Question 1

The MRP of labor curve is the firm's labor demand curve.

Accepted Answer

A) True 
 B)False

Question 2

If one worker can pick $30 worth of grapes and two workers together can pick $70 worth of grapes, the

Accepted Answer

A) marginal revenue product of each worker is $35. 
B) marginal revenue product of the first worker is $40. 
C) marginal revenue product of the second worker is $40. 
D) data given are insufficient to determine the marginal revenue product of either worker. 
A) marginal revenue product of each worker is $35. 
B) marginal revenue product of the first worker is $40. 
C) marginal revenue product of the second worker is $40. 
D) data given are insufficient to determine the marginal revenue product of either worker.

Question 3

If two resources are highly substitutable for one another,

Accepted Answer

A) a decrease in the price of one will increase unit costs of production. 
B) an increase in the price of one will increase the demand for the other. 
C) an increase in the price of one will reduce the demand for the other. 
D) a decrease in the price of one will increase the demand for the other. 
A) a decrease in the price of one will increase unit costs of production. 
B) an increase in the price of one will increase the demand for the other. 
C) an increase in the price of one will reduce the demand for the other. 
D) a decrease in the price of one will increase the demand for the other.

Question 4

Refer to the given table. This firm is

Accepted Answer

A) selling its product in a purely competitive market. 
B) selling its product in an imperfectly competitive market. 
C) hiring workers in a purely competitive market. 
D) hiring workers in an imperfectly competitive market. 
A) selling its product in a purely competitive market. 
B) selling its product in an imperfectly competitive market. 
C) hiring workers in a purely competitive market. 
D) hiring workers in an imperfectly competitive market.

Question 5

It will be profitable for a firm to hire additional units of any resource up to the point at which its MRP is equal to its MRC.

Accepted Answer

A) True 
 B)False

Question 6

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 7

Assume that the resource market is purely competitive. If the price of the resource falls, other factors constant, then a firm that sells its product in a purely competitive market will

Accepted Answer

A) increase production by a larger amount than a firm with some monopoly power in its product market. 
B) increase production by a smaller amount than a firm with some monopoly power in its product market. 
C) decrease production by a larger amount than a firm with some monopoly power in its product market. 
D) decrease production by a smaller amount than a firm with some monopoly power in its product market. 
A) increase production by a larger amount than a firm with some monopoly power in its product market. 
B) increase production by a smaller amount than a firm with some monopoly power in its product market. 
C) decrease production by a larger amount than a firm with some monopoly power in its product market. 
D) decrease production by a smaller amount than a firm with some monopoly power in its product market.

Question 8

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. Assume that the prices of a and b are $15 and $20, respectively. To maximize profits, what combination of a and b should the employer hire?

Accepted Answer

A) 3 of a and 5 of b 
B) 5 of a and 7 of b 
C) 7 of a and 7 of b 
D) 6 of a and 2 of b 
A) 3 of a and 5 of b 
B) 5 of a and 7 of b 
C) 7 of a and 7 of b 
D) 6 of a and 2 of b

Question 9

Use the graph to answer the question about the labor resource market faced by producers of good X. What will shift D ₂ to D ₁?

Accepted Answer

A) a decrease in productivity of labor 
B) a decrease in the price of labor 
C) a decrease in the price of complementary input 
D) a decrease in the price of a substitute input (if the output effect > substitution effect) 
A) a decrease in productivity of labor 
B) a decrease in the price of labor 
C) a decrease in the price of complementary input 
D) a decrease in the price of a substitute input (if the output effect > substitution effect)

Question 10

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 11

Marginal product is

Accepted Answer

A) the output of the least skilled worker. 
B) a worker's output multiplied by the price at which each unit can be sold. 
C) the amount an additional worker adds to the firm's total output. 
D) the amount any given worker contributes to the firm's total revenue. 
A) the output of the least skilled worker. 
B) a worker's output multiplied by the price at which each unit can be sold. 
C) the amount an additional worker adds to the firm's total output. 
D) the amount any given worker contributes to the firm's total revenue.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Suppose that a union successfully negotiated a 10 percent wage increase and the quantity of labor demanded increased by 10 percent. We can conclude that

