Question 1

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 2

As the price of a resource decreases,

Accepted Answer

A) demand for that resource increases. 
B) the quantity demanded of that resource decreases. 
C) the supply of that resource increases. 
D) producers are more willing and able to hire that resource. 
E) producers are less willing and able to hire that resource. 
A) demand for that resource increases. 
B) the quantity demanded of that resource decreases. 
C) the supply of that resource increases. 
D) producers are more willing and able to hire that resource. 
E) producers are less willing and able to hire that resource.

Question 3

Prices in resource markets

Accepted Answer

A) provide users with information concerning the relative scarcity of resources. 
B) encourage the use of a resource now if its price is expected to rise in the future. 
C) provide suppliers with little incentive to develop more of those resources that are intensely demanded by users. 
D) have little impact on productive decisions unless they are closely regulated by the government. 
A) provide users with information concerning the relative scarcity of resources. 
B) encourage the use of a resource now if its price is expected to rise in the future. 
C) provide suppliers with little incentive to develop more of those resources that are intensely demanded by users. 
D) have little impact on productive decisions unless they are closely regulated by the government.

Question 4

The supply of human capital to a particular use is

Accepted Answer

A) perfectly inelastic in the short run. 
B) perfectly elastic in the long run. 
C) more inelastic in the short run since it takes time for persons to acquire a particular skill. 
D) more elastic in the short run since individuals who already possess the particular skill can be attracted into the labor force in the short run. 
A) perfectly inelastic in the short run. 
B) perfectly elastic in the long run. 
C) more inelastic in the short run since it takes time for persons to acquire a particular skill. 
D) more elastic in the short run since individuals who already possess the particular skill can be attracted into the labor force in the short run.

Question 5

Suppose that workers immigrate to Minnesota from Canada. Which of the following correctly describes what would happen in the market for labor in Minnesota?

Accepted Answer

A) The equilibrium wage would increase, as would the quantity of labor. With more workers, the added output from an extra worker is larger. 
B) The equilibrium wage would decrease, as would the quantity of labor. With fewer workers, the added output from an extra worker is smaller. 
C) The equilibrium wage would decrease, and the quantity of labor would increase. With more workers, the added output from an extra worker is smaller. 
D) The equilibrium wage would decrease, and the quantity of labor would increase. With more workers, the added output from an extra worker is larger. 
A) The equilibrium wage would increase, as would the quantity of labor. With more workers, the added output from an extra worker is larger. 
B) The equilibrium wage would decrease, as would the quantity of labor. With fewer workers, the added output from an extra worker is smaller. 
C) The equilibrium wage would decrease, and the quantity of labor would increase. With more workers, the added output from an extra worker is smaller. 
D) The equilibrium wage would decrease, and the quantity of labor would increase. With more workers, the added output from an extra worker is larger.

Question 6

Because the demand for a resource is highly dependent upon the demand for the final goods that the resource helps produce, the demand for a resource is called a(n)

Accepted Answer

A) derived demand. 
B) independent demand. 
C) declining proportions demand. 
D) elastic demand. 
A) derived demand. 
B) independent demand. 
C) declining proportions demand. 
D) elastic demand.

Question 7

A decrease in the demand for a product will cause output of that product to

Accepted Answer

A) increase and the demand for and prices of the resources used to produce the product to rise. 
B) decrease and both the demand for and prices of the resources used to produce the product to fall. 
C) decline; the demand for the resources used to produce the product will remain constant. 
D) increase; the price of resources used to produce the product will rise if their supply is elastic but fall if supply is inelastic. 
A) increase and the demand for and prices of the resources used to produce the product to rise. 
B) decrease and both the demand for and prices of the resources used to produce the product to fall. 
C) decline; the demand for the resources used to produce the product will remain constant. 
D) increase; the price of resources used to produce the product will rise if their supply is elastic but fall if supply is inelastic.

Question 8

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 9

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 10

An increase in the demand for a product will cause

Accepted Answer

A) both the demand for and prices of the resources used to produce the product to decline. 
B) both the demand for and prices of the resources used to produce the product to increase. 
C) the demand for the resources used to produce the product to increase and their prices to decline. 
D) the demand for the resources used to produce the product to decline and their prices to increase. 
A) both the demand for and prices of the resources used to produce the product to decline. 
B) both the demand for and prices of the resources used to produce the product to increase. 
C) the demand for the resources used to produce the product to increase and their prices to decline. 
D) the demand for the resources used to produce the product to decline and their prices to increase.

