Question 1

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.

Question 2

Table 12-3
  
-Refer to Table 12-3. What is the marginal product of the third worker?

Accepted Answer

A)  7 
B)  8 
C)  25 
D)  75 
A)  7 
B)  8 
C)  25 
D)  75

Question 3

As the price paid to a resource increases,

Accepted Answer

A)  the supply of that resource will increase in the resource market. 
B)  the supply of that resource will decrease in the resource market. 
C)  resources will shift from other resource markets to this one. 
D)  resources will shift from this resource market to others. 
E)  resource usage will be unaffected. 
A)  the supply of that resource will increase in the resource market. 
B)  the supply of that resource will decrease in the resource market. 
C)  resources will shift from other resource markets to this one. 
D)  resources will shift from this resource market to others. 
E)  resource usage will be unaffected.

Question 4

A firm currently employs 80 units of labor and 50 units of capital equipment to produce 3,000 hamster cages. Given the current input levels utilized, the marginal product of labor is 40 and the marginal product of capital is 10. If we assume that labor costs $20 per unit and capital costs $10 per unit,

Accepted Answer

A)  the firm is using the appropriate mix of labor and capital to minimize its costs. 
B)  the firm could lower its costs for the same level of output by using more labor and less capital. 
C)  the firm could lower its costs for the same level of output by using more capital and less labor. 
D)  the current MRP of capital exceeds the current MRP of labor. 
A)  the firm is using the appropriate mix of labor and capital to minimize its costs. 
B)  the firm could lower its costs for the same level of output by using more labor and less capital. 
C)  the firm could lower its costs for the same level of output by using more capital and less labor. 
D)  the current MRP of capital exceeds the current MRP of labor.

Question 5

Table 12-7
Assume the firm hires labor competitively and sells its product in a competitive price-taker market at a price of $2 per unit.
  
-Refer to Table 12-7. If the market wage rate rose to $7 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 6

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 7

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 8

Table 12-3
  
-Refer to Table 12-3. Suppose that the firm pays its workers $75 per day. Each unit of output sells for $10. How many days of labor should the firm hire?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 9

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 10

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 11

Figure 12-2
  
-The demand D₁ and short-run supply SSR of accountants is indicated in Figure 12-2. Which of the following would most likely shift the demand for accountants from D₁ to D₂?

Accepted Answer

A)  an increase in the number of accounting majors in college 
B)  enacting legislation that increases the complexity of personal and business tax returns 
C)  high wages for accountants 
D)  a reduction in the wages of bookkeepers, a substitute resource for accountants 
A)  an increase in the number of accounting majors in college 
B)  enacting legislation that increases the complexity of personal and business tax returns 
C)  high wages for accountants 
D)  a reduction in the wages of bookkeepers, a substitute resource for accountants

Question 12

In a price-taker industry, the marginal revenue derived from the sale of an additional unit of the product is equal to the market price of the product. In these circumstances,

Accepted Answer

A)  value of marginal product is less than marginal revenue product. 
B)  value of marginal product is greater than marginal revenue product. 
C)  value of marginal product equals marginal revenue product. 
D)  marginal product equals marginal cost. 
A)  value of marginal product is less than marginal revenue product. 
B)  value of marginal product is greater than marginal revenue product. 
C)  value of marginal product equals marginal revenue product. 
D)  marginal product equals marginal cost.

Question 13

Table 12-3
  
-Refer to Table 12-3. Suppose that the firm pays its workers $55 per day. Each unit of output sells for $12. How many days of labor should the firm hire?

Accepted Answer

A)  3 
B)  4 
C)  5 
D)  6 
A)  3 
B)  4 
C)  5 
D)  6

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

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 16

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

Accepted Answer

A)  a law student who works as a waiter in the summer 
B)  on-the-job training received by an apprentice welder 
C)  payments into a retirement pension plan by a skilled laborer 
D)  all of the above are correct. 
A)  a law student who works as a waiter in the summer 
B)  on-the-job training received by an apprentice welder 
C)  payments into a retirement pension plan by a skilled laborer 
D)  all of the above are correct.

Question 17

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. What is the total revenue per day that the firm will earn if it employs five workers?

Accepted Answer

A)  $500. 
B)  $300. 
C)  $2200. 
D)  $2500. 
A)  $500. 
B)  $300. 
C)  $2200. 
D)  $2500.

Question 18

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 19

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 20

An improvement in technology that allows workers to process twice as many insurance forms in an hour than before will cause

Accepted Answer

A)  more labor to be employed because its marginal revenue product has fallen. 
B)  an increase in insurance premiums. 
C)  fewer workers to be employed because their marginal revenue product has decreased. 
D)  more workers to be employed because their marginal revenue product has increased. 
E)  fewer workers to be employed because their marginal revenue product has increased. 
A)  more labor to be employed because its marginal revenue product has fallen. 
B)  an increase in insurance premiums. 
C)  fewer workers to be employed because their marginal revenue product has decreased. 
D)  more workers to be employed because their marginal revenue product has increased. 
E)  fewer workers to be employed because their marginal revenue product has increased.

Exam 25: The Supply of and Demand for Productive Resources

The labor supply curve reflects how

Table 12-3 -Refer to Table 12-3. What is the marginal product of the third worker?

As the price paid to a resource increases,

Table 12-7 Assume the firm hires labor competitively and sells its product in a competitive price-taker market at a price of $2 per unit. -Refer to Table 12-7. If the market wage rate rose to $7 per day, how many workers should the firm employ if it wants to maximize profits?

The demand for a resource depends largely on the

If a college education did not increase worker productivity,

Table 12-3 -Refer to Table 12-3. Suppose that the firm pays its workers $75 per day. Each unit of output sells for $10. How many days of labor should the firm hire?

According to the principle of marginal productivity, if

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?

Figure 12-2 -The demand D₁ and short-run supply SSR of accountants is indicated in Figure 12-2. Which of the following would most likely shift the demand for accountants from D₁ to D₂?

In a price-taker industry, the marginal revenue derived from the sale of an additional unit of the product is equal to the market price of the product. In these circumstances,

Table 12-3 -Refer to Table 12-3. Suppose that the firm pays its workers $55 per day. Each unit of output sells for $12. How many days of labor should the firm hire?

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

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

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

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. What is the total revenue per day that the firm will earn if it employs five workers?

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

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

An improvement in technology that allows workers to process twice as many insurance forms in an hour than before will cause

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

A : Taking the Nations Economic Pulse

B : Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

A : an Introduction to Basic Macroeconomic Markets

B : an 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

A : Money and the Banking System

B : Money 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

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

Special Topic 1 : Government Spending and Taxation

Special Topic 2 : The Economics of Social Security

Special Topic 3 : The Stock Market: Its Function, Performance, and Potential as an Investment Opportunity

Special Topic 4 : Great Debates in Economics: Keynes Versus Hayek

Special Topic 5 : The Crisis of 2008: Causes and Lessons for the Future

Special Topic 6 : Lessons from the Great Depression

Special Topic 7 : Lessons from Japan and Canada

Special Topic 8 : The Federal Budget and the National Debt

Special Topic 9 : The Economics of Healthcare

Special Topic 10 : Education: Problems and Performance

Special Topic 11 : Earnings Differences Between Men and Women

Special Topic 12 : Do Labor Unions Increase the Wages of Workers?

Special Topic 13 : The Question of Resource Exhaustion

Special Topic 14 : Difficult Environmental Cases and the Role of Government

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