Accepted Answer

A) the labor demand curve must have independently shifted to the right. 
B) labor demand is highly elastic. 
C) the coefficient of labor demand elasticity is less than 1. 
D) labor demand is unit-elastic. 
A) the labor demand curve must have independently shifted to the right. 
B) labor demand is highly elastic. 
C) the coefficient of labor demand elasticity is less than 1. 
D) labor demand is unit-elastic.

Question 14

Refer to the given data. For the $12 to $10 range of wage rates, labor demand is

Accepted Answer

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

Question 15

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 16

Which of the following occupations is among the 10 projected most rapidly declining U.S. occupations in terms of percentage decreases from 2016 to 2026?

Accepted Answer

A) medical assistants 
B) veterinarians 
C) college professors 
D) computer operators 
A) medical assistants 
B) veterinarians 
C) college professors 
D) computer operators

Question 17

Assume that a purely competitive firm uses two resources, labor (L)and capital (C), to produce a product. In which situation would the firm be maximizing profit?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 18

Which of the following statements is correct?

Accepted Answer

A) If the profit-maximizing rule is fulfilled, it necessarily follows that the cost-minimization rule is being fulfilled. 
B) The profit-maximizing and the cost-minimizing rules are such that fulfilling one has no bearing on fulfilling the other. 
C) If the profit-maximizing rule is fulfilled, the cost-minimization rule may or may not be fulfilled. 
D) If the cost-minimization rule is fulfilled, it necessarily follows that the profit-maximizing rule is being fulfilled. 
A) If the profit-maximizing rule is fulfilled, it necessarily follows that the cost-minimization rule is being fulfilled. 
B) The profit-maximizing and the cost-minimizing rules are such that fulfilling one has no bearing on fulfilling the other. 
C) If the profit-maximizing rule is fulfilled, the cost-minimization rule may or may not be fulfilled. 
D) If the cost-minimization rule is fulfilled, it necessarily follows that the profit-maximizing rule is being fulfilled.

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) U.S. consumers overall 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) U.S. consumers overall 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 farmer who has fixed amounts of land and capital finds that total product is 24 for the first worker hired, 32 when two workers are hired, 37 when three are hired, and 40 when four are hired. The farmer's product sells for $3 per unit, and the wage rate is $13 per worker. The marginal product of the second worker is

Accepted Answer

A) 32 
B) 1 
C) 5 
D) 8 
A) 32 
B) 1 
C) 5 
D) 8

Exam 16: The Demand for Resources

The MRP of labor curve is the firm's labor demand curve.

If one worker can pick $30 worth of grapes and two workers together can pick $70 worth of grapes, the

If two resources are highly substitutable for one another,

Refer to the given table. This firm is

It will be profitable for a firm to hire additional units of any resource up to the point at which its MRP is equal to its MRC.

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

Assume that the resource market is purely competitive. If the price of the resource falls, other factors constant, then a firm that sells its product in a purely competitive market will

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. Assume that the prices of a and b are $15 and $20, respectively. To maximize profits, what combination of a and b should the employer hire?

Use the graph to answer the question about the labor resource market faced by producers of good X. What will shift D ₂ to D ₁?

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

Marginal product is

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

Suppose that a union successfully negotiated a 10 percent wage increase and the quantity of labor demanded increased by 10 percent. We can conclude that

Refer to the given data. For the $12 to $10 range of wage rates, labor demand is

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

Which of the following occupations is among the 10 projected most rapidly declining U.S. occupations in terms of percentage decreases from 2016 to 2026?

Assume that a purely competitive firm uses two resources, labor (L)and capital (C), to produce a product. In which situation would the firm be maximizing profit?

Which of the following statements is correct?

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

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, 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

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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