Question 1

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 2

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 3

Tucker Corporation sells its product for $5.00. Tucker's industrial engineers have informed management that hiring one additional worker will increase output by five units per hour. Tucker should hire the additional worker only if the wage rate is

Accepted Answer

A)  $5.00 or less per hour. 
B)  $1.00 or more per hour. 
C)  $25.00 or less per hour. 
D)  none of the above. 
A)  $5.00 or less per hour. 
B)  $1.00 or more per hour. 
C)  $25.00 or less per hour. 
D)  none of the above.

Question 4

The marginal revenue product of a resource

Accepted Answer

A)  is defined as the marginal product of the resource multiplied by the resource price. 
B)  simply means that a firm should add to its capital stock as long as competition requires it. 
C)  equals the extra output produced by an additional unit of the resource multiplied by the marginal revenue per unit of that output. 
D)  equals the average product of the resource multiplied by the cost of hiring an additional (marginal) unit of the resource. 
A)  is defined as the marginal product of the resource multiplied by the resource price. 
B)  simply means that a firm should add to its capital stock as long as competition requires it. 
C)  equals the extra output produced by an additional unit of the resource multiplied by the marginal revenue per unit of that output. 
D)  equals the average product of the resource multiplied by the cost of hiring an additional (marginal) unit of the resource.

Question 5

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 6

Since the demand for a resource depends on the demand for goods that the resource helps produce, the demand for each resource is

Accepted Answer

A)  an elastic demand. 
B)  an independent demand. 
C)  a derived demand. 
D)  inversely related to the marginal productivity of the resource. 
A)  an elastic demand. 
B)  an independent demand. 
C)  a derived demand. 
D)  inversely related to the marginal productivity of the resource.

Question 7

If skilled labor is three times the cost of unskilled labor, a profit-maximizing firm will vary the quantity of each type of labor until the

Accepted Answer

A)  marginal product of each is the same. 
B)  amount of unskilled labor used is three times the quantity of skilled labor used. 
C)  amount of unskilled labor used is one-third the quantity of skilled labor used. 
D)  marginal product of unskilled labor is one-third that of skilled labor. 
A)  marginal product of each is the same. 
B)  amount of unskilled labor used is three times the quantity of skilled labor used. 
C)  amount of unskilled labor used is one-third the quantity of skilled labor used. 
D)  marginal product of unskilled labor is one-third that of skilled labor.

Question 8

Which of the following is most likely to result from an increase in the demand for computer technicians?

Accepted Answer

A)  an increase in the wages of computer technicians, which will attract additional technicians in the long run 
B)  an increase in the employment of computer technicians, which will depress current wage rates but eventually lead to higher wage rates for technicians 
C)  a decline in the number of persons preparing themselves for careers as computer technicians 
D)  lower wage rates and a shortage of computer technicians 
A)  an increase in the wages of computer technicians, which will attract additional technicians in the long run 
B)  an increase in the employment of computer technicians, which will depress current wage rates but eventually lead to higher wage rates for technicians 
C)  a decline in the number of persons preparing themselves for careers as computer technicians 
D)  lower wage rates and a shortage of computer technicians

Question 9

If a construction boom leads to an increase in the price of lumber, how will the higher lumber prices influence the wood furniture market?

Accepted Answer

A)  The demand for wood furniture will decline, and furniture prices will fall. 
B)  There will be a shortage of wood furniture. 
C)  There will be a surplus of wood furniture. 
D)  The supply of wood furniture will decline, and furniture prices will increase. 
A)  The demand for wood furniture will decline, and furniture prices will fall. 
B)  There will be a shortage of wood furniture. 
C)  There will be a surplus of wood furniture. 
D)  The supply of wood furniture will decline, and furniture prices will increase.

Question 10

Marginal revenue product is the

Accepted Answer

A)  additional revenue from one additional dollar increase in price. 
B)  change in the revenue product resulting from one additional unit of input. 
C)  additional revenue from one additional unit of input. 
D)  change in revenue resulting in one additional dollar in price. 
A)  additional revenue from one additional dollar increase in price. 
B)  change in the revenue product resulting from one additional unit of input. 
C)  additional revenue from one additional unit of input. 
D)  change in revenue resulting in one additional dollar in price.

