Question 1

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 2

Jim Smith runs a company that sells encyclopedia sets for $200 each. When he employs 5 workers, they can sell 20 sets per week, while only 17 sets are sold when 4 workers are employed. If the wage of workers in this skill category is $500 per week, should the fifth worker be hired?

Accepted Answer

A)  No, because the MRP of the fifth worker is less than $500 per week. 
B)  No, because the MRP of the fifth worker is more than $500 per week. 
C)  Yes, because the MRP of the fifth worker is less than $500 per week. 
D)  Yes, because the MRP of the fifth worