of labor.

Accepted Answer

A) True 
 B)False

Question 4

If MPa / Pa = MPb / Pb and MRPa / Pa = MRPb / Pb > 1, this firm is

Accepted Answer

A) producing its output with the least costly combination of resources but is not producing the profit-maximizing output. 
B) maximizing profits but failing to minimize costs. 
C) neither maximizing profits nor minimizing costs. 
D) combining resources a and b so as to minimize costs and maximize profits.16-30 
A) producing its output with the least costly combination of resources but is not producing the profit-maximizing output. 
B) maximizing profits but failing to minimize costs. 
C) neither maximizing profits nor minimizing costs. 
D) combining resources a and b so as to minimize costs and maximize profits.16-30

Question 5

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.In competitive labor markets, the marginal cost of an additional unit of labor

Accepted Answer

A) is equal to PL × MPL. 
B) is equal to MPL/PL. 
C) is equal to PL. 
D) cannot be determined from the information given.Difficulty: 02 Medium 
A) is equal to PL × MPL. 
B) is equal to MPL/PL. 
C) is equal to PL. 
D) cannot be determined from the information given.Difficulty: 02 Medium

Question 6

From 2014 to 2024, the U.S.Bureau of Labor Statistics expects that there will be a fall in demand for

Accepted Answer

A) manufactured building and mobile home installers. 
B) physical therapists. 
C) commercial drivers. 
D) occupational therapy assistants. 
A) manufactured building and mobile home installers. 
B) physical therapists. 
C) commercial drivers. 
D) occupational therapy assistants.

Question 7

What happens when technological advance makes available a new highly productive capital good for which MP/P is greater than that of labor for which it is a substitute resource?

Accepted Answer

A) Labor will replace the new capital because labor is now cheaper. 
B) The new capital will replace labor because it reduces the firms' costs. 
C) More of both the new capital and labor will be used because firms are more productive. 
D) Less of both the new capital and labor will be used because the firms do not know how to use the new technology. 
A) Labor will replace the new capital because labor is now cheaper. 
B) The new capital will replace labor because it reduces the firms' costs. 
C) More of both the new capital and labor will be used because firms are more productive. 
D) Less of both the new capital and labor will be used because the firms do not know how to use the new technology.

Question 8

Other things being the same, if the demand for labor is inelastic,

Accepted Answer

A) decreases in wage rates will result in greater payrolls. 
B) increases in wage rates will result in greater payrolls. 
C) increases in wage rates will result in smaller payrolls. 
D) decreases in wage rates will increase both employment and worker incomes. 
A) decreases in wage rates will result in greater payrolls. 
B) increases in wage rates will result in greater payrolls. 
C) increases in wage rates will result in smaller payrolls. 
D) decreases in wage rates will increase both employment and worker incomes.

Question 9

A firm will find it profitable to hire workers up to the point at which their

Accepted Answer

A) marginal resource cost equals their wage rate. 
B) wage rate equals product price. 
C) MP is equal to their MRP. 
D) marginal resource cost is equal to their MRP. 
A) marginal resource cost equals their wage rate. 
B) wage rate equals product price. 
C) MP is equal to their MRP. 
D) marginal resource cost is equal to their MRP.

Question 10

If the marginal revenue product (MRP) of labor is less than the wage rate,

Accepted Answer

A) the firm is making profits. 
B) the firm is incurring losses. 
C) more labor should be employed. 
D) less labor should be employed. 
A) the firm is making profits. 
B) the firm is incurring losses. 
C) more labor should be employed. 
D) less labor should be employed.

Question 11

In a competitive resource market, a decrease in the demand for a productive resource, ceteris paribus, will cause all of the following except a(n)

Accepted Answer

A) decrease in the price of the resource. 
B) increase in the price of the resource. 
C) decrease in the total income earned by all units of the resource. 
D) decrease in the number of units of the resource that are employed. 
A) decrease in the price of the resource. 
B) increase in the price of the resource. 
C) decrease in the total income earned by all units of the resource. 
D) decrease in the number of units of the resource that are employed.

Question 12

The marginal product of labor is expressed in , while the marginal revenue product of labor is expressed in .

Accepted Answer

A) units of output per unit of labor; dollars per unit of labor 
B) units of output per unit of labor; units of output per unit of labor also 
C) dollars per unit of labor; units of output per unit of labor 
D) dollars per unit of labor; dollars per unit of labor also 
A) units of output per unit of labor; dollars per unit of labor 
B) units of output per unit of labor; units of output per unit of labor also 
C) dollars per unit of labor; units of output per unit of labor 
D) dollars per unit of labor; dollars per unit of labor also

Question 13

The substitution effect indicates that a profit-seeking firm will use

Accepted Answer

A) more of an input whose price has fallen and less of other inputs in producing a given output. 
B) more of all inputs if production costs fall. 
C) more of those inputs whose marginal productivity is the greatest. 
D) less of an input whose price has fallen and more of other inputs in producing a given output. 
A) more of an input whose price has fallen and less of other inputs in producing a given output. 
B) more of all inputs if production costs fall. 
C) more of those inputs whose marginal productivity is the greatest. 
D) less of an input whose price has fallen and more of other inputs in producing a given output.

