Question 1

The profit-maximizing and the least-cost combination of inputs are

Accepted Answer

A) the result of unrelated decisions. 
B) always identical. 
C) such that minimizing costs always results in profit maximization. 
D) such that maximizing profits always entails the least-cost combination of inputs. 
A) the result of unrelated decisions. 
B) always identical. 
C) such that minimizing costs always results in profit maximization. 
D) such that maximizing profits always entails the least-cost combination of inputs.

Question 2

Assume that the coefficient of elasticity of product demand is 0.9 in industry A and is 2.8 in industry B. Other things equal, labor demand will be

Accepted Answer

A) more elastic in industry A than in B. 
B) relatively elastic in both industries A and B. 
C) more elastic in industry B than in A. 
D) relatively inelastic in both industries A and B. 
A) more elastic in industry A than in B. 
B) relatively elastic in both industries A and B. 
C) more elastic in industry B than in A. 
D) relatively inelastic in both industries A and B.

Question 3

The table gives marginal product data for resources a and b. The output of these independent resources sells in a purely competitive market at $1 per unit. Assuming the prices of resources a and b are $5 and $8 respectively, what is the least costly combination of resources for the firm to employ in producing 238 units of output?

Accepted Answer

A) 3 of a and 7 of b 
B) 7 of a and 5 of b 
C) 6 of a and 4 of b 
D) 4 of a and 6 of b 
A) 3 of a and 7 of b 
B) 7 of a and 5 of b 
C) 6 of a and 4 of b 
D) 4 of a and 6 of 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

Refer to the table. The marginal revenue product of the third unit of resource is

Accepted Answer

A) $4. 
B) $8. 
C) $18. 
D) $72. 
A) $4. 
B) $8. 
C) $18. 
D) $72.

Question 6

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 7

Assume labor is the only variable input and that an additional input of labor increases total output from 72 to 80 units. If the product sells for $6 per unit in a purely competitive market, the MRP of this additional worker is

Accepted Answer

A) $6. 
B) $8. 
C) $48. 
D) $80. 
A) $6. 
B) $8. 
C) $48. 
D) $80.

Question 8

Other things being equal, a firm's demand for labor is likely to be more elastic than its demand for capital if

Accepted Answer

A) labor costs are a smaller proportion of total costs than capital costs. 
B) the firm uses labor-intensive production techniques. 
C) substitutions of one resource for another are difficult. 
D) the demand for its final product is price elastic. 
A) labor costs are a smaller proportion of total costs than capital costs. 
B) the firm uses labor-intensive production techniques. 
C) substitutions of one resource for another are difficult. 
D) the demand for its final product is price elastic.

Question 9

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 10

Suppose a firm is hiring resources l and m under purely competitive conditions to produce product Y, which sells for $2 in a purely competitive market. The prices of l and m are $10 and $4, respectively. In equilibrium, the MPs of l and m, respectively, are

Accepted Answer

A) 1 and 1. 
B) 2 and 5. 
C) 10 and 4. 
D) 5 and 2. 
A) 1 and 1. 
B) 2 and 5. 
C) 10 and 4. 
D) 5 and 2.

Question 11

Which type of occupation is expected by the U.S. Bureau of Labor Statistics to be the fastest growing from 2016 to 2026?

Accepted Answer

A) manufacturing 
B) service 
C) construction 
D) mining 
A) manufacturing 
B) service 
C) construction 
D) mining

Question 12

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 13

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 14

A profit-maximizing firm will employ labor up to the point where the

Accepted Answer

A) MRP of labor = MRC of labor. 
B) MP of labor = MRC of labor. 
C) MC = MRP. 
D) MP = MC. 
A) MRP of labor = MRC of labor. 
B) MP of labor = MRC of labor. 
C) MC = MRP. 
D) MP = MC.

Question 15

A firm combines two resources, A and B, to produce an output, Q. Their respective marginal revenue products are $30 and $21. A costs $15 a unit and B $7 a unit. To reduce the cost of Q,

Accepted Answer

A) more B and less A should be used. 
B) more A and less B should be used. 
C) more of both resources should be used. 
D) less of both resources should be used. 
A) more B and less A should be used. 
B) more A and less B should be used. 
C) more of both resources should be used. 
D) less of both resources should be used.

Question 16

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 17

The demand for a productive resource is said to be "derived" because the demand for the factor

Accepted Answer

A) depends on the demand for the product it helps to produce. 
B) depends on the demand for a complementary factor. 
C) is derived from the state of the economy. 
D) is derived from government policy. 
A) depends on the demand for the product it helps to produce. 
B) depends on the demand for a complementary factor. 
C) is derived from the state of the economy. 
D) is derived from government policy.

Question 18

Refer to the table. The price of the product being produced by this resource is

Accepted Answer

A) $1. 
B) $2. 
C) $3. 
D) $4. 
A) $1. 
B) $2. 
C) $3. 
D) $4.

Question 19

The table shows a total-product schedule for a resource. Assume that the quantities of other resources the firm employs remain constant. If the product the firm produces sells for a constant $2 per unit, the marginal revenue product of the third unit of the resource is

Accepted Answer

A) $6. 
B) $12. 
C) $18. 
D) $24. 
A) $6. 
B) $12. 
C) $18. 
D) $24.

Question 20

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) 0.1, and labor's share of total costs is 20 percent. 
D) 0.1, 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) 0.1, and labor's share of total costs is 20 percent. 
D) 0.1, and labor's share of total costs is 75 percent.

Exam 16: The Demand for Resources

The profit-maximizing and the least-cost combination of inputs are

Assume that the coefficient of elasticity of product demand is 0.9 in industry A and is 2.8 in industry B. Other things equal, labor demand will be

Refer to the table. The marginal revenue product of the third unit of resource is

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

Assume labor is the only variable input and that an additional input of labor increases total output from 72 to 80 units. If the product sells for $6 per unit in a purely competitive market, the MRP of this additional worker is

Other things being equal, a firm's demand for labor is likely to be more elastic than its demand for capital if

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

Suppose a firm is hiring resources l and m under purely competitive conditions to produce product Y, which sells for $2 in a purely competitive market. The prices of l and m are $10 and $4, respectively. In equilibrium, the MPs of l and m, respectively, are

Which type of occupation is expected by the U.S. Bureau of Labor Statistics to be the fastest growing from 2016 to 2026?

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

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

A profit-maximizing firm will employ labor up to the point where the

A firm combines two resources, A and B, to produce an output, Q. Their respective marginal revenue products are $30 and $21. A costs $15 a unit and B $7 a unit. To reduce the cost of Q,

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

The demand for a productive resource is said to be "derived" because the demand for the factor

Refer to the table. The price of the product being produced by this resource is

The table shows a total-product schedule for a resource. Assume that the quantities of other resources the firm employs remain constant. If the product the firm produces sells for a constant $2 per unit, the marginal revenue product of the third unit of the resource is

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

Limits, Alternatives, and Choices

The Market System and the Circular Flow

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