Question 1

The labor demand curve of a purely competitive seller

Accepted Answer

A) slopes downward because the elasticity of demand is always less than unity. 
B) slopes downward because of diminishing marginal productivity. 
C) is perfectly elastic at the going wage rate. 
D) slopes downward because of diminishing marginal utility. 
A) slopes downward because the elasticity of demand is always less than unity. 
B) slopes downward because of diminishing marginal productivity. 
C) is perfectly elastic at the going wage rate. 
D) slopes downward because of diminishing marginal utility.

Question 2

In firm X labor costs are 85 percent of production costs, while in firm Y labor costs are 40 percent of production costs.A 20 percent increase in wages would increase production costs by

Accepted Answer

A) 23 percent in firm X and 20 percent in firm Y. 
B) 19 percent in firm X and 15 percent in firm Y. 
C) 15 percent in firm X and 6 percent in firm Y. 
D) 17 percent in firm X and 8 percent in firm Y. 
A) 23 percent in firm X and 20 percent in firm Y. 
B) 19 percent in firm X and 15 percent in firm Y. 
C) 15 percent in firm X and 6 percent in firm Y. 
D) 17 percent in firm X and 8 percent in firm Y.

Question 3

Holding revenues constant, cost minimization by firms is equivalent to

Accepted Answer

A) sales maximization. 
B) price optimization. 
C) profit maximization. 
D) quantity minimization. 
A) sales maximization. 
B) price optimization. 
C) profit maximization. 
D) quantity minimization.

Question 4

A firm that hires labor in a purely competitive resource market is a

Accepted Answer

A) "price maker." 
B) "product taker." 
C) "money maker." 
D) "wage taker." 
A) "price maker." 
B) "product taker." 
C) "money maker." 
D) "wage taker."

Question 5

In the marginal productivity theory of income distribution, when all markets are purely competitive, the payment for each unit of a resource is equal to its

Accepted Answer

A) total product. 
B) marginal product. 
C) marginal revenue product. 
D) total revenue product. 
A) total product. 
B) marginal product. 
C) marginal revenue product. 
D) total revenue product.

Question 6

What will the elasticity of resource demand be if unit wages rise by 8 percent and the number of employed workers falls by 5 percent?

Accepted Answer

A) 0.63 
B) 1.61 
C) 2.90 
D) 4.00 
A) 0.63 
B) 1.61 
C) 2.90 
D) 4.00

Question 7

If the price of a good increases, then in the market for the type of labor needed to produce this good,

Accepted Answer

A) employment will decrease. 
B) the labor supply will increase. 
C) the marginal product (MP) of labor will increase. 
D) the marginal revenue product (MRP) of labor will increase. 
A) employment will decrease. 
B) the labor supply will increase. 
C) the marginal product (MP) of labor will increase. 
D) the marginal revenue product (MRP) of labor will increase.

Question 8

A decrease in the price of a productive resource will result in each of the following except a(n)

Accepted Answer

A) downward shift in the average-cost curves for all products that use the resource. 
B) rightward shift in the supply of products which use the resource. 
C) rightward shift in the demand curves for all products that use the resource. 
D) increase in the quantity demanded of this productive resource. 
A) downward shift in the average-cost curves for all products that use the resource. 
B) rightward shift in the supply of products which use the resource. 
C) rightward shift in the demand curves for all products that use the resource. 
D) increase in the quantity demanded of this productive resource.

Question 9

Suppose a competitive firm in both the resource and product markets is using inputs such that the marginal product of labor is 16 and the price of labor is $4 per unit, while the marginal product of capital is 12 and the price of capital is $3 per unit.At the maximum profit equilibrium point, the price of the product is

Accepted Answer

A) $3. 
B) $4. 
C) $0.25. 
D) between $3 and $4. 
A) $3. 
B) $4. 
C) $0.25. 
D) between $3 and $4.

Question 10

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.For the $16 to $14 range of wage rates, labor demand is

Accepted Answer

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

Question 11

To achieve profit maximization, a firm must produce the profit-maximizing output with the least amount of economic resources.

Accepted Answer

A) True 
 B)False

Question 12

If two resources are complementary, a decrease in the price of one will reduce the demand for the other.

Accepted Answer

A) True 
 B)False

Question 13

Hiring the least-costly combination of resources ensures that profits will be maximized.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following will not shift the demand curve for labor?

