Question 1

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 2

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.If the firm is maximizing the marginal product of labor,what is the firm's marginal revenue product?

Accepted Answer

A) 140 baseballs. 
B) $300. 
C) $400. 
D) $700. 
A) 140 baseballs. 
B) $300. 
C) $400. 
D) $700.

Question 3

Diane's Auto World installs tires on automobiles,light trucks,and sport utility vehicles.She is a profit-maximizing business owner whose firm operates in a competitive market.The marginal cost of installing a tire is $10.The marginal productivity of the last worker that Diane hired was 2 tires per hour.What is the maximum hourly wage that Diane was willing to pay the last worker hired?

Accepted Answer

A) $5 
B) $10 
C) $20 
D) There is insufficient information to answer this question. 
A) $5 
B) $10 
C) $20 
D) There is insufficient information to answer this question.

Question 4

If a firm used only two factors of production,labor (L)and capital (K),which of the following conditions would be present if the firm was minimizing its cost of production?

Accepted Answer

A) MPL ¸ PL = MPK ¸ PK 
B) MPL ´ PL = MPK ´ PK 
C) MRPL = MRPK 
D) MPL = MPK 
A) MPL ¸ PL = MPK ¸ PK 
B) MPL ´ PL = MPK ´ PK 
C) MRPL = MRPK 
D) MPL = MPK

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

If an advance in computer technology reduces the need for businesses to hire accountants,students majoring in accounting should expect

Accepted Answer

A) a lower rate of return on their human capital investment. 
B) an increase in their employment prospects. 
C) a higher wage rate than they were expecting when they selected their major. 
D) an increase in the demand for accountants. 
A) a lower rate of return on their human capital investment. 
B) an increase in their employment prospects. 
C) a higher wage rate than they were expecting when they selected their major. 
D) an increase in the demand for accountants.

Question 7

Compared to the short-run demand,the long-run demand for a resource is

Accepted Answer

A) less elastic. 
B) more elastic. 
C) equally elastic. 
D) either more or less elastic;we cannot predict which. 
A) less elastic. 
B) more elastic. 
C) equally elastic. 
D) either more or less elastic;we cannot predict which.

Question 8

Relative to a mobile factor of production,economic theory suggests that the price elasticity of supply for a highly immobile factor of production (for example,land)will be

Accepted Answer

A) more elastic. 
B) less elastic. 
C) of unitary elasticity. 
D) this is a trick question;the price elasticity of supply for factors of production is not affected by factor mobility. 
A) more elastic. 
B) less elastic. 
C) of unitary elasticity. 
D) this is a trick question;the price elasticity of supply for factors of production is not affected by factor mobility.

Question 9

The marginal revenue product of a resource is equal to the value of marginal product when the product produced by the resource is sold in

Accepted Answer

A) a competitive price-taker market. 
B) a competitive price-searcher market. 
C) an oligopolistic market. 
D) a monopolistic industry. 
A) a competitive price-taker market. 
B) a competitive price-searcher market. 
C) an oligopolistic market. 
D) a monopolistic industry.

Question 10

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 11

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 12

If the price of airline tickets falls,what will happen to the demand curve for flight attendants?

Accepted Answer

A) It will shift to the right. 
B) It will shift to the left. 
C) The direction of the shift is ambiguous. 
D) It will remain unchanged. 
A) It will shift to the right. 
B) It will shift to the left. 
C) The direction of the shift is ambiguous. 
D) It will remain unchanged.

Question 13

Marginal revenue product is the

Accepted Answer

A) additional revenue from one additional dollar increase in price. 
B) change in the revenue product resulting from one additional unit of input. 
C) additional revenue from one additional unit of input. 
D) change in revenue resulting in one additional dollar in price. 
A) additional revenue from one additional dollar increase in price. 
B) change in the revenue product resulting from one additional unit of input. 
C) additional revenue from one additional unit of input. 
D) change in revenue resulting in one additional dollar in price.

Question 14

If a college education did not increase worker productivity,

Accepted Answer

A) no one would go to college. 
B) wages would tend to be the same for workers with and without a college education. 
C) wages would still be higher for workers with college degrees because of the cost of going to college. 
D) the total lifetime earnings of workers who go to college and those who do not would tend to be the same. 
A) no one would go to college. 
B) wages would tend to be the same for workers with and without a college education. 
C) wages would still be higher for workers with college degrees because of the cost of going to college. 
D) the total lifetime earnings of workers who go to college and those who do not would tend to be the same.

Question 15

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 16

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 17

The demand for accountants is a result of the complicated tax code.This is an example of

Accepted Answer

A) dependent demand. 
B) resource demand. 
C) derived demand. 
D) none of the above. 
A) dependent demand. 
B) resource demand. 
C) derived demand. 
D) none of the above.

Question 18

When the price of a resource goes up and firms seek other suitable resources,this is called the

Accepted Answer

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

Question 19

At a low wage rate,

Accepted Answer

A) there is no substitution effect. 
B) there is no income effect. 
C) the substitution effect usually outweighs the income effect. 
D) the income effect usually outweighs the substitution effect. 
E) the disutility of market work is usually high. 
A) there is no substitution effect. 
B) there is no income effect. 
C) the substitution effect usually outweighs the income effect. 
D) the income effect usually outweighs the substitution effect. 
E) the disutility of market work is usually high.

Question 20

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.

Exam 25: The Supply of and Demand for Productive Resources

When the price of a resource is set below equilibrium,

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.If the firm is maximizing the marginal product of labor,what is the firm's marginal revenue product?

If a firm used only two factors of production,labor (L)and capital (K),which of the following conditions would be present if the firm was minimizing its cost of production?

If an advance in computer technology reduces the need for businesses to hire accountants,students majoring in accounting should expect

Compared to the short-run demand,the long-run demand for a resource is

Relative to a mobile factor of production,economic theory suggests that the price elasticity of supply for a highly immobile factor of production (for example,land)will be

The marginal revenue product of a resource is equal to the value of marginal product when the product produced by the resource is sold in

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?

The more elastic the demand for a final product,

If the price of airline tickets falls,what will happen to the demand curve for flight attendants?

Marginal revenue product is the

If a college education did not increase worker productivity,

The value marginal product of a resource is

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 accountants is a result of the complicated tax code.This is an example of

When the price of a resource goes up and firms seek other suitable resources,this is called the

At a low wage rate,

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

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

Filters