Question 1

Ceteris paribus , a decrease in the demand for automobiles will

Accepted Answer

A)  increase the price of automobiles. 
B)  increase the quantity supplied of automobiles. 
C)  decrease the demand for automobile workers. 
D)  increase the demand for automobile workers. 
A)  increase the price of automobiles. 
B)  increase the quantity supplied of automobiles. 
C)  decrease the demand for automobile workers. 
D)  increase the demand for automobile workers.

Question 2

Use the table to answer the following question.
  If the market wage rate is $150 per worker, how many workers should be employed if the firm wants to maximize profit?

Accepted Answer

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

Question 3

The value marginal product of a resource is

Accepted Answer

A)  the marginal product of the resource multiplied by the price of the product it helps to produce. 
B)  the price of the product times the price of the resource. 
C)  larger when the product price is smaller. 
D)  larger when the marginal product is smaller. 
A)  the marginal product of the resource multiplied by the price of the product it helps to produce. 
B)  the price of the product times the price of the resource. 
C)  larger when the product price is smaller. 
D)  larger when the marginal product is smaller.

Question 4

Farmer Ted owned a worn-out piece of farmland for growing cotton, which he had been unable to rent for years. Suddenly he was getting offers from cotton farmers to lease his land. What is the most likely explanation of this?

Accepted Answer

A)  The price of cotton went down. 
B)  The physical productivity of the land went up. 
C)  Taxes on the land went up. 
D)  The price of cotton went up. 
A)  The price of cotton went down. 
B)  The physical productivity of the land went up. 
C)  Taxes on the land went up. 
D)  The price of cotton went up.

Question 5

Which of the following most clearly illustrates the concept of "derived demand"?

Accepted Answer

A)  An increase in the price of steak causes the demand for poultry to increase. 
B)  As the price of coffee increases, the quantity demanded for coffee declines. 
C)  A boom in the housing market leads to an increase in the demand for lumber and electricians. 
D)  An increase in beer advertising on television leads to an increase in per capita beer consumption. 
A)  An increase in the price of steak causes the demand for poultry to increase. 
B)  As the price of coffee increases, the quantity demanded for coffee declines. 
C)  A boom in the housing market leads to an increase in the demand for lumber and electricians. 
D)  An increase in beer advertising on television leads to an increase in per capita beer consumption.

Question 6

Cattle manure is an input often used in making fertilizer. Suppose a technique is discovered that can transform cattle manure into quality gasoline. What would happen in the fertilizer industry?

Accepted Answer

This alternative use for manure would ca

Question 7

If a profit-maximizing firm hires an additional unit of labor, what must be true about labor's wage and marginal revenue product?

Accepted Answer

A)  Its wage always equals its marginal revenue product. 
B)  Its wage is always greater than its marginal revenue product. 
C)  Its wage is always total revenue minus marginal revenue product. 
D)  Its wage is always less than or equal to its marginal revenue product. 
A)  Its wage always equals its marginal revenue product. 
B)  Its wage is always greater than its marginal revenue product. 
C)  Its wage is always total revenue minus marginal revenue product. 
D)  Its wage is always less than or equal to its marginal revenue product.

Question 8

Tucker Corporation sells its product for $5.00. Tucker's industrial engineers have informed management that hiring one additional worker will increase output by five units per hour. Tucker should hire the additional worker only if the wage rate is

Accepted Answer

A)  $5.00 or less per hour. 
B)  $1.00 or more per hour. 
C)  $25.00 or less per hour. 
D)  none of the above. 
A)  $5.00 or less per hour. 
B)  $1.00 or more per hour. 
C)  $25.00 or less per hour. 
D)  none of the above.

Question 9

What concept implies that a firm's marginal revenue product curve for labor will slope downward in the short run?

Accepted Answer

A)  diminishing marginal returns 
B)  the law of supply 
C)  the law of decreasing cost 
D)  the price equalization principle 
A)  diminishing marginal returns 
B)  the law of supply 
C)  the law of decreasing cost 
D)  the price equalization principle

Question 10

A decrease in the demand for a final product will cause

Accepted Answer

A)  a decrease in demand for the resources used to produce the good. 
B)  an increase in demand for the resources used to produce the good. 
C)  firms to expand production of the good. 
D)  an increase in the supply of resources used to produce the good. 
A)  a decrease in demand for the resources used to produce the good. 
B)  an increase in demand for the resources used to produce the good. 
C)  firms to expand production of the good. 
D)  an increase in the supply of resources used to produce the good.

