Question 1

Firms should hire additional units of a resource as long as the

Accepted Answer

A)  marginal product of the resource exceeds the price of the resource multiplied by the quantity of output produced. 
B)  marginal product of the resource is less than the price of the resource. 
C)  price of the output produced is positive. 
D)  marginal revenue product of the resource exceeds the cost of employing an additional unit of the resource. 
A)  marginal product of the resource exceeds the price of the resource multiplied by the quantity of output produced. 
B)  marginal product of the resource is less than the price of the resource. 
C)  price of the output produced is positive. 
D)  marginal revenue product of the resource exceeds the cost of employing an additional unit of the resource.

Question 2

Table 12-3
 
Refer to Table 12-3. Suppose that the firm pays its workers $75 per day. Each unit of output sells for $10. How many days of labor should the firm hire?

Accepted Answer

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

Question 3

For a price searcher, marginal revenue product ( MRP ) differs from the value of marginal product ( VMP ) because

Accepted Answer

A)  MRP equals MP times product price ( P ), while VMP equals MP times marginal revenue ( MR ). 
B)  VMP equals MP times product price ( P ), while MRP equals MP times marginal revenue ( MR ). 
C)  VMP equals MP times marginal cost ( MC ), while MRP equals MP times marginal revenue ( MR ). 
D)  They do not differ; they are the same for every firm. 
A)  MRP equals MP times product price ( P ), while VMP equals MP times marginal revenue ( MR ). 
B)  VMP equals MP times product price ( P ), while MRP equals MP times marginal revenue ( MR ). 
C)  VMP equals MP times marginal cost ( MC ), while MRP equals MP times marginal revenue ( MR ). 
D)  They do not differ; they are the same for every firm.

Question 4

Table 12-3
  Refer to Table 12-3. Suppose that the firm pays its workers $55 per day. Each unit of output sells for $12. How many days of labor should the firm hire?

Accepted Answer

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

Question 5

A new government study reveals that daily consumption of peanut butter increases life expectancy by 10 years. What will this do to the input markets for peanuts and peanut butter factory workers? Assuming bologna is a substitute for peanut butter, what will happen in the market for bologna factory workers?

Accepted Answer

The demand for peanut butter will increa

Question 6

The following table provides information for Harry's Hammers, a firm that hires labor competitively and sells hammers for $50 each in a competitive price-taker market.
  If the market wage rate is $225 per week, how many units of labor would a profit-maximizing firm employ?

Accepted Answer

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

Question 7

The demand curve for a human resource will be more elastic the

Accepted Answer

A)  more and better substitutes are available for it. 
B)  more difficult it is to substitute other resources for it. 
C)  more inelastic the demand for the product the resource is used to produce. 
D)  shorter the time period under consideration. 
A)  more and better substitutes are available for it. 
B)  more difficult it is to substitute other resources for it. 
C)  more inelastic the demand for the product the resource is used to produce. 
D)  shorter the time period under consideration.

Question 8

As the price of a resource decreases,

Accepted Answer

A)  demand for that resource increases. 
B)  the quantity demanded of that resource decreases. 
C)  the supply of that resource increases. 
D)  producers are more willing and able to hire that resource. 
E)  producers are less willing and able to hire that resource. 
A)  demand for that resource increases. 
B)  the quantity demanded of that resource decreases. 
C)  the supply of that resource increases. 
D)  producers are more willing and able to hire that resource. 
E)  producers are less willing and able to hire that resource.

Question 9

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

Accepted Answer

A)  A decrease in the price of glass causes the demand for plastic to decrease. 
B)  An increase in the demand for bread leads to an increase in the demand for flour. 
C)  A decrease in the price of air travel leads to an increase in the quantity demanded of air travel. 
D)  An increase in the demand for peanut butter leads to an increase in the demand for jelly. 
A)  A decrease in the price of glass causes the demand for plastic to decrease. 
B)  An increase in the demand for bread leads to an increase in the demand for flour. 
C)  A decrease in the price of air travel leads to an increase in the quantity demanded of air travel. 
D)  An increase in the demand for peanut butter leads to an increase in the demand for jelly.