Accepted Answer

A) the use of a larger stock of capital with the labor force 
B) a change in the wage rate 
C) an increase in the price of the product that labor is helping to produce 
D) the adoption of a more efficient method of combining labor and capital in the production process 
A) the use of a larger stock of capital with the labor force 
B) a change in the wage rate 
C) an increase in the price of the product that labor is helping to produce 
D) the adoption of a more efficient method of combining labor and capital in the production process

Question 15

An increase in the price of capital will reduce the demand for labor if capital and labor are complementary resources.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) Access to computers increases the productivity of mail order businesses, thus increasing the demand for their workers. 
B) Tourism increases in popularity, increasing the demand for workers at tourist resorts. 
C) A decrease in the price of trucks decreases the cost of transporting goods, thus increasing the demand for truckers. 
D) A change in work rules increases output per worker in the auto industry, thus increasing the demand for autoworkers. 
A) Access to computers increases the productivity of mail order businesses, thus increasing the demand for their workers. 
B) Tourism increases in popularity, increasing the demand for workers at tourist resorts. 
C) A decrease in the price of trucks decreases the cost of transporting goods, thus increasing the demand for truckers. 
D) A change in work rules increases output per worker in the auto industry, thus increasing the demand for autoworkers.

Question 17

Harry owns a barbershop and charges $6 per haircut.By hiring one barber at $10 per hour, the shop can provide 24 haircuts per eight-hour day.By hiring a second barber at the same wage rate, the shop can now provide a total of 42 haircuts per day.The MP of the second barber is

Accepted Answer

A) $240. 
B) $108. 
C) 18 haircuts. 
D) 42 haircuts. 
A) $240. 
B) $108. 
C) 18 haircuts. 
D) 42 haircuts.

Question 18

Which of the following occupations is projected to be the fastest growing in the U.S.in terms of percentage increases?

Accepted Answer

A) medical assistants 
B) occupational therapy assistants 
C) wind turbine service technicians 
D) statisticians 
A) medical assistants 
B) occupational therapy assistants 
C) wind turbine service technicians 
D) statisticians

Question 19

Which of the following statements is most accurate about the occupations projected to be the most rapidly declining in the U.S.in terms of percentage decreases?

Accepted Answer

A) The majority are in education related professions. 
B) The majority are in health care related professions. 
C) The majority are in manufacturing related professions. 
D) The majority are in unskilled jobs. 
A) The majority are in education related professions. 
B) The majority are in health care related professions. 
C) The majority are in manufacturing related professions. 
D) The majority are in unskilled jobs.

Question 20

A firm is hiring resources X, Y, and Z in the profit-maximizing amounts when

Accepted Answer

A) MRPx/Px equals MRPy/Py equals MRPz/Pz equals 1. 
B) the sum of the MRPs of the three resources is at a minimum. 
C) the marginal revenue productivity of all three resources is the same. 
D) the marginal revenue product of the last dollar spent on each of the three resources is the same. 
A) MRPx/Px equals MRPy/Py equals MRPz/Pz equals 1. 
B) the sum of the MRPs of the three resources is at a minimum. 
C) the marginal revenue productivity of all three resources is the same. 
D) the marginal revenue product of the last dollar spent on each of the three resources is the same.

Exam 16: The Demand for Resources

The labor demand curve of a purely competitive seller

In firm X labor costs are 85 percent of production costs, while in firm Y labor costs are 40 percent of production costs.A 20 percent increase in wages would increase production costs by

Holding revenues constant, cost minimization by firms is equivalent to

A firm that hires labor in a purely competitive resource market is a

In the marginal productivity theory of income distribution, when all markets are purely competitive, the payment for each unit of a resource is equal to its

What will the elasticity of resource demand be if unit wages rise by 8 percent and the number of employed workers falls by 5 percent?

If the price of a good increases, then in the market for the type of labor needed to produce this good,

A decrease in the price of a productive resource will result in each of the following except a(n)

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.For the $16 to $14 range of wage rates, labor demand is

To achieve profit maximization, a firm must produce the profit-maximizing output with the least amount of economic resources.

If two resources are complementary, a decrease in the price of one will reduce the demand for the other.

Hiring the least-costly combination of resources ensures that profits will be maximized.

Which of the following will not shift the demand curve for labor?

An increase in the price of capital will reduce the demand for labor if capital and labor are complementary resources.

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

Harry owns a barbershop and charges $6 per haircut.By hiring one barber at $10 per hour, the shop can provide 24 haircuts per eight-hour day.By hiring a second barber at the same wage rate, the shop can now provide a total of 42 haircuts per day.The MP of the second barber is

Which of the following occupations is projected to be the fastest growing in the U.S.in terms of percentage increases?

Which of the following statements is most accurate about the occupations projected to be the most rapidly declining in the U.S.in terms of percentage decreases?

A firm is hiring resources X, Y, and Z in the profit-maximizing amounts when

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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