Question 1

A change in the demand for a resource can be caused by which of the following?

Accepted Answer

A) a change in the demand for the final product that uses the resource as a factor of production 
B) a change in the productivity of the resource 
C) a change in the price of other resources that could be used as substitutes for the resource in question 
D) all of the above 
A) a change in the demand for the final product that uses the resource as a factor of production 
B) a change in the productivity of the resource 
C) a change in the price of other resources that could be used as substitutes for the resource in question 
D) all of the above

Question 2

If the price of cotton increases

Accepted Answer

A) consumers will buy more cotton clothes. 
B) consumers will increase their purchases of clothing made of other materials. 
C) clothing producers will stop making cotton clothes. 
D) clothing producers will not be able to adjust their output. 
A) consumers will buy more cotton clothes. 
B) consumers will increase their purchases of clothing made of other materials. 
C) clothing producers will stop making cotton clothes. 
D) clothing producers will not be able to adjust their output.

Question 3

If a firm is using a resource hired in a perfectly competitive market,and if the marginal resource cost is less than its marginal revenue product,

Accepted Answer

A) more of the resource should be used. 
B) less of the resource should be used. 
C) the firm should pay a lower price for the resource. 
D) the firm should pay a higher price for the resource. 
E) the firm is using the optimal amount of the resource. 
A) more of the resource should be used. 
B) less of the resource should be used. 
C) the firm should pay a lower price for the resource. 
D) the firm should pay a higher price for the resource. 
E) the firm is using the optimal amount of the resource.

Question 4

If businesses found that changing economic conditions made it attractive for them to hire a larger number of economics majors,we would expect

Accepted Answer

A) economics majors to receive a greater return on their human capital investment. 
B) a decrease in the employment opportunities for economics majors. 
C) lower wages for economics majors. 
D) fewer students to major in economics. 
A) economics majors to receive a greater return on their human capital investment. 
B) a decrease in the employment opportunities for economics majors. 
C) lower wages for economics majors. 
D) fewer students to major in economics.

Question 5

Harold Brown runs a company that sells encyclopedia sets for $250 each.When he employs 10 workers,they can sell 60 sets per week,while only 54 sets are sold when 9 workers are employed.What is the weekly marginal revenue product of the tenth worker?

Accepted Answer

A) $250 
B) $1,250 
C) $1,500 
D) $15,000 
A) $250 
B) $1,250 
C) $1,500 
D) $15,000

Question 6

Why is a college graduate more likely to get a job in management than is someone with only a high school diploma,even when the job has nothing to do with a specific type of education?

Accepted Answer

Increasingly,a college education is used

Question 7

The demand for most products is likely to be

Accepted Answer

A) more elastic in the long run than in the short run. 
B) less elastic in the long run than in the short run. 
C) equally elastic in the short and long run. 
D) equally inelastic in the short and long run. 
A) more elastic in the long run than in the short run. 
B) less elastic in the long run than in the short run. 
C) equally elastic in the short and long run. 
D) equally inelastic in the short and long run.

Question 8

A competitive car wash currently hires 4 workers,who together can wash 80 cars per day.The market price of car washes is $5 per wash,and the price of workers is $60 per day.The car wash should hire a fifth worker if it would increase total production to at least

Accepted Answer

A) 92 cars per day. 
B) 100 cars per day. 
C) 104 cars per day. 
D) 110 cars per day. 
A) 92 cars per day. 
B) 100 cars per day. 
C) 104 cars per day. 
D) 110 cars per day.

Question 9

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 10

Which of the following is the most accurate definition of a worker's "marginal revenue product"?

Accepted Answer

A) the change in the firm's profits as the result of hiring an additional worker 
B) the change in the firm's total revenue as the result of hiring an additional worker 
C) the change in the firm's output as the result of hiring an additional worker 
D) the change in the firm's cost as the result of hiring an additional worker 
A) the change in the firm's profits as the result of hiring an additional worker 
B) the change in the firm's total revenue as the result of hiring an additional worker 
C) the change in the firm's output as the result of hiring an additional worker 
D) the change in the firm's cost as the result of hiring an additional worker

Question 11

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 12

When a resource price is below equilibrium,

Accepted Answer

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

Question 13

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 14

Figure 12-2
  
-If an unanticipated increase in demand in Figure 12-2 shifts the demand for accountants from D₁ to D₂,how will the higher level of demand influence the wages of accountants in the short run and the long run?