Question 11

When a firm decides to hire more workers because local wage rates have decreased, this is an example of

Accepted Answer

A)  market failure. 
B)  substitution in production. 
C)  labor exploitation. 
D)  substitution in consumption. 
A)  market failure. 
B)  substitution in production. 
C)  labor exploitation. 
D)  substitution in consumption.

Question 12

When the price of steel rises, Ford uses more aluminum in the production of its cars. This is an example of

Accepted Answer

A)  substitution in consumption. 
B)  substitution in production. 
C)  a change in the marginal productivity of a resource. 
D)  derived demand. 
A)  substitution in consumption. 
B)  substitution in production. 
C)  a change in the marginal productivity of a resource. 
D)  derived demand.

Question 13

Other things constant, if the demand for a product is inelastic, the demand for a resource used as an input will tend to be

Accepted Answer

A)  inelastic as well. 
B)  basically elastic. 
C)  of unitary elasticity. 
D)  the inverse of the elasticity coefficient of the product. 
A)  inelastic as well. 
B)  basically elastic. 
C)  of unitary elasticity. 
D)  the inverse of the elasticity coefficient of the product.

Question 14

If a construction boom leads to an increase in the price of lumber, how will the higher lumber prices influence the wood furniture market?

Accepted Answer

A)  The demand for wood furniture will decline, and furniture prices will fall. 
B)  There will be a shortage of wood furniture. 
C)  There will be a surplus of wood furniture. 
D)  The supply of wood furniture will decline, and furniture prices will increase. 
A)  The demand for wood furniture will decline, and furniture prices will fall. 
B)  There will be a shortage of wood furniture. 
C)  There will be a surplus of wood furniture. 
D)  The supply of wood furniture will decline, and furniture prices will increase.

Question 15

Table 12-5
 
Refer to Table 12-5. What is the marginal product of the fourth worker?

Accepted Answer

A)  65 
B)  70 
C)  75 
D)  80 
A)  65 
B)  70 
C)  75 
D)  80

Question 16

When the price of a resource increases, thereby causing the price of the final product to rise, consumers will purchase less of the final product. This is called the

Accepted Answer

A)  substitution in production effect. 
B)  substitution in consumption effect. 
C)  elasticity effect. 
D)  inelasticity effect. 
A)  substitution in production effect. 
B)  substitution in consumption effect. 
C)  elasticity effect. 
D)  inelasticity effect.

Question 17

The following table indicates the reductions in total losses due to theft if a jewelry store hires additional security guards.
Table 12-1
 
Refer to Table 12-1. If the security guards can be hired for $75 per day, how many guards should the shop hire?

Accepted Answer

A)  two 
B)  three 
C)  four 
D)  five 
E)  six 
A)  two 
B)  three 
C)  four 
D)  five 
E)  six

Question 18

The supply of a resource, such as oil, is likely to be

Accepted Answer

A)  equally elastic in both the short and long run. 
B)  more elastic in the long run than in the short run. 
C)  more elastic in the short run than in the long run. 
D)  determined by the demand for the resource. 
A)  equally elastic in both the short and long run. 
B)  more elastic in the long run than in the short run. 
C)  more elastic in the short run than in the long run. 
D)  determined by the demand for the resource.

Question 19

Which of the following most clearly illustrates the concept of "derived demand"?

Accepted Answer

A)  An increase in the price of steak causes the demand for poultry to increase. 
B)  An increase in the demand for new houses leads to an increase in the demand for construction workers. 
C)  An increase in consumer income leads to an increase in the demand for services provided by the government. 
D)  An increase in the demand for new cars causes the demand for used automobiles to rise. 
A)  An increase in the price of steak causes the demand for poultry to increase. 
B)  An increase in the demand for new houses leads to an increase in the demand for construction workers. 
C)  An increase in consumer income leads to an increase in the demand for services provided by the government. 
D)  An increase in the demand for new cars causes the demand for used automobiles to rise.

