Question 1

A technological advance that increases labor productivity will

Accepted Answer

A)  lower wages. 
B)  decrease the demand for labor as fewer workers are needed. 
C)  decrease the supply of labor as fewer workers are needed. 
D)  increase the demand for labor as MP rises. 
E)  decrease the demand for labor as MP falls. 
A)  lower wages. 
B)  decrease the demand for labor as fewer workers are needed. 
C)  decrease the supply of labor as fewer workers are needed. 
D)  increase the demand for labor as MP rises. 
E)  decrease the demand for labor as MP falls. D

Question 2

An increase in the demand for a resource

Accepted Answer

A)  will cause the price of that resource to fall. 
B)  may be the result of a decrease in the demand for products utilizing this resource. 
C)  will cause the price of the resource to fall by a smaller amount in the short run than in the long run. 
D)  will increase the price of the resource and, thereby, increase the incentive of potential suppliers to provide the resource in the future. 
A)  will cause the price of that resource to fall. 
B)  may be the result of a decrease in the demand for products utilizing this resource. 
C)  will cause the price of the resource to fall by a smaller amount in the short run than in the long run. 
D)  will increase the price of the resource and, thereby, increase the incentive of potential suppliers to provide the resource in the future. D

Question 3

Profit-maximizing firms will expand their employment of each variable resource until

Accepted Answer

A)  the Marginal Revenue Product (MRP) of the resource is just equal to the price of the resource. 
B)  other firms realize they can't compete. 
C)  the MRP of the resource is below the cost of the resource. 
D)  the MRP of the resource is above the cost of the resource. 
A)  the Marginal Revenue Product (MRP) of the resource is just equal to the price of the resource. 
B)  other firms realize they can't compete. 
C)  the MRP of the resource is below the cost of the resource. 
D)  the MRP of the resource is above the cost of the resource. A

Question 4

An improvement in technology that allows workers to process twice as many insurance forms in an hour than before will cause

Accepted Answer

A)  more labor to be employed because its marginal revenue product has fallen. 
B)  an increase in insurance premiums. 
C)  fewer workers to be employed because their marginal revenue product has decreased. 
D)  more workers to be employed because their marginal revenue product has increased. 
E)  fewer workers to be employed because their marginal revenue product has increased. 
A)  more labor to be employed because its marginal revenue product has fallen. 
B)  an increase in insurance premiums. 
C)  fewer workers to be employed because their marginal revenue product has decreased. 
D)  more workers to be employed because their marginal revenue product has increased. 
E)  fewer workers to be employed because their marginal revenue product has increased.

Question 5

Developments in the computer software industry have made it extremely easy for firms to keep their books, conduct their own audits, and fill out the various tax forms. If accountants are an input in the accounting services industry, what will likely happen in the market for accountants? Is there a difference between the short run and the long run?

Accepted Answer

We would expect the demand for accountan

Question 6

When the price of a resource is set below equilibrium,

Accepted Answer

A)  excess demand for the resource will occur. 
B)  excess supply of the resource will result. 
C)  the supply of the resource will be inelastic. 
D)  the demand for the resource will be inelastic. 
A)  excess demand for the resource will occur. 
B)  excess supply of the resource will result. 
C)  the supply of the resource will be inelastic. 
D)  the demand for the resource will be inelastic.

Question 7

The supply of human capital to a particular use is

Accepted Answer

A)  perfectly inelastic in the short run. 
B)  perfectly elastic in the long run. 
C)  more inelastic in the short run since it takes time for persons to acquire a particular skill. 
D)  more elastic in the short run since individuals who already possess the particular skill can be attracted into the labor force in the short run. 
A)  perfectly inelastic in the short run. 
B)  perfectly elastic in the long run. 
C)  more inelastic in the short run since it takes time for persons to acquire a particular skill. 
D)  more elastic in the short run since individuals who already possess the particular skill can be attracted into the labor force in the short run.

Question 8

Use the information in the table below to answer the following question(s). The firm hires labor competitively and sells its product in a competitive price-taker market.
Table 12-6
 
Refer to Table 12-6. If the market wage rate is $25 per day, how many workers should the firm hire if it wants to maximize profits?

Accepted Answer

A)  4 
B)  5 
C)  6 
D)  7 
A)  4 
B)  5 
C)  6 
D)  7

Question 9

Table 12-2
  Refer to Table 12-2. This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor. Each baseball sells for $5 in a competitive market. What is the total revenue per day that the firm will earn if it employs five workers?

Accepted Answer

A)  $500. 
B)  $300. 
C)  $2200. 
D)  $2500. 
A)  $500. 
B)  $300. 
C)  $2200. 
D)  $2500.