Question 14

Suppose a technological improvement increases the productivity of a firm's capital and, simultaneously, its workers' union negotiates a wage increase.We can predict that

Accepted Answer

A) the firm will use relatively more capital and relatively less labor. 
B) the firm will use relatively more labor and relatively less capital. 
C) inputs of capital and labor will be unchanged. 
D) the firm's equilibrium output will necessarily increase. 
A) the firm will use relatively more capital and relatively less labor. 
B) the firm will use relatively more labor and relatively less capital. 
C) inputs of capital and labor will be unchanged. 
D) the firm's equilibrium output will necessarily increase.

Question 15

A firm is producing with the least-cost combination of resources when the

Accepted Answer

A) last dollar spent on each resource yields the same marginal product. 
B) total dollars spent on each resource are all the same. 
C) unit prices of the resources are equalized. 
D) marginal product of each of the resources is all the same. 
A) last dollar spent on each resource yields the same marginal product. 
B) total dollars spent on each resource are all the same. 
C) unit prices of the resources are equalized. 
D) marginal product of each of the resources is all the same.

Question 16

A profit-maximizing firm's daily total revenue is $155 with 3 workers, $200 with 4 workers, and $230 with 5 workers.The cost of each worker is $40 per day.The firm should

Accepted Answer

A) not hire a fourth worker. 
B) hire four workers. 
C) hire five workers. 
D) hire more than five workers. 
A) not hire a fourth worker. 
B) hire four workers. 
C) hire five workers. 
D) hire more than five workers.

Question 17

Suppose that a union successfully negotiated a 10 percent wage increase and the quantity of labor demanded decreased by 10 percent.Given a fixed labor demand curve, we can conclude that

Accepted Answer

A) the labor demand curve is upsloping. 
B) labor demand is elastic. 
C) labor demand is unit-elastic. 
D) the coefficient of elasticity of labor demand is less than 1. 
A) the labor demand curve is upsloping. 
B) labor demand is elastic. 
C) labor demand is unit-elastic. 
D) the coefficient of elasticity of labor demand is less than 1.

Question 18

The more inelastic the demand for a resource, the

Accepted Answer

A) less elastic its marginal revenue product curve. 
B) more elastic its marginal revenue product curve. 
C) greater the potential for resource substitution. 
D) greater the productivity of the resource. 
A) less elastic its marginal revenue product curve. 
B) more elastic its marginal revenue product curve. 
C) greater the potential for resource substitution. 
D) greater the productivity of the resource.

Question 19

In the United States, professional football players earn much higher incomes than professional soccer players.This occurs because

Accepted Answer

A) most football players are good soccer players, while the reverse is not true. 
B) consumers have a greater demand for football games than for soccer games. 
C) football and soccer games are highly substitutable products for most consumers. 
D) the marginal productivity of soccer players exceeds that of football players. 
A) most football players are good soccer players, while the reverse is not true. 
B) consumers have a greater demand for football games than for soccer games. 
C) football and soccer games are highly substitutable products for most consumers. 
D) the marginal productivity of soccer players exceeds that of football players.

Question 20

A union representative observed that if the union members' wages were increased by some proportion, the workers would eventually suffer a greater than proportional decline in employment.This statement could best be explained if

Accepted Answer

A) the new wages are to take effect immediately. 
B) union labor can easily be replaced with capital. 
C) union labor is an insignificant portion of the total cost of production. 
D) the demand for the final product the workers produce is relatively inelastic. 
A) the new wages are to take effect immediately. 
B) union labor can easily be replaced with capital. 
C) union labor is an insignificant portion of the total cost of production. 
D) the demand for the final product the workers produce is relatively inelastic.

Exam 16: The Demand for Resources

The demand for capital by a firm is based on the demand for the product that the capital produces.This relationship is referred to as

When the elasticity coefficient for resource demand is greater than one, resource demand is

The marginal revenue product of labor is measured in dollars per unit of labor.

If MPa / Pa = MPb / Pb and MRPa / Pa = MRPb / Pb > 1, this firm is

From 2014 to 2024, the U.S.Bureau of Labor Statistics expects that there will be a fall in demand for

What happens when technological advance makes available a new highly productive capital good for which MP/P is greater than that of labor for which it is a substitute resource?

Other things being the same, if the demand for labor is inelastic,

A firm will find it profitable to hire workers up to the point at which their

If the marginal revenue product (MRP) of labor is less than the wage rate,

In a competitive resource market, a decrease in the demand for a productive resource, ceteris paribus, will cause all of the following except a(n)

The marginal product of labor is expressed in , while the marginal revenue product of labor is expressed in .

The substitution effect indicates that a profit-seeking firm will use

Suppose a technological improvement increases the productivity of a firm's capital and, simultaneously, its workers' union negotiates a wage increase.We can predict that

A firm is producing with the least-cost combination of resources when the

A profit-maximizing firm's daily total revenue is $155 with 3 workers, $200 with 4 workers, and $230 with 5 workers.The cost of each worker is $40 per day.The firm should

Suppose that a union successfully negotiated a 10 percent wage increase and the quantity of labor demanded decreased by 10 percent.Given a fixed labor demand curve, we can conclude that

The more inelastic the demand for a resource, the

In the United States, professional football players earn much higher incomes than professional soccer players.This occurs because

A union representative observed that if the union members' wages were increased by some proportion, the workers would eventually suffer a greater than proportional decline in employment.This statement could best be explained if

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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