Question 1

An unexpected increase in the demand for accountants will lead to

Accepted Answer

A)  an increase in their earnings and an expansion in the future supply of accountants. 
B)  a decrease in the incentive of students to prepare for a career in accounting. 
C)  a reduction in the current earnings of accountants, followed by a reduction in the future supply of accountants. 
D)  a reduction in the employment of accountants but not their wage rates. 
A)  an increase in their earnings and an expansion in the future supply of accountants. 
B)  a decrease in the incentive of students to prepare for a career in accounting. 
C)  a reduction in the current earnings of accountants, followed by a reduction in the future supply of accountants. 
D)  a reduction in the employment of accountants but not their wage rates.

Question 2

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 3

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. For which level of employment is the marginal product of labor greatest?

Accepted Answer

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

Question 4

A technological advance that increases labor productivity will

Accepted Answer

A)  lower wages. 
B)  decrease the demand for labor as fewer workers are needed. 
C)  decrease the supply of labor as fewer workers are needed. 
D)  increase the demand for labor as MP rises. 
E)  decrease the demand for labor as MP falls. 
A)  lower wages. 
B)  decrease the demand for labor as fewer workers are needed. 
C)  decrease the supply of labor as fewer workers are needed. 
D)  increase the demand for labor as MP rises. 
E)  decrease the demand for labor as MP falls.

Question 5

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 6

The Alpha Car Wash is known for the quality way in which every car is hand cleaned. The Beta Car Wash uses machines, so consumers are generally willing to pay a higher price for Alpha's services. The Auto Washers union at Alpha has just succeeded in obtaining a substantial wage increase. What will likely happen as a result?

Accepted Answer

Higher wages will cause the price of an

Question 7

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 8

Which of the following most clearly illustrates the concept of "derived demand"?

Accepted Answer

A)  An increase in the price of steak causes the demand for poultry to increase. 
B)  An increase in the demand for new houses leads to an increase in the demand for construction workers. 
C)  An increase in consumer income leads to an increase in the demand for services provided by the government. 
D)  An increase in the demand for new cars causes the demand for used automobiles to rise. 
A)  An increase in the price of steak causes the demand for poultry to increase. 
B)  An increase in the demand for new houses leads to an increase in the demand for construction workers. 
C)  An increase in consumer income leads to an increase in the demand for services provided by the government. 
D)  An increase in the demand for new cars causes the demand for used automobiles to rise.

Question 9

If a firm is using a resource hired in a perfectly competitive market, and if the marginal resource cost is less than its marginal revenue product,

Accepted Answer

A)  more of the resource should be used. 
B)  less of the resource should be used. 
C)  the firm should pay a lower price for the resource. 
D)  the firm should pay a higher price for the resource. 
E)  the firm is using the optimal amount of the resource. 
A)  more of the resource should be used. 
B)  less of the resource should be used. 
C)  the firm should pay a lower price for the resource. 
D)  the firm should pay a higher price for the resource. 
E)  the firm is using the optimal amount of the resource.

Question 10

If a profit-maximizing firm hires an additional unit of labor, what must be true about labor's wage and marginal revenue product?

Accepted Answer

A)  Its wage always equals its marginal revenue product. 
B)  Its wage is always greater than its marginal revenue product. 
C)  Its wage is always total revenue minus marginal revenue product. 
D)  Its wage is always less than or equal to its marginal revenue product. 
A)  Its wage always equals its marginal revenue product. 
B)  Its wage is always greater than its marginal revenue product. 
C)  Its wage is always total revenue minus marginal revenue product. 
D)  Its wage is always less than or equal to its marginal revenue product.

Question 11

The rule for the optimal use of any input states that

Accepted Answer

A)  when MRP is less than price, profit will increase when more of that resource is utilized. 
B)  when MRP is greater than resource price, profit will increase when more of that resource is utilized. 
C)  when MRP equals price, profit will increase when less of that resource is utilized. 
D)  when MRP is greater than resource price, profit will increase when less of that resource is utilized. 
E)  resources should be used only if MRP exceeds product price. 
A)  when MRP is less than price, profit will increase when more of that resource is utilized. 
B)  when MRP is greater than resource price, profit will increase when more of that resource is utilized. 
C)  when MRP equals price, profit will increase when less of that resource is utilized. 
D)  when MRP is greater than resource price, profit will increase when less of that resource is utilized. 
E)  resources should be used only if MRP exceeds product price.