Question 10

The optimal level of resource use comes when

Accepted Answer

A)  MRP exceeds input price. 
B)  MRP is less than input price. 
C)  MRP equals input price. 
D)  use of the resource exhausts the producer's funds. 
A)  MRP exceeds input price. 
B)  MRP is less than input price. 
C)  MRP equals input price. 
D)  use of the resource exhausts the producer's funds.

Question 11

Which of the following expresses the correct decision-making rule for a profit-maximizing firm hiring units of labor?

Accepted Answer

A)  If the MRP was rising, less labor would be employed as time passed. 
B)  The firm should continue to hire workers as long as their MRP is greater than the wage rate. 
C)  The firm should continue to hire workers until the total costs of all workers equals the total revenue from the output of the workers. 
D)  The firm should continue to hire workers until the wage rate equals the price of the product. 
A)  If the MRP was rising, less labor would be employed as time passed. 
B)  The firm should continue to hire workers as long as their MRP is greater than the wage rate. 
C)  The firm should continue to hire workers until the total costs of all workers equals the total revenue from the output of the workers. 
D)  The firm should continue to hire workers until the wage rate equals the price of the product.

Question 12

Figure 12-3  
Refer to Figure 12-3. This figure depicts labor demand and supply in a nonunionized labor market. The original equilibrium is at point A. If a labor union subsequently establishes a union shop and negotiates an hourly wage of $20, then the employment level

Accepted Answer

A)  increases from 6,000 to 10,000. 
B)  increases from 3,000 to 10,000. 
C)  decreases from 10,000 to 3,000. 
D)  decreases from 6,000 to 3,000. 
A)  increases from 6,000 to 10,000. 
B)  increases from 3,000 to 10,000. 
C)  decreases from 10,000 to 3,000. 
D)  decreases from 6,000 to 3,000.

Question 13

The demand for a resource is generally more

Accepted Answer

A)  elastic in the short run because it takes time to alter the ratio of resources used in many production processes. 
B)  inelastic in the short run because it takes time to alter the ratio of resources used in many production processes. 
C)  elastic in the short run because an increase in the price of the resource may not be expected to last. 
D)  inelastic in the short run because once resource suppliers find out they can charge a higher price, they will do so in the long run. 
A)  elastic in the short run because it takes time to alter the ratio of resources used in many production processes. 
B)  inelastic in the short run because it takes time to alter the ratio of resources used in many production processes. 
C)  elastic in the short run because an increase in the price of the resource may not be expected to last. 
D)  inelastic in the short run because once resource suppliers find out they can charge a higher price, they will do so in the long run.

Question 14

Which of the following labor resources will likely have the most elastic supply schedule in the short run?

Accepted Answer

A)  nuclear physicists 
B)  surgeons 
C)  retail cashiers 
D)  graduate-level math professors 
A)  nuclear physicists 
B)  surgeons 
C)  retail cashiers 
D)  graduate-level math professors

Question 15

If the marginal physical product of more labor is twice as high as the marginal physical product of more machinery, a profit-maximizing firm will

Accepted Answer

A)  reduce the labor used and increase the machinery used if labor costs half as much as machinery. 
B)  reduce the labor used and increase the machinery used if labor and machinery cost the same amount. 
C)  reduce the labor used and increase the machinery used only if labor costs more than twice as much as machinery. 
D)  reduce the labor used and increase the machinery used only if labor costs exactly twice as much as machinery. 
A)  reduce the labor used and increase the machinery used if labor costs half as much as machinery. 
B)  reduce the labor used and increase the machinery used if labor and machinery cost the same amount. 
C)  reduce the labor used and increase the machinery used only if labor costs more than twice as much as machinery. 
D)  reduce the labor used and increase the machinery used only if labor costs exactly twice as much as machinery.

Question 16

Which of the following resources will have the most inelastic supply in the short run?

Accepted Answer

A)  dentists 
B)  receptionists 
C)  waiters 
D)  flight attendants 
A)  dentists 
B)  receptionists 
C)  waiters 
D)  flight attendants

Question 17

Suppose a U.S. automotive manufacturer was considering moving to Mexico to take advantage of the lower wage rates for unskilled Mexican labor. The typical Mexican worker could produce 20 cars per day, while the firm's typical U.S. worker can produce 50 cars per day. If the firm currently pays its U.S. workers an hourly wage of $25, economic theory suggests that the firm should

Accepted Answer

A)  move to Mexico if the Mexican hourly wage is less than $25. 
B)  move to Mexico if the Mexican hourly wage is $15. 
C)  move to Mexico if the Mexican hourly wage is $12. 
D)  only move to Mexico if the Mexican hourly wage is less than $10. 
A)  move to Mexico if the Mexican hourly wage is less than $25. 
B)  move to Mexico if the Mexican hourly wage is $15. 
C)  move to Mexico if the Mexican hourly wage is $12. 
D)  only move to Mexico if the Mexican hourly wage is less than $10.

