Question 1

The marginal revenue product of a resource

Accepted Answer

A)  is defined as the marginal product of the resource multiplied by the resource price. 
B)  simply means that a firm should add to its capital stock as long as competition requires it. 
C)  equals the extra output produced by an additional unit of the resource multiplied by the marginal revenue per unit of that output. 
D)  equals the average product of the resource multiplied by the cost of hiring an additional (marginal) unit of the resource. 
A)  is defined as the marginal product of the resource multiplied by the resource price. 
B)  simply means that a firm should add to its capital stock as long as competition requires it. 
C)  equals the extra output produced by an additional unit of the resource multiplied by the marginal revenue per unit of that output. 
D)  equals the average product of the resource multiplied by the cost of hiring an additional (marginal) unit of the resource.

Question 2

According to the principle of marginal productivity, if

Accepted Answer

A)  the product price is less than MRP, the firm is using too little of the input. 
B)  the price of an input rises, the quantity demanded of the input will increase. 
C)  MRP is greater than product price, the firm should reduce the use of the input. 
D)  price of the input equals MRP, the firm is maximizing profit. 
A)  the product price is less than MRP, the firm is using too little of the input. 
B)  the price of an input rises, the quantity demanded of the input will increase. 
C)  MRP is greater than product price, the firm should reduce the use of the input. 
D)  price of the input equals MRP, the firm is maximizing profit.

Question 3

Use the figure to answer the following question(s).
Figure 12-1
 
If one short-run supply curve in Figure 12-1 was for truck drivers and the other was for nuclear physicists (also short-run), which one would probably be the supply curve for physicists?

Accepted Answer

A)  Q2 
B)  Q3 
C)  Sb 
D)  Sa 
A)  Q2 
B)  Q3 
C)  Sb 
D)  Sa

Question 4

Which of the following is the best example of an investment in human capital?

Accepted Answer

A)  an increase in the number of hours worked per week by a worker in an unskilled laboring job 
B)  the purchase of company stock by a worker 
C)  a summer internship at a law firm for someone going to law school 
D)  payments into a retirement pension plan by a skilled laborer 
A)  an increase in the number of hours worked per week by a worker in an unskilled laboring job 
B)  the purchase of company stock by a worker 
C)  a summer internship at a law firm for someone going to law school 
D)  payments into a retirement pension plan by a skilled laborer

Question 5

If the United Auto Workers' Union obtained a 15 percent increase in the wages of its workers, employment in the auto industry would most likely fall if

Accepted Answer

A)  the demand for American-made automobiles was highly inelastic. 
B)  American consumers considered foreign automobiles a poor substitute for American-made automobiles. 
C)  the demand for American-made automobiles was highly elastic. 
D)  the demand for American-made automobiles was increasing. 
A)  the demand for American-made automobiles was highly inelastic. 
B)  American consumers considered foreign automobiles a poor substitute for American-made automobiles. 
C)  the demand for American-made automobiles was highly elastic. 
D)  the demand for American-made automobiles was increasing.

Question 6

Jim Smith runs a company that sells encyclopedia sets for $200 each. When he employs 5 workers, they can sell 20 sets per week, while only 17 sets are sold when 4 workers are employed. If the wage of workers in this skill category is $500 per week, should the fifth worker be hired?

Accepted Answer

A)  No, because the MRP of the fifth worker is less than $500 per week. 
B)  No, because the MRP of the fifth worker is more than $500 per week. 
C)  Yes, because the MRP of the fifth worker is less than $500 per week. 
D)  Yes, because the MRP of the fifth worker is more than $500 per week. 
A)  No, because the MRP of the fifth worker is less than $500 per week. 
B)  No, because the MRP of the fifth worker is more than $500 per week. 
C)  Yes, because the MRP of the fifth worker is less than $500 per week. 
D)  Yes, because the MRP of the fifth worker is more than $500 per week.

Question 7

Since the demand for a resource depends on the demand for goods that the resource helps produce, the demand for each resource is

Accepted Answer

A)  an elastic demand. 
B)  an independent demand. 
C)  a derived demand. 
D)  inversely related to the marginal productivity of the resource. 
A)  an elastic demand. 
B)  an independent demand. 
C)  a derived demand. 
D)  inversely related to the marginal productivity of the resource.

Question 8

Economists refer to expenditures on training, education, and skill development designed to increase the productivity of an individual as

Accepted Answer

A)  overhead expenditures. 
B)  investments in human capital. 
C)  sunk expenditures. 
D)  social capital. 
A)  overhead expenditures. 
B)  investments in human capital. 
C)  sunk expenditures. 
D)  social capital.

Question 9

Which of the following events could increase the demand for labor?

