Question 1

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. A

Question 2

An unexpected decrease in the demand for accountants will lead to

Accepted Answer

A) an increase in the earnings of accountants. 
B) an increase in the incentive of students to prepare for a career in accounting. 
C) a reduction in the future supply of accountants. 
D) an increase in the employment opportunities of accountants. 
A) an increase in the earnings of accountants. 
B) an increase in the incentive of students to prepare for a career in accounting. 
C) a reduction in the future supply of accountants. 
D) an increase in the employment opportunities of accountants. C

Question 3

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. B

Question 4

An apple orchard currently hires 10 workers. The owner estimates that hiring an additional worker would increase apple yields by 20 bushels per day. The price of apples is $15 per bushel. The owner should hire the extra worker if the wage rate is no greater than

Accepted Answer

A) $50 per day. 
B) $150 per day. 
C) $200 per day. 
D) $300 per day. 
A) $50 per day. 
B) $150 per day. 
C) $200 per day. 
D) $300 per day.

Question 5

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 6

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 7

The labor supply curve is fundamentally a representation of the trade-off people face between which of the following?

Accepted Answer

A) work and wage 
B) work and leisure 
C) wage and productivity 
D) technology and wage 
A) work and wage 
B) work and leisure 
C) wage and productivity 
D) technology and wage

Question 8

Figure 12-4
  
-Refer to Figure 12-4. With regard to cookie production, the figure implies

Accepted Answer

A) diminishing marginal product of workers. 
B) diminishing marginal cost of cookie production. 
C) decreasing cost of cookie production. 
D) increasing marginal product of workers. 
A) diminishing marginal product of workers. 
B) diminishing marginal cost of cookie production. 
C) decreasing cost of cookie production. 
D) increasing marginal product of workers.

Question 9

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 10

Which of the following scenarios would serve to decrease the demand for unskilled labor in our country?

Accepted Answer

A) increased productivity gains among the unskilled laborers. 
B) increased demand for goods produced by unskilled labor. 
C) increased international trade with countries where unskilled labor is more plentiful. 
D) increased supply of migrant workers. 
A) increased productivity gains among the unskilled laborers. 
B) increased demand for goods produced by unskilled labor. 
C) increased international trade with countries where unskilled labor is more plentiful. 
D) increased supply of migrant workers.

Question 11

Which of the following resources will have the most inelastic supply in the short run?

Accepted Answer

A) dentists 
B) receptionists 
C) waiters 
D) flight attendants 
A) dentists 
B) receptionists 
C) waiters 
D) flight attendants

Question 12

Table 12-6
  
-Refer to Table 12-6. What is the marginal revenue product of the fifth unit of labor?

Accepted Answer

A) $6 
B) $36 
C) $54 
D) $324 
A) $6 
B) $36 
C) $54 
D) $324

Question 13

A sudden increase in the demand for newly built homes will

Accepted Answer

A) decrease the demand for lumber, bricks, and steel. 
B) decrease the demand for construction workers and architects. 
C) increase the marginal product of workers in the construction industry. 
D) increase the demand for construction workers and architects. 
A) decrease the demand for lumber, bricks, and steel. 
B) decrease the demand for construction workers and architects. 
C) increase the marginal product of workers in the construction industry. 
D) increase the demand for construction workers and architects.

Question 14

A profit-maximizing restaurant owner will hire more busboys to keep more tables clean and quickly available to new customers, as long as the

Accepted Answer

A) marginal product of busboys exceeds the marginal product of other employees. 
B) hourly wage of busboys is lower than that of cashiers and cooks. 
C) marginal revenue product of busboys exceeds their wage rate. 
D) wage of busboys exceeds the wage of other employees. 
A) marginal product of busboys exceeds the marginal product of other employees. 
B) hourly wage of busboys is lower than that of cashiers and cooks. 
C) marginal revenue product of busboys exceeds their wage rate. 
D) wage of busboys exceeds the wage of other employees.

Question 15

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 16

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 17

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 18

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 19

Unions often attempt to obtain stricter certification requirements and/or longer apprenticeships. These changes will tend to raise union workers' wages because they

Accepted Answer

A) create unnecessary unemployment. 
B) shift the labor supply curve leftward. 
C) decrease the marginal product of labor. 
D) increase the demand for the product. 
A) create unnecessary unemployment. 
B) shift the labor supply curve leftward. 
C) decrease the marginal product of labor. 
D) increase the demand for the product.

Question 20

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

Exam 12: The Supply of and Demand for Productive Resources

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

An unexpected decrease in the demand for accountants will lead to

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

An apple orchard currently hires 10 workers. The owner estimates that hiring an additional worker would increase apple yields by 20 bushels per day. The price of apples is $15 per bushel. The owner should hire the extra worker if the wage rate is no greater than

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

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

The labor supply curve is fundamentally a representation of the trade-off people face between which of the following?

Figure 12-4 -Refer to Figure 12-4. With regard to cookie production, the figure implies

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?

Which of the following scenarios would serve to decrease the demand for unskilled labor in our country?

Which of the following resources will have the most inelastic supply in the short run?

Table 12-6 -Refer to Table 12-6. What is the marginal revenue product of the fifth unit of labor?

A sudden increase in the demand for newly built homes will

A profit-maximizing restaurant owner will hire more busboys to keep more tables clean and quickly available to new customers, as long as the

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

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

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

Unions often attempt to obtain stricter certification requirements and/or longer apprenticeships. These changes will tend to raise union workers' wages because they

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

The Economic Approach

A: Some Tools of the Economist

B: Some Tools of the Economist

A: Supply, Demand, and the Market Process

B: Supply, Demand, and the Market Process

A: Supply and Demand: Applications and Extensions

B: Supply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Consumer Choice and Elasticity

A: Costs and the Supply of Goods

B: Costs and the Supply of Goods

A: Price Takers and the Competitive Process

B: Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

A: Price-Searcher Markets With High Entry Barriers

B: 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

Appendix: Government Spending and Taxation

Appendix: the Economics of Social Security

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

Appendix: Great Debates in Economics: Keynes Versus Hayek

Appendix: the Crisis of 2008: Causes and Lessons for the Future

Appendix: Lessons From the Great Depression

Appendix: the Economics of Healthcare

Appendix:education: Problems and Performance

Appendix: Earnings Differences Between Men and Women

Appendix: the Question of Resource Exhaustion

Appendix: Do Labor Unions Increase the Wages of Workers

Appendix: Difficult Environmental Cases and the Role of Government

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