Question 12

A decrease in the price of a resource would cause

Accepted Answer

A)  producers to substitute other inputs for the resource. 
B)  the cost of products made from the resource to fall. 
C)  producers to use more of the resource. 
D)  none of the above. 
E)  both b and c above. 
A)  producers to substitute other inputs for the resource. 
B)  the cost of products made from the resource to fall. 
C)  producers to use more of the resource. 
D)  none of the above. 
E)  both b and c above.

Question 13

The marginal productivity principle says that a profit-maximizing firm should

Accepted Answer

A)  hire capital until its marginal product is zero. 
B)  hire labor until another worker costs more to hire than he can earn for the firm. 
C)  hire the quantities of capital and of labor at which their marginal products are equal. 
D)  hire capital until its marginal product is negative. 
A)  hire capital until its marginal product is zero. 
B)  hire labor until another worker costs more to hire than he can earn for the firm. 
C)  hire the quantities of capital and of labor at which their marginal products are equal. 
D)  hire capital until its marginal product is negative.

Question 14

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.

Question 15

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 16

The derived demand curve for a resource is downward sloping because

Accepted Answer

A)  the demand for products that utilize the resource is directly related to the price of the resource. 
B)  the marginal productivity of resources will decline as their price increases. 
C)  as the price of a resource rises, other resources will be less desirable than the higher priced resource. 
D)  other resources will be substituted for a resource that increases in price. 
A)  the demand for products that utilize the resource is directly related to the price of the resource. 
B)  the marginal productivity of resources will decline as their price increases. 
C)  as the price of a resource rises, other resources will be less desirable than the higher priced resource. 
D)  other resources will be substituted for a resource that increases in price.

Question 17

The marginal revenue product of a resource is best described as the

Accepted Answer

A)  selling price of the last unit of output produced. 
B)  increment of total cost resulting from the use of an additional unit of the resource. 
C)  marginal product of the resource divided by the unit price of the good produced. 
D)  change in total revenue resulting from employing an additional unit of the resource. 
A)  selling price of the last unit of output produced. 
B)  increment of total cost resulting from the use of an additional unit of the resource. 
C)  marginal product of the resource divided by the unit price of the good produced. 
D)  change in total revenue resulting from employing an additional unit of the resource.

Question 18

Other things constant, if the demand for a product is inelastic, the demand for a resource used as an input will tend to be

Accepted Answer

A)  inelastic as well. 
B)  basically elastic. 
C)  of unitary elasticity. 
D)  the inverse of the elasticity coefficient of the product. 
A)  inelastic as well. 
B)  basically elastic. 
C)  of unitary elasticity. 
D)  the inverse of the elasticity coefficient of the product.

Question 19

When the price of a resource goes up and firms seek other suitable resources, this is called the

Accepted Answer

A)  substitution in production effect. 
B)  substitution in demand effect. 
C)  elasticity effect. 
D)  inelasticity effect. 
A)  substitution in production effect. 
B)  substitution in demand effect. 
C)  elasticity effect. 
D)  inelasticity effect.

Question 20

When a firm decides to hire more workers because local wage rates have decreased, this is an example of

Accepted Answer

A)  market failure. 
B)  substitution in production. 
C)  labor exploitation. 
D)  substitution in consumption. 
A)  market failure. 
B)  substitution in production. 
C)  labor exploitation. 
D)  substitution in consumption.

Exam 25: The Supply of and Demand for Productive Resources

An unexpected increase in the demand for accountants will lead to

A sudden increase in the demand for newly built homes will

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. For which level of employment is the marginal product of labor greatest?

A technological advance that increases labor productivity will

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

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

Which of the following most clearly illustrates the concept of "derived demand"?

If a firm is using a resource hired in a perfectly competitive market, and if the marginal resource cost is less than its marginal revenue product,

If a profit-maximizing firm hires an additional unit of labor, what must be true about labor's wage and marginal revenue product?

The rule for the optimal use of any input states that

A decrease in the price of a resource would cause

The marginal productivity principle says that a profit-maximizing firm should

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

The supply of human capital to a particular use is

The derived demand curve for a resource is downward sloping because

The marginal revenue product of a resource is best described as the

Other things constant, if the demand for a product is inelastic, the demand for a resource used as an input will tend to be

When the price of a resource goes up and firms seek other suitable resources, this is called the

When a firm decides to hire more workers because local wage rates have decreased, this is an example of

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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