Accepted Answer

A) In the short run,wages will increase to W₂,but the wage increase will be smaller in the long run. 
B) In the short run,wages will be less than W₂,but in the long run,they will rise to W₂. 
C) In the short run,wages will increase to W₂,and in the long run,they will be even higher than W₂. 
D) Employment will increase,but the higher level of demand will not alter the wages of accountants. 
A) In the short run,wages will increase to W₂,but the wage increase will be smaller in the long run. 
B) In the short run,wages will be less than W₂,but in the long run,they will rise to W₂. 
C) In the short run,wages will increase to W₂,and in the long run,they will be even higher than W₂. 
D) Employment will increase,but the higher level of demand will not alter the wages of accountants.

Question 15

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 16

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 17

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 18

The derived demand and,consequently,the demand curve for labor are determined by

Accepted Answer

A) labor's wage. 
B) labor's marginal revenue. 
C) the marginal cost of the input labor. 
D) labor's marginal revenue product. 
A) labor's wage. 
B) labor's marginal revenue. 
C) the marginal cost of the input labor. 
D) labor's marginal revenue product.

Question 19

One way to invest in human capital is by

Accepted Answer

A) increasing your education. 
B) avoiding on-the-job training programs. 
C) doing nothing;it is impossible to improve your human capital.Human capital is solely determined by the abilities that you are born with. 
D) investing in physical capital. 
A) increasing your education. 
B) avoiding on-the-job training programs. 
C) doing nothing;it is impossible to improve your human capital.Human capital is solely determined by the abilities that you are born with. 
D) investing in physical capital.

Question 20

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.

Exam 25: The Supply of and Demand for Productive Resources

A change in the demand for a resource can be caused by which of the following?

If the price of cotton increases

If a firm is using a resource hired in a perfectly competitive market,and if the marginal resource cost is less than its marginal revenue product,

If businesses found that changing economic conditions made it attractive for them to hire a larger number of economics majors,we would expect

Harold Brown runs a company that sells encyclopedia sets for $250 each.When he employs 10 workers,they can sell 60 sets per week,while only 54 sets are sold when 9 workers are employed.What is the weekly marginal revenue product of the tenth worker?

Why is a college graduate more likely to get a job in management than is someone with only a high school diploma,even when the job has nothing to do with a specific type of education?

The demand for most products is likely to be

A competitive car wash currently hires 4 workers,who together can wash 80 cars per day.The market price of car washes is $5 per wash,and the price of workers is $60 per day.The car wash should hire a fifth worker if it would increase total production to at least

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

Which of the following is the most accurate definition of a worker's "marginal revenue product"?

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

When a resource price is below equilibrium,

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

Figure 12-2 -If an unanticipated increase in demand in Figure 12-2 shifts the demand for accountants from D₁ to D₂,how will the higher level of demand influence the wages of accountants in the short run and the long run?

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?

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?

The derived demand and,consequently,the demand curve for labor are determined by

One way to invest in human capital is by

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

The Economic Approach

Asome Tools of the Economist

Asupply,demand,and the Market Process

Asupply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Ataking the Nations Economic Pulse

Economic Fluctuations, unemployment, and Inflation

Aan Introduction to Basic Macroeconomic Markets

Dynamic Change, economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and Historical Perspective

Fiscal Policy, incentives, and Secondary Effects

Amoney and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, output, and Employment

Creating an Environment for Growth and Prosperity

Institutions,policies,and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Consumer Choice and Elasticity

Acosts and the Supply of Goods

Aprice Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Aprice-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

Government Spending and Taxation

The Economics of Social Security

The Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Great Debates in Economics: Keynes Versus Hayek

The Crisis of 2008: Causes and Lessons for the Future

Lessons From the Great Depression

Lessons From Japan and Canada

The Federal Budget and the National Debt

The Economics of Healthcare

Education: Problems and Performance

Earnings Differences Between Men and Women

Do Labor Unions Increase the Wages of Workers

The Question of Resource Exhaustion

Difficult Environmental Cases and the Role of Government

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