Question 18

Ten cases of spring water are sold for $6 each, and the marginal product of the last unit of labor is 5. If the price of a case increases from $6 to $8, then the marginal revenue product of the last unit of labor would

Accepted Answer

A)  decrease by $10. 
B)  increase by $40. 
C)  decrease by $30. 
D)  increase by $10. 
E)  not change. 
A)  decrease by $10. 
B)  increase by $40. 
C)  decrease by $30. 
D)  increase by $10. 
E)  not change.

Question 19

Table 12-4
 
Refer to Table 12-4. What is total output when 4 workers are hired?

Accepted Answer

A)  30 
B)  40 
C)  120 
D)  160 
A)  30 
B)  40 
C)  120 
D)  160

Question 20

Suppose the United Auto Workers' Union succeeded in obtaining a 10 percent increase in the wages of its workers and that the wage increase caused automobile prices to rise. Employment in the auto industry would be most likely to decline significantly if

Accepted Answer

A)  the demand for American-made automobiles was highly elastic. 
B)  the supply of foreign-produced automobiles was highly inelastic. 
C)  American consumers considered foreign automobiles a poor substitute for American automobiles. 
D)  the demand for American automobiles was relatively constant and highly inelastic. 
A)  the demand for American-made automobiles was highly elastic. 
B)  the supply of foreign-produced automobiles was highly inelastic. 
C)  American consumers considered foreign automobiles a poor substitute for American automobiles. 
D)  the demand for American automobiles was relatively constant and highly inelastic.

A technological advance that increases labor productivity will

An increase in the demand for a resource

Profit-maximizing firms will expand their employment of each variable resource until

An improvement in technology that allows workers to process twice as many insurance forms in an hour than before will cause

When the price of a resource is set below equilibrium,

The supply of human capital to a particular use is

Table 12-2 Refer to Table 12-2. This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor. Each baseball sells for $5 in a competitive market. What is the total revenue per day that the firm will earn if it employs five workers?

The optimal level of resource use comes when

Which of the following expresses the correct decision-making rule for a profit-maximizing firm hiring units of labor?

Figure 12-3 Refer to Figure 12-3. This figure depicts labor demand and supply in a nonunionized labor market. The original equilibrium is at point A. If a labor union subsequently establishes a union shop and negotiates an hourly wage of $20, then the employment level

The demand for a resource is generally more

Which of the following labor resources will likely have the most elastic supply schedule in the short run?

If the marginal physical product of more labor is twice as high as the marginal physical product of more machinery, a profit-maximizing firm will

Which of the following resources will have the most inelastic supply in the short run?

Ten cases of spring water are sold for $6 each, and the marginal product of the last unit of labor is 5. If the price of a case increases from $6 to $8, then the marginal revenue product of the last unit of labor would

Table 12-4 Refer to Table 12-4. What is total output when 4 workers are hired?

Suppose the United Auto Workers' Union succeeded in obtaining a 10 percent increase in the wages of its workers and that the wage increase caused automobile prices to rise. Employment in the auto industry would be most likely to decline significantly if

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Applying the Basics: Special Topics in Economics

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Exam 12: The Supply of and Demand for Productive Resources

A technological advance that increases labor productivity will

An increase in the demand for a resource

Profit-maximizing firms will expand their employment of each variable resource until

An improvement in technology that allows workers to process twice as many insurance forms in an hour than before will cause

When the price of a resource is set below equilibrium,

The supply of human capital to a particular use is

Table 12-2 Refer to Table 12-2. This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor. Each baseball sells for $5 in a competitive market. What is the total revenue per day that the firm will earn if it employs five workers?

The optimal level of resource use comes when

Which of the following expresses the correct decision-making rule for a profit-maximizing firm hiring units of labor?

Figure 12-3 Refer to Figure 12-3. This figure depicts labor demand and supply in a nonunionized labor market. The original equilibrium is at point A. If a labor union subsequently establishes a union shop and negotiates an hourly wage of $20, then the employment level

The demand for a resource is generally more

Which of the following labor resources will likely have the most elastic supply schedule in the short run?

If the marginal physical product of more labor is twice as high as the marginal physical product of more machinery, a profit-maximizing firm will

Which of the following resources will have the most inelastic supply in the short run?

Ten cases of spring water are sold for $6 each, and the marginal product of the last unit of labor is 5. If the price of a case increases from $6 to $8, then the marginal revenue product of the last unit of labor would

Table 12-4 Refer to Table 12-4. What is total output when 4 workers are hired?

Suppose the United Auto Workers' Union succeeded in obtaining a 10 percent increase in the wages of its workers and that the wage increase caused automobile prices to rise. Employment in the auto industry would be most likely to decline significantly if

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Applying the Basics: Special Topics in Economics

Filters