Question 11

In the short run, the supply of a resource will generally be

Accepted Answer

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

Question 12

Ceteris paribus, a decrease in the demand for automobiles will

Accepted Answer

A)  increase the price of automobiles. 
B)  increase the quantity supplied of automobiles. 
C)  decrease the demand for automobile workers. 
D)  increase the demand for automobile workers. 
A)  increase the price of automobiles. 
B)  increase the quantity supplied of automobiles. 
C)  decrease the demand for automobile workers. 
D)  increase the demand for automobile workers.

Question 13

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 14

The supply curve of a human resource will be more elastic the

Accepted Answer

A)  easier it is to obtain the skill and knowledge necessary to provide the resource. 
B)  more elastic the demand for the product. 
C)  more inelastic the demand for the product. 
D)  higher the skill level necessary to perform the job. 
A)  easier it is to obtain the skill and knowledge necessary to provide the resource. 
B)  more elastic the demand for the product. 
C)  more inelastic the demand for the product. 
D)  higher the skill level necessary to perform the job.

Question 15

If the marginal revenue product of the fifth worker hired by a firm is $15 and the price of a unit of output is $5 regardless of how much is sold, then the marginal product of the fifth worker is

Accepted Answer

A)  15 units of output. 
B)  5 units of output. 
C)  3 units of output. 
D)  45 units of output. 
E)  75 units of output. 
A)  15 units of output. 
B)  5 units of output. 
C)  3 units of output. 
D)  45 units of output. 
E)  75 units of output.

Question 16

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 17

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 18

The supply of a resource, such as oil, is likely to be

Accepted Answer

A)  equally elastic in both the short and long run. 
B)  more elastic in the long run than in the short run. 
C)  more elastic in the short run than in the long run. 
D)  determined by the demand for the resource. 
A)  equally elastic in both the short and long run. 
B)  more elastic in the long run than in the short run. 
C)  more elastic in the short run than in the long run. 
D)  determined by the demand for the resource.

Question 19

If there is a shortage of nurses, it is expected that

Accepted Answer

A)  wages for nurses will go up as hospitals try to fill these positions. 
B)  wages for nurses will go down because of the increased competition between hospitals. 
C)  the return on the human capital investment of current nursing majors will decline. 
D)  wages for nurses currently practicing will increase, but new nurses will experience lower wages in the future. 
A)  wages for nurses will go up as hospitals try to fill these positions. 
B)  wages for nurses will go down because of the increased competition between hospitals. 
C)  the return on the human capital investment of current nursing majors will decline. 
D)  wages for nurses currently practicing will increase, but new nurses will experience lower wages in the future.

Question 20

Which of the following is the most accurate definition of a worker's "marginal revenue product"?

Accepted Answer

A)  the change in the firm's profits as the result of hiring an additional worker 
B)  the change in the firm's total revenue as the result of hiring an additional worker 
C)  the change in the firm's output as the result of hiring an additional worker 
D)  the change in the firm's cost as the result of hiring an additional worker 
A)  the change in the firm's profits as the result of hiring an additional worker 
B)  the change in the firm's total revenue as the result of hiring an additional worker 
C)  the change in the firm's output as the result of hiring an additional worker 
D)  the change in the firm's cost as the result of hiring an additional worker

Exam 25: The Supply of and Demand for Productive Resources

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

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

Tucker Corporation sells its product for $5.00. Tucker's industrial engineers have informed management that hiring one additional worker will increase output by five units per hour. Tucker should hire the additional worker only if the wage rate is

The marginal revenue product of a resource

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

Since the demand for a resource depends on the demand for goods that the resource helps produce, the demand for each resource is

If skilled labor is three times the cost of unskilled labor, a profit-maximizing firm will vary the quantity of each type of labor until the

Which of the following is most likely to result from an increase in the demand for computer technicians?

If a construction boom leads to an increase in the price of lumber, how will the higher lumber prices influence the wood furniture market?

Marginal revenue product is the

In the short run, the supply of a resource will generally be

Ceteris paribus, a decrease in the demand for automobiles will

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 supply curve of a human resource will be more elastic the

If the marginal revenue product of the fifth worker hired by a firm is $15 and the price of a unit of output is $5 regardless of how much is sold, then the marginal product of the fifth worker is

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

An increase in the demand for a product will cause

The supply of a resource, such as oil, is likely to be

If there is a shortage of nurses, it is expected that

Which of the following is the most accurate definition of a worker's "marginal revenue product"?

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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