Question 20

An increase in the price of a resource would cause

Accepted Answer

A)  producers to substitute other inputs for the resource. 
B)  consumers to increase consumption of the goods that increase in price as the result of the higher resource price. 
C)  an increase in the demand for products that use the resource intensely. 
D)  a reduction in the price of goods produced with the resource. 
A)  producers to substitute other inputs for the resource. 
B)  consumers to increase consumption of the goods that increase in price as the result of the higher resource price. 
C)  an increase in the demand for products that use the resource intensely. 
D)  a reduction in the price of goods produced with the resource.

Ceteris paribus , a decrease in the demand for automobiles will

Use the table to answer the following question. If the market wage rate is $150 per worker, how many workers should be employed if the firm wants to maximize profit?

The value marginal product of a resource is

Farmer Ted owned a worn-out piece of farmland for growing cotton, which he had been unable to rent for years. Suddenly he was getting offers from cotton farmers to lease his land. What is the most likely explanation of this?

Which of the following most clearly illustrates the concept of "derived demand"?

Cattle manure is an input often used in making fertilizer. Suppose a technique is discovered that can transform cattle manure into quality gasoline. What would happen in the fertilizer industry?

If a profit-maximizing firm hires an additional unit of labor, what must be true about labor's wage and marginal revenue product?

Tucker Corporation sells its product for $5.00. Tucker's industrial engineers have informed management that hiring one additional worker will increase output by five units per hour. Tucker should hire the additional worker only if the wage rate is

What concept implies that a firm's marginal revenue product curve for labor will slope downward in the short run?

A decrease in the demand for a final product will cause

When a firm decides to hire more workers because local wage rates have decreased, this is an example of

When the price of steel rises, Ford uses more aluminum in the production of its cars. This is an example of

Other things constant, if the demand for a product is inelastic, the demand for a resource used as an input will tend to be

If a construction boom leads to an increase in the price of lumber, how will the higher lumber prices influence the wood furniture market?

Table 12-5 Refer to Table 12-5. What is the marginal product of the fourth worker?

When the price of a resource increases, thereby causing the price of the final product to rise, consumers will purchase less of the final product. This is called the

The following table indicates the reductions in total losses due to theft if a jewelry store hires additional security guards. Table 12-1 Refer to Table 12-1. If the security guards can be hired for $75 per day, how many guards should the shop hire?

The supply of a resource, such as oil, is likely to be

Which of the following most clearly illustrates the concept of "derived demand"?

An increase in the price of a resource would cause

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

Ceteris paribus , a decrease in the demand for automobiles will

Use the table to answer the following question. If the market wage rate is $150 per worker, how many workers should be employed if the firm wants to maximize profit?

The value marginal product of a resource is

Farmer Ted owned a worn-out piece of farmland for growing cotton, which he had been unable to rent for years. Suddenly he was getting offers from cotton farmers to lease his land. What is the most likely explanation of this?

Which of the following most clearly illustrates the concept of "derived demand"?

Cattle manure is an input often used in making fertilizer. Suppose a technique is discovered that can transform cattle manure into quality gasoline. What would happen in the fertilizer industry?

If a profit-maximizing firm hires an additional unit of labor, what must be true about labor's wage and marginal revenue product?

Tucker Corporation sells its product for $5.00. Tucker's industrial engineers have informed management that hiring one additional worker will increase output by five units per hour. Tucker should hire the additional worker only if the wage rate is

What concept implies that a firm's marginal revenue product curve for labor will slope downward in the short run?

A decrease in the demand for a final product will cause

When a firm decides to hire more workers because local wage rates have decreased, this is an example of

When the price of steel rises, Ford uses more aluminum in the production of its cars. This is an example of

Other things constant, if the demand for a product is inelastic, the demand for a resource used as an input will tend to be

If a construction boom leads to an increase in the price of lumber, how will the higher lumber prices influence the wood furniture market?

Table 12-5 Refer to Table 12-5. What is the marginal product of the fourth worker?

When the price of a resource increases, thereby causing the price of the final product to rise, consumers will purchase less of the final product. This is called the

The following table indicates the reductions in total losses due to theft if a jewelry store hires additional security guards. Table 12-1 Refer to Table 12-1. If the security guards can be hired for $75 per day, how many guards should the shop hire?

The supply of a resource, such as oil, is likely to be

Which of the following most clearly illustrates the concept of "derived demand"?

An increase in the price of a resource would cause

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