Question 10

The notion that the demand for inputs depends on the demand for outputs is termed

Accepted Answer

A)  inverse demand. 
B)  derived demand. 
C)  proportional demand. 
D)  complementary demand. 
A)  inverse demand. 
B)  derived demand. 
C)  proportional demand. 
D)  complementary demand.

Question 11

If steel workers obtain a substantial wage increase, employment in the steel industry will be most likely to fall if

Accepted Answer

A)  the demand curve for steel is highly inelastic. 
B)  the demand curve for steel is highly elastic. 
C)  the demand curve for steel workers is highly inelastic. 
D)  there are no good substitutes for steel. 
A)  the demand curve for steel is highly inelastic. 
B)  the demand curve for steel is highly elastic. 
C)  the demand curve for steel workers is highly inelastic. 
D)  there are no good substitutes for steel.

Question 12

A decrease in the marginal product of labor would be represented by

Accepted Answer

A)  increase in labor demand. 
B)  decrease in labor demand. 
C)  increase in the quantity demanded of labor. 
D)  decrease in the quantity demanded of labor. 
E)  an increase in wages. 
A)  increase in labor demand. 
B)  decrease in labor demand. 
C)  increase in the quantity demanded of labor. 
D)  decrease in the quantity demanded of labor. 
E)  an increase in wages.

Question 13

The figure below depicts a production function for a firm that produces cookies.
Figure 12-4
 
Refer to Figure 12-4. As the number of workers increases,

Accepted Answer

A)  total output increases, but at a decreasing rate. 
B)  marginal product increases, but at a decreasing rate. 
C)  marginal product increases at an increasing rate. 
D)  total output decreases. 
A)  total output increases, but at a decreasing rate. 
B)  marginal product increases, but at a decreasing rate. 
C)  marginal product increases at an increasing rate. 
D)  total output decreases.

Question 14

The demand for a factor of production will be more inelastic

Accepted Answer

A)  when the cost of the factor is small relative to the total cost of the product. 
B)  the more elastic the demand for the final product. 
C)  the easier it is to substitute other resources for the factor. 
D)  the more elastic the supply of products produced with the resource. 
A)  when the cost of the factor is small relative to the total cost of the product. 
B)  the more elastic the demand for the final product. 
C)  the easier it is to substitute other resources for the factor. 
D)  the more elastic the supply of products produced with the resource.

Question 15

Use the information given in the table below to answer the following question(s). Assume the firm hires labor competitively and sells its product in a competitive price-taker market at a price of $2 per unit.
Table 12-7
  Refer to Table 12-7. What is the marginal revenue product of the fifth unit of labor?

Accepted Answer

A)  $2 
B)  $4 
C)  $20 
D)  $100 
A)  $2 
B)  $4 
C)  $20 
D)  $100

Question 16

An unanticipated decline in the demand for legal services will

Accepted Answer

A)  increase both the wages of lawyers and the rate of return they can expect to derive from their legal education. 
B)  lead to a shortage in the market for legal services. 
C)  reduce the wages of lawyers but not the quantity of legal services supplied. 
D)  reduce the wages of lawyers and the rate of return on a legal education.. 
A)  increase both the wages of lawyers and the rate of return they can expect to derive from their legal education. 
B)  lead to a shortage in the market for legal services. 
C)  reduce the wages of lawyers but not the quantity of legal services supplied. 
D)  reduce the wages of lawyers and the rate of return on a legal education..

Question 17

Suppose the price of aluminum rises, and as a result, a manufacturing company purchases tin to use in place of the now higher-priced aluminum. This is referred to as

Accepted Answer

A)  substitution in consumption. 
B)  substitution in production. 
C)  reverse substitution. 
D)  factor reversal. 
A)  substitution in consumption. 
B)  substitution in production. 
C)  reverse substitution. 
D)  factor reversal.

Question 18

Prices in resource markets

Accepted Answer

A)  provide users with information concerning the relative scarcity of resources. 
B)  encourage the use of a resource now if its price is expected to rise in the future. 
C)  provide suppliers with little incentive to develop more of those resources that are intensely demanded by users. 
D)  have little impact on productive decisions unless they are closely regulated by the government. 
A)  provide users with information concerning the relative scarcity of resources. 
B)  encourage the use of a resource now if its price is expected to rise in the future. 
C)  provide suppliers with little incentive to develop more of those resources that are intensely demanded by users. 
D)  have little impact on productive decisions unless they are closely regulated by the government.