Question 11

Figure 12-4
  
-Refer to Figure 12-4. As the number of workers increases,

Accepted Answer

A) total output increases, but at a decreasing rate. 
B) marginal product increases, but at a decreasing rate. 
C) marginal product increases at an increasing rate. 
D) total output decreases. 
A) total output increases, but at a decreasing rate. 
B) marginal product increases, but at a decreasing rate. 
C) marginal product increases at an increasing rate. 
D) total output decreases.

Question 12

The short-run supply of a human resource will be more elastic the

Accepted Answer

A) more elastic the demand for the product to be produced. 
B) more inelastic the demand for the product to be produced. 
C) lower the skill level necessary to perform the job. 
D) harder it is to acquire the skill and knowledge necessary to provide the resource. 
A) more elastic the demand for the product to be produced. 
B) more inelastic the demand for the product to be produced. 
C) lower the skill level necessary to perform the job. 
D) harder it is to acquire the skill and knowledge necessary to provide the resource.

Question 13

Suppose the United Auto Workers' Union succeeded in obtaining a 10 percent increase in the wages of its workers and that the wage increase caused automobile prices to rise. Employment in the auto industry would be most likely to decline significantly if

Accepted Answer

A) the demand for American-made automobiles was highly elastic. 
B) the supply of foreign-produced automobiles was highly inelastic. 
C) American consumers considered foreign automobiles a poor substitute for American automobiles. 
D) the demand for American automobiles was relatively constant and highly inelastic. 
A) the demand for American-made automobiles was highly elastic. 
B) the supply of foreign-produced automobiles was highly inelastic. 
C) American consumers considered foreign automobiles a poor substitute for American automobiles. 
D) the demand for American automobiles was relatively constant and highly inelastic.

Question 14

The following table provides information for Harry's Hammers, a firm that hires labor competitively and sells hammers for $50 each in a competitive price-taker market.  
If the market wage rate is $225 per week, how many units of labor would a profit-maximizing firm employ?

Accepted Answer

A) 4 
B) 5 
C) 6 
D) 7 
A) 4 
B) 5 
C) 6 
D) 7

Question 15

The demand curve for a human resource will be more elastic the

Accepted Answer

A) more and better substitutes are available for it. 
B) more difficult it is to substitute other resources for it. 
C) more inelastic the demand for the product the resource is used to produce. 
D) shorter the time period under consideration. 
A) more and better substitutes are available for it. 
B) more difficult it is to substitute other resources for it. 
C) more inelastic the demand for the product the resource is used to produce. 
D) shorter the time period under consideration.

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

Economists refer to expenditures on training, education, and skill development designed to increase the productivity of an individual as

Accepted Answer

A) overhead expenditures. 
B) investments in human capital. 
C) non-exhaustive expenditures. 
D) social capital. 
A) overhead expenditures. 
B) investments in human capital. 
C) non-exhaustive expenditures. 
D) social capital.

Question 18

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 19

Assume the average salary for a college philosophy professor is $50,000. Suppose businesses decide they need in-house instructors to teach ethics to employees, and they begin hiring philosophy professors at a salary of $75,000. What are the short-term and long-term effects of this supposition?

Accepted Answer

As philosophy professors move into the c

Question 20

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

Exam 12: The Supply of and Demand for Productive Resources

If a college education did not increase worker productivity,

As the price of a resource decreases,

Prices in resource markets

The supply of human capital to a particular use is

Suppose that workers immigrate to Minnesota from Canada. Which of the following correctly describes what would happen in the market for labor in Minnesota?

Because the demand for a resource is highly dependent upon the demand for the final goods that the resource helps produce, the demand for a resource is called a(n)

A decrease in the demand for a product will cause output of that product to

One way to invest in human capital is by

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

An increase in the demand for a product will cause

Figure 12-4 -Refer to Figure 12-4. As the number of workers increases,

The short-run supply of a human resource will be more elastic the

Suppose the United Auto Workers' Union succeeded in obtaining a 10 percent increase in the wages of its workers and that the wage increase caused automobile prices to rise. Employment in the auto industry would be most likely to decline significantly if

The following table provides information for Harry's Hammers, a firm that hires labor competitively and sells hammers for $50 each in a competitive price-taker market. If the market wage rate is $225 per week, how many units of labor would a profit-maximizing firm employ?

The demand curve for a human resource will be more elastic the

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

Economists refer to expenditures on training, education, and skill development designed to increase the productivity of an individual as

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

Assume the average salary for a college philosophy professor is $50,000. Suppose businesses decide they need in-house instructors to teach ethics to employees, and they begin hiring philosophy professors at a salary of $75,000. What are the short-term and long-term effects of this supposition?

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

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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