Question 1

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 2

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 3

When an employer pays the cost of educating a worker,it is likely that the employer

Accepted Answer

A) is demonstrating altruistic motives. 
B) is pursuing some objective other than profit-maximization. 
C) hopes to recapture its investment in the form of increased labor productivity. 
D) receives reimbursement from the government for the cost of the education. 
A) is demonstrating altruistic motives. 
B) is pursuing some objective other than profit-maximization. 
C) hopes to recapture its investment in the form of increased labor productivity. 
D) receives reimbursement from the government for the cost of the education.

Question 4

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 5

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 6

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 7

Table 12-5
  
-Refer to Table 12-5.At which number of workers does diminishing marginal product begin?

Accepted Answer

A) 2 
B) 3 
C) 4 
D) 5 
A) 2 
B) 3 
C) 4 
D) 5

Question 8

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 9

Which of the following is a correct statement about the labor market?

Accepted Answer

A) Workers determine the supply of labor,and firms determine the demand for labor. 
B) Workers determine the demand for labor,and firms determine the supply of labor. 
C) Workers determine the supply of labor,and government determines the demand for labor. 
D) The forces of supply and demand,while present in the labor market,have nothing to balance in that market. 
A) Workers determine the supply of labor,and firms determine the demand for labor. 
B) Workers determine the demand for labor,and firms determine the supply of labor. 
C) Workers determine the supply of labor,and government determines the demand for labor. 
D) The forces of supply and demand,while present in the labor market,have nothing to balance in that market.

Question 10

The demand for a resource is generally more

Accepted Answer

A) elastic in the short run because it takes time to alter the ratio of resources used in many production processes. 
B) inelastic in the short run because it takes time to alter the ratio of resources used in many production processes. 
C) elastic in the short run because an increase in the price of the resource may not be expected to last. 
D) inelastic in the short run because once resource suppliers find out they can charge a higher price,they will do so in the long run. 
A) elastic in the short run because it takes time to alter the ratio of resources used in many production processes. 
B) inelastic in the short run because it takes time to alter the ratio of resources used in many production processes. 
C) elastic in the short run because an increase in the price of the resource may not be expected to last. 
D) inelastic in the short run because once resource suppliers find out they can charge a higher price,they will do so in the long run.

Question 11

Generally,the supply of a resource in the short run will be

Accepted Answer

A) more elastic than in the long run. 
B) less elastic than in the long run. 
C) equally elastic as the supply of the resource in the long run. 
D) directly related to the elasticity of demand for the product that the resource helps produce. 
A) more elastic than in the long run. 
B) less elastic than in the long run. 
C) equally elastic as the supply of the resource in the long run. 
D) directly related to the elasticity of demand for the product that the resource helps produce.

Question 12

If the demand for a consumer good increases,the demand for resources required to make the good will

Accepted Answer

A) remain the same,but the quantity demanded will increase. 
B) decrease if the demand for the consumer good is inelastic,otherwise the demand will increase. 
C) stay the same,but the quantity demanded will decrease. 
D) increase. 
A) remain the same,but the quantity demanded will increase. 
B) decrease if the demand for the consumer good is inelastic,otherwise the demand will increase. 
C) stay the same,but the quantity demanded will decrease. 
D) increase.

Question 13

Table 12-4
  
-Refer to Table 12-4.What is total output when 4 workers are hired?

Accepted Answer

A) 30 
B) 40 
C) 120 
D) 160 
A) 30 
B) 40 
C) 120 
D) 160

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

Ten cases of spring water are sold for $6 each,and the marginal product of the last unit of labor is 5.If the price of a case increases from $6 to $8,then the marginal revenue product of the last unit of labor would

Accepted Answer

A) decrease by $10. 
B) increase by $40. 
C) decrease by $30. 
D) increase by $10. 
E) not change. 
A) decrease by $10. 
B) increase by $40. 
C) decrease by $30. 
D) increase by $10. 
E) not change.

Question 16

When the marginal revenue product of an input is less than its price,the

Accepted Answer

A) producer should expand the use of that input. 
B) price of the input will automatically rise in a free market. 
C) producer should reduce the use of that input. 
D) marginal physical product of that input must be below its average physical product. 
A) producer should expand the use of that input. 
B) price of the input will automatically rise in a free market. 
C) producer should reduce the use of that input. 
D) marginal physical product of that input must be below its average physical product.

Question 17

If the demand for a consumer good decreases,the demand for resources required to make the good will

Accepted Answer

A) increase. 
B) remain the same,but the quantity demanded will increase. 
C) decrease. 
D) increase or decrease depending on whether the demand for the product is elastic or inelastic. 
A) increase. 
B) remain the same,but the quantity demanded will increase. 
C) decrease. 
D) increase or decrease depending on whether the demand for the product is elastic or inelastic.

Question 18

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 19

Figure 12-1
  
-If Figure 12-1 indicated the short-run and long-run supply curves for a resource,which of the following would probably be the long-run supply curve of the resource?

Accepted Answer

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

Question 20

The labor supply curve reflects how

Accepted Answer

A) workers' decisions about the labor-leisure tradeoff respond to a change in the wage. 
B) workers' decisions about the opportunity cost of labor respond to a change in the quantity of labor supplied. 
C) firms' decisions about the labor-leisure tradeoff respond to the quantity of labor demanded. 
D) firms' decisions about how the quantity of labor they hire respond to changes in their opportunities to earn profits. 
A) workers' decisions about the labor-leisure tradeoff respond to a change in the wage. 
B) workers' decisions about the opportunity cost of labor respond to a change in the quantity of labor supplied. 
C) firms' decisions about the labor-leisure tradeoff respond to the quantity of labor demanded. 
D) firms' decisions about how the quantity of labor they hire respond to changes in their opportunities to earn profits.

Exam 25: The Supply of and Demand for Productive Resources

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

An unanticipated decline in the demand for legal services will

When an employer pays the cost of educating a worker,it is likely that the employer

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

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

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

Table 12-5 -Refer to Table 12-5.At which number of workers does diminishing marginal product begin?

Which of the following is a correct statement about the labor market?

The demand for a resource is generally more

Generally,the supply of a resource in the short run will be

If the demand for a consumer good increases,the demand for resources required to make the good will

Table 12-4 -Refer to Table 12-4.What is total output when 4 workers are hired?

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.

Ten cases of spring water are sold for $6 each,and the marginal product of the last unit of labor is 5.If the price of a case increases from $6 to $8,then the marginal revenue product of the last unit of labor would

When the marginal revenue product of an input is less than its price,the

If the demand for a consumer good decreases,the demand for resources required to make the good will

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

Figure 12-1 -If Figure 12-1 indicated the short-run and long-run supply curves for a resource,which of the following would probably be the long-run supply curve of the resource?

The labor supply curve reflects how

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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.