Question 1

If steel workers obtain a substantial wage increase, employment in the steel industry will be likely to fall the most 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 2

Table 12-7
  
-Refer to Table 12-7. If the market wage rate is $5 per day, how many workers should the firm employ if it wants to maximize profits?

Accepted Answer

A) three 
B) four 
C) five 
D) six 
A) three 
B) four 
C) five 
D) six

Question 3

Table 12-2
  
-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

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 5

According to the principle of marginal productivity, if

Accepted Answer

A) the product price is less than MRP, the firm is using too little of the input. 
B) the price of an input rises, the quantity demanded of the input will increase. 
C) MRP is greater than product price, the firm should reduce the use of the input. 
D) price of the input equals MRP, the firm is maximizing profit. 
A) the product price is less than MRP, the firm is using too little of the input. 
B) the price of an input rises, the quantity demanded of the input will increase. 
C) MRP is greater than product price, the firm should reduce the use of the input. 
D) price of the input equals MRP, the firm is maximizing profit.

Question 6

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 7

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 8

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.

Question 9

Table 12-1
  
-Refer to Table 12-1. If the security guards can be hired for $75 per day, how many guards should the shop hire?

Accepted Answer

A) two 
B) three 
C) four 
D) five 
E) six 
A) two 
B) three 
C) four 
D) five 
E) six

Question 10

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 11

When the supply of workers is plentiful, one would predict that market wages would be

Accepted Answer

A) determined solely by factors that affect supply. 
B) determined solely by factors that affect demand. 
C) low, other things equal. 
D) high, other things equal. 
A) determined solely by factors that affect supply. 
B) determined solely by factors that affect demand. 
C) low, other things equal. 
D) high, other things equal.

Question 12

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 13

The demand for a resource depends largely on the

Accepted Answer

A) demand for the products that it produces. 
B) price of the resource. 
C) supply of the resource. 
D) cost of producing the resource. 
A) demand for the products that it produces. 
B) price of the resource. 
C) supply of the resource. 
D) cost of producing the resource.

Question 14

If the demand for workers with doctorate degrees in economics increases, we would expect

Accepted Answer

A) the wages of economists to increase in the short run and the number of economists employed to increase in the long run. 
B) the supply of economists to increase in the short run and their wages to rise in the long run. 
C) a rapid increase in the supply of economists, causing wages to remain constant. 
D) the wages of economists to decrease in the short run and the number of economists employed to increase in the long run. 
A) the wages of economists to increase in the short run and the number of economists employed to increase in the long run. 
B) the supply of economists to increase in the short run and their wages to rise in the long run. 
C) a rapid increase in the supply of economists, causing wages to remain constant. 
D) the wages of economists to decrease in the short run and the number of economists employed to increase in the long run.

Question 15

Profit-maximizing firms will expand their employment of each variable resource until

Accepted Answer

A) the Marginal Revenue Product (MRP) of the resource is just equal to the price of the resource. 
B) other firms realize they can't compete. 
C) the MRP of the resource is below the cost of the resource. 
D) the MRP of the resource is above the cost of the resource. 
A) the Marginal Revenue Product (MRP) of the resource is just equal to the price of the resource. 
B) other firms realize they can't compete. 
C) the MRP of the resource is below the cost of the resource. 
D) the MRP of the resource is above the cost of the resource.

Question 16

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 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

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 19

A decrease in the demand for a final product will cause

Accepted Answer

A) a decrease in demand for the resources used to produce the good. 
B) an increase in demand for the resources used to produce the good. 
C) firms to expand production of the good. 
D) an increase in the supply of resources used to produce the good. 
A) a decrease in demand for the resources used to produce the good. 
B) an increase in demand for the resources used to produce the good. 
C) firms to expand production of the good. 
D) an increase in the supply of resources used to produce the good.

Question 20

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

Exam 12: The Supply of and Demand for Productive Resources

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

Table 12-7 -Refer to Table 12-7. If the market wage rate is $5 per day, how many workers should the firm employ if it wants to maximize profits?

According to the principle of marginal productivity, if

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

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

Table 12-1 -Refer to Table 12-1. If the security guards can be hired for $75 per day, how many guards should the shop hire?

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?

When the supply of workers is plentiful, one would predict that market wages would be

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

The demand for a resource depends largely on the

If the demand for workers with doctorate degrees in economics increases, we would expect

Profit-maximizing firms will expand their employment of each variable resource until

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

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?

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

A decrease in the demand for a final product will cause

Table 12-7 -Refer to Table 12-7. What is the marginal revenue product of the fifth unit of labor?

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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