Accepted Answer

A)  a decrease in output price. 
B)  a decrease in the amount of capital available for workers to use. 
C)  an increase in the marginal productivity of workers. 
D)  All of the above are correct. 
A)  a decrease in output price. 
B)  a decrease in the amount of capital available for workers to use. 
C)  an increase in the marginal productivity of workers. 
D)  All of the above are correct.

Question 10

The market where firms purchase factors of production is referred to as the

Accepted Answer

A)  product market. 
B)  resource market. 
C)  capital market. 
D)  foreign exchange market. 
A)  product market. 
B)  resource market. 
C)  capital market. 
D)  foreign exchange market.

Question 11

The Hardboard Construction Company hired Bob at $10 an hour, but its output of doll houses only increased by three units a day. Two weeks later, the company purchased an $8 hammer for Bob and output increased by twelve units. Since the hammer increased the marginal product more than Bob did, and at less cost, Hardboard fired Bob. Is this consistent with the theory of marginal productivity? Why or why not?

Accepted Answer

This example illustrates a minor flaw wi

Question 12

Other things constant, if the demand for computer scientists rises,

Accepted Answer

A)  the wages of computer scientists will tend to fall. 
B)  employment of computer scientists will tend to rise. 
C)  there will be a surplus of computer scientists. 
D)  there will be a shortage of computer scientists. 
A)  the wages of computer scientists will tend to fall. 
B)  employment of computer scientists will tend to rise. 
C)  there will be a surplus of computer scientists. 
D)  there will be a shortage of computer scientists.

Question 13

The supply of both physical and human resources in the long run is determined primarily by

Accepted Answer

A)  the presence or absence of economies of scale. 
B)  investment choices and resource depreciation. 
C)  sunk costs; what happens in the present cannot change the future. 
D)  the law of diminishing marginal returns. 
A)  the presence or absence of economies of scale. 
B)  investment choices and resource depreciation. 
C)  sunk costs; what happens in the present cannot change the future. 
D)  the law of diminishing marginal returns.

Question 14

The supply curve of truck drivers is upward sloping and demand curve is downward sloping. A reduction in the price of hauling freight by truck relative to the price of hauling freight by rail will ____ the equilibrium wage of truck drivers and ____ the number of drivers employed.

Accepted Answer

A)  decrease; decrease 
B)  decrease; increase 
C)  increase; decrease 
D)  increase; increase 
A)  decrease; decrease 
B)  decrease; increase 
C)  increase; decrease 
D)  increase; increase

Question 15

Assume that the demand for paper products increases. Then, we expect that the

Accepted Answer

A)  demand for trees will also increase. 
B)  demand for trees will stay the same. 
C)  demand for trees will decrease. 
D)  effect on the demand for trees is uncertain; it depends on the elasticity of the demand for paper. 
A)  demand for trees will also increase. 
B)  demand for trees will stay the same. 
C)  demand for trees will decrease. 
D)  effect on the demand for trees is uncertain; it depends on the elasticity of the demand for paper.

Question 16

Suppose a certain firm is able to produce 165 units of output per day when 15 workers are hired. The firm is able to produce 176 units of output per day when 16 workers are hired (holding other inputs fixed). Then the marginal product of the 16th worker is

Accepted Answer

A)  10 units of output. 
B)  11 units of output. 
C)  16 units of output. 
D)  176 units of output. 
A)  10 units of output. 
B)  11 units of output. 
C)  16 units of output. 
D)  176 units of output.

Question 17

The following schedule shows how many jars of Jaynie's Jam can be produced daily with various amounts of labor (assume that the jam is sold in a competitive price-taker market).
 
If Jaynie must pay each worker $65 per day and she can sell her jam for $10 per jar, how many workers should she hire if she wants to maximize profits?

Accepted Answer

A)  3 
B)  4 
C)  5 
D)  6 
A)  3 
B)  4 
C)  5 
D)  6

Question 18

The rule for the optimal use of any input states that

Accepted Answer

A)  when MRP is less than price, profit will increase when more of that resource is utilized. 
B)  when MRP is greater than resource price, profit will increase when more of that resource is utilized. 
C)  when MRP equals price, profit will increase when less of that resource is utilized. 
D)  when MRP is greater than resource price, profit will increase when less of that resource is utilized. 
E)  resources should be used only if MRP exceeds product price. 
A)  when MRP is less than price, profit will increase when more of that resource is utilized. 
B)  when MRP is greater than resource price, profit will increase when more of that resource is utilized. 
C)  when MRP equals price, profit will increase when less of that resource is utilized. 
D)  when MRP is greater than resource price, profit will increase when less of that resource is utilized. 
E)  resources should be used only if MRP exceeds product price.

Question 19

Which of the following would be the most likely result from a new government program that provided significant financial aid for children of low- and middle-income families to attend college?