Question 19

The more elastic the demand for a final product,

Accepted Answer

A)  the more elastic will be the demand for the productive resources used. 
B)  the less elastic the supply of resources used in producing the product. 
C)  the less firms will reduce their usage of resources when the price of the resources increases. 
D)  the higher the MRP of the resources used to produce the product. 
A)  the more elastic will be the demand for the productive resources used. 
B)  the less elastic the supply of resources used in producing the product. 
C)  the less firms will reduce their usage of resources when the price of the resources increases. 
D)  the higher the MRP of the resources used to produce the product.

Question 20

Assume the average salary for a college philosophy professor is $50,000. Suppose businesses decide they need in-house instructors to teach ethics to employees, and they begin hiring philosophy professors at a salary of $75,000. What are the short-term and long-term effects of this supposition?

Accepted Answer

As philosophy professors move into the c

Firms should hire additional units of a resource as long as the

Table 12-3 Refer to Table 12-3. Suppose that the firm pays its workers $75 per day. Each unit of output sells for $10. How many days of labor should the firm hire?

For a price searcher, marginal revenue product ( MRP ) differs from the value of marginal product ( VMP ) because

Table 12-3 Refer to Table 12-3. Suppose that the firm pays its workers $55 per day. Each unit of output sells for $12. How many days of labor should the firm hire?

The following table provides information for Harry's Hammers, a firm that hires labor competitively and sells hammers for $50 each in a competitive price-taker market. If the market wage rate is $225 per week, how many units of labor would a profit-maximizing firm employ?

The demand curve for a human resource will be more elastic the

As the price of a resource decreases,

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

The notion that the demand for inputs depends on the demand for outputs is termed

If steel workers obtain a substantial wage increase, employment in the steel industry will be most likely to fall if

A decrease in the marginal product of labor would be represented by

The figure below depicts a production function for a firm that produces cookies. Figure 12-4 Refer to Figure 12-4. As the number of workers increases,

The demand for a factor of production will be more inelastic

An unanticipated decline in the demand for legal services will

Suppose the price of aluminum rises, and as a result, a manufacturing company purchases tin to use in place of the now higher-priced aluminum. This is referred to as

Prices in resource markets

The more elastic the demand for a final product,

Assume the average salary for a college philosophy professor is $50,000. Suppose businesses decide they need in-house instructors to teach ethics to employees, and they begin hiring philosophy professors at a salary of $75,000. What are the short-term and long-term effects of this supposition?

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

Firms should hire additional units of a resource as long as the

Table 12-3 Refer to Table 12-3. Suppose that the firm pays its workers $75 per day. Each unit of output sells for $10. How many days of labor should the firm hire?

For a price searcher, marginal revenue product ( MRP ) differs from the value of marginal product ( VMP ) because

Table 12-3 Refer to Table 12-3. Suppose that the firm pays its workers $55 per day. Each unit of output sells for $12. How many days of labor should the firm hire?

The following table provides information for Harry's Hammers, a firm that hires labor competitively and sells hammers for $50 each in a competitive price-taker market. If the market wage rate is $225 per week, how many units of labor would a profit-maximizing firm employ?

The demand curve for a human resource will be more elastic the

As the price of a resource decreases,

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

The notion that the demand for inputs depends on the demand for outputs is termed

If steel workers obtain a substantial wage increase, employment in the steel industry will be most likely to fall if

A decrease in the marginal product of labor would be represented by

The figure below depicts a production function for a firm that produces cookies. Figure 12-4 Refer to Figure 12-4. As the number of workers increases,

The demand for a factor of production will be more inelastic

An unanticipated decline in the demand for legal services will

Suppose the price of aluminum rises, and as a result, a manufacturing company purchases tin to use in place of the now higher-priced aluminum. This is referred to as

Prices in resource markets

The more elastic the demand for a final product,

Assume the average salary for a college philosophy professor is $50,000. Suppose businesses decide they need in-house instructors to teach ethics to employees, and they begin hiring philosophy professors at a salary of $75,000. What are the short-term and long-term effects of this supposition?

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