Question 1

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 2

For a firm selling its product in a purely competitive market, the marginal revenue product of labor can be found by

Accepted Answer

A) adding marginal product to total product as one more unit of labor is employed. 
B) adding marginal revenue to total product as one more unit of labor is employed. 
C) multiplying marginal product by product price. 
D) dividing marginal product by product price. 
A) adding marginal product to total product as one more unit of labor is employed. 
B) adding marginal revenue to total product as one more unit of labor is employed. 
C) multiplying marginal product by product price. 
D) dividing marginal product by product price.

Question 3

Suppose that a union successfully negotiated a 14 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 inelastic. 
D) the coefficient of elasticity of labor demand is equal to 1. 
A) the labor demand curve is upsloping. 
B) labor demand is elastic. 
C) labor demand is inelastic. 
D) the coefficient of elasticity of labor demand is equal to 1.

Question 4

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 $3.50 per unit, and the wage rate is $17 per worker. What is the farmer's profit-maximizing output?

Accepted Answer

A) 40 
B) 32 
C) 20 
D) 37 
A) 40 
B) 32 
C) 20 
D) 37

Question 5

The demand for airline pilots results from the demand for air travel. This fact is an example of

Accepted Answer

A) resource substitutability. 
B) rising marginal resource cost. 
C) elasticity of resource demand. 
D) the derived demand for labor. 
A) resource substitutability. 
B) rising marginal resource cost. 
C) elasticity of resource demand. 
D) the derived demand for labor.

Question 6

Refer to the given data. Suppose that the union that provides labor to firms in this market successfully negotiates an increase in the wage rate from $12 to $16. As a result of the wage increase, firms will hire

Accepted Answer

A) fewer workers, and the total paid out for wages will increase. 
B) fewer workers, and the total paid out for wages will decline. 
C) fewer workers, and the total paid out for wages will remain unchanged. 
D) more capital, if capital and labor are used in fixed proportions in production. 
A) fewer workers, and the total paid out for wages will increase. 
B) fewer workers, and the total paid out for wages will decline. 
C) fewer workers, and the total paid out for wages will remain unchanged. 
D) more capital, if capital and labor are used in fixed proportions in production.

Question 7

Refer to the table. How many units of the resource would the profit-maximizing firm use if the price of the resource was $18.00?

Accepted Answer

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

Question 8

What are the two key factors that determine the strength of demand for a resource? How do they determine whether a resource is in high demand or low demand?

Accepted Answer

The two factors that determine the stren

Question 9

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 10

A firm is both hiring labor and selling output in purely competitive markets and is maximizing profits. It is currently operating in the elastic range of its MRP curve. If the wage rate increases, its total spending on wages at the new equilibrium will

Accepted Answer

A) be larger. 
B) be smaller. 
C) be unchanged. 
D) change in an undetermined direction. 
A) be larger. 
B) be smaller. 
C) be unchanged. 
D) change in an undetermined direction.

Question 11

Which of the following statements best illustrates the concept of derived demand?

Accepted Answer

A) As income goes up, the demand for farm products will increase by a smaller relative amount. 
B) A decline in the price of margarine will reduce the demand for butter. 
C) A decline in the demand for shoes will cause the demand for leather to decline. 
D) When the price of gasoline goes up, the demand for motor oil will decline. 
A) As income goes up, the demand for farm products will increase by a smaller relative amount. 
B) A decline in the price of margarine will reduce the demand for butter. 
C) A decline in the demand for shoes will cause the demand for leather to decline. 
D) When the price of gasoline goes up, the demand for motor oil will decline.

Question 12

What is a firm's MRC?

Accepted Answer

A firm's MRC is the amount by which the

Question 13

The data in the table reveal that

Accepted Answer

A) the firm is selling its product in a purely competitive market. 
B) the firm is selling its product in an imperfectly competitive market. 
C) there is no level of output at which this firm can operate at a profit. 
D) the firm is hiring labor in an imperfectly competitive market. 
A) the firm is selling its product in a purely competitive market. 
B) the firm is selling its product in an imperfectly competitive market. 
C) there is no level of output at which this firm can operate at a profit. 
D) the firm is hiring labor in an imperfectly competitive market.

Question 14

Which of the following will not cause a shift in the demand for resource X?

Accepted Answer

A) a decline in the price of resource X 
B) an increase in the price of the product that resource X is producing 
C) a decrease in the price of substitute resource Y 
D) an increase in the productivity of resource X 
A) a decline in the price of resource X 
B) an increase in the price of the product that resource X is producing 
C) a decrease in the price of substitute resource Y 
D) an increase in the productivity of resource X

Question 15

What are two examples of occupations that are expected to experience a rapid decline in employment from 2016-2026? Why are these occupations likely to experience this decline?

Accepted Answer

Most of the occupations declining are be

Question 16

A cost-minimizing firm using two inputs, x and y, will employ inputs so that

Accepted Answer

A) MP x = MP y. 
B) Pₓ / MP y = Pᵧ / MP x. 
C) MP x/ Pₓ = MP y / Pᵧ . 
D) Pₓ = Pᵧ . 
A) MP x = MP y. 
B) Pₓ / MP y = Pᵧ / MP x. 
C) MP x/ Pₓ = MP y / Pᵧ . 
D) Pₓ = Pᵧ .

Question 17

The case of ATMs and bank tellers illustrates that

Accepted Answer

A) capital is primarily a substitute for labor. 
B) capital is, overall, a complement for labor, not a substitute. 
C) capital and labor are almost always used in fixed proportions. 
D) technological innovation is generally detrimental to employment. 
A) capital is primarily a substitute for labor. 
B) capital is, overall, a complement for labor, not a substitute. 
C) capital and labor are almost always used in fixed proportions. 
D) technological innovation is generally detrimental to employment.

Question 18

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 MRP of the second barber is

Accepted Answer

A) 18 haircuts. 
B) $108. 
C) 42 haircuts. 
D) $126. 
A) 18 haircuts. 
B) $108. 
C) 42 haircuts. 
D) $126.

Question 19

The marginal revenue product curve for an input is downsloping because of the law of diminishing returns.

Accepted Answer

A) True 
 B)False

Question 20

The marginal productivity theory of income distribution has been criticized because

Accepted Answer

A) the resulting distribution of income is likely to be too equal to maintain production incentives. 
B) income from inherited property is inconsistent with the theory. 
C) purely competitive conditions characterize most resource markets. 
D) it fails to recognize that resource demand is derived from product demand. 
A) the resulting distribution of income is likely to be too equal to maintain production incentives. 
B) income from inherited property is inconsistent with the theory. 
C) purely competitive conditions characterize most resource markets. 
D) it fails to recognize that resource demand is derived from product demand.

Exam 16: The Demand for Resources

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

For a firm selling its product in a purely competitive market, the marginal revenue product of labor can be found by

Suppose that a union successfully negotiated a 14 percent wage increase and the quantity of labor demanded decreased by 10 percent. Given a fixed labor demand curve, we can conclude that

The demand for airline pilots results from the demand for air travel. This fact is an example of

Refer to the given data. Suppose that the union that provides labor to firms in this market successfully negotiates an increase in the wage rate from $12 to $16. As a result of the wage increase, firms will hire

Refer to the table. How many units of the resource would the profit-maximizing firm use if the price of the resource was $18.00?

What are the two key factors that determine the strength of demand for a resource? How do they determine whether a resource is in high demand or low demand?

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

A firm is both hiring labor and selling output in purely competitive markets and is maximizing profits. It is currently operating in the elastic range of its MRP curve. If the wage rate increases, its total spending on wages at the new equilibrium will

Which of the following statements best illustrates the concept of derived demand?

What is a firm's MRC?

The data in the table reveal that

Which of the following will not cause a shift in the demand for resource X?

What are two examples of occupations that are expected to experience a rapid decline in employment from 2016-2026? Why are these occupations likely to experience this decline?

A cost-minimizing firm using two inputs, x and y, will employ inputs so that

The case of ATMs and bank tellers illustrates that

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 MRP of the second barber is

The marginal revenue product curve for an input is downsloping because of the law of diminishing returns.

The marginal productivity theory of income distribution has been criticized 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

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Immigration

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The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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