Accepted Answer

A)  Starting salaries for new college graduates would rise because of an increase in the number of high-quality graduates. 
B)  Starting salaries for college graduates would be unaffected. 
C)  The productivity of the labor force would be permanently lower because more young people would choose to be students instead of workers. 
D)  Starting salaries of new college graduates would fall as the supply of graduates increased. 
A)  Starting salaries for new college graduates would rise because of an increase in the number of high-quality graduates. 
B)  Starting salaries for college graduates would be unaffected. 
C)  The productivity of the labor force would be permanently lower because more young people would choose to be students instead of workers. 
D)  Starting salaries of new college graduates would fall as the supply of graduates increased.

Question 20

Other things equal, when the supply of workers is scarce, one would predict that market wages would be

Accepted Answer

A)  relatively high. 
B)  relatively low. 
C)  determined solely by factors that affect demand. 
D)  determined outside the domain of economic theory. 
A)  relatively high. 
B)  relatively low. 
C)  determined solely by factors that affect demand. 
D)  determined outside the domain of economic theory.

The marginal revenue product of a resource

According to the principle of marginal productivity, if

Use the figure to answer the following question(s). Figure 12-1 If one short-run supply curve in Figure 12-1 was for truck drivers and the other was for nuclear physicists (also short-run), which one would probably be the supply curve for physicists?

Which of the following is the best example of an investment in human capital?

If the United Auto Workers' Union obtained a 15 percent increase in the wages of its workers, employment in the auto industry would most likely fall if

Jim Smith runs a company that sells encyclopedia sets for $200 each. When he employs 5 workers, they can sell 20 sets per week, while only 17 sets are sold when 4 workers are employed. If the wage of workers in this skill category is $500 per week, should the fifth worker be hired?

Since the demand for a resource depends on the demand for goods that the resource helps produce, the demand for each resource is

Economists refer to expenditures on training, education, and skill development designed to increase the productivity of an individual as

Which of the following events could increase the demand for labor?

The market where firms purchase factors of production is referred to as the

Other things constant, if the demand for computer scientists rises,

The supply of both physical and human resources in the long run is determined primarily by

The supply curve of truck drivers is upward sloping and demand curve is downward sloping. A reduction in the price of hauling freight by truck relative to the price of hauling freight by rail will the equilibrium wage of truck drivers and the number of drivers employed.

Assume that the demand for paper products increases. Then, we expect that the

Suppose a certain firm is able to produce 165 units of output per day when 15 workers are hired. The firm is able to produce 176 units of output per day when 16 workers are hired (holding other inputs fixed). Then the marginal product of the 16th worker is

The rule for the optimal use of any input states that

Which of the following would be the most likely result from a new government program that provided significant financial aid for children of low- and middle-income families to attend college?

Other things equal, when the supply of workers is scarce, one would predict that market wages would be

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

Exam 12: The Supply of and Demand for Productive Resources

The marginal revenue product of a resource

According to the principle of marginal productivity, if

Use the figure to answer the following question(s). Figure 12-1 If one short-run supply curve in Figure 12-1 was for truck drivers and the other was for nuclear physicists (also short-run), which one would probably be the supply curve for physicists?

Which of the following is the best example of an investment in human capital?

If the United Auto Workers' Union obtained a 15 percent increase in the wages of its workers, employment in the auto industry would most likely fall if

Jim Smith runs a company that sells encyclopedia sets for $200 each. When he employs 5 workers, they can sell 20 sets per week, while only 17 sets are sold when 4 workers are employed. If the wage of workers in this skill category is $500 per week, should the fifth worker be hired?

Since the demand for a resource depends on the demand for goods that the resource helps produce, the demand for each resource is

Economists refer to expenditures on training, education, and skill development designed to increase the productivity of an individual as

Which of the following events could increase the demand for labor?

The market where firms purchase factors of production is referred to as the

Other things constant, if the demand for computer scientists rises,

The supply of both physical and human resources in the long run is determined primarily by

The supply curve of truck drivers is upward sloping and demand curve is downward sloping. A reduction in the price of hauling freight by truck relative to the price of hauling freight by rail will ____ the equilibrium wage of truck drivers and ____ the number of drivers employed.

Assume that the demand for paper products increases. Then, we expect that the

Suppose a certain firm is able to produce 165 units of output per day when 15 workers are hired. The firm is able to produce 176 units of output per day when 16 workers are hired (holding other inputs fixed). Then the marginal product of the 16th worker is

The rule for the optimal use of any input states that

Which of the following would be the most likely result from a new government program that provided significant financial aid for children of low- and middle-income families to attend college?

Other things equal, when the supply of workers is scarce, one would predict that market wages would be

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

The supply curve of truck drivers is upward sloping and demand curve is downward sloping. A reduction in the price of hauling freight by truck relative to the price of hauling freight by rail will the equilibrium wage of truck drivers and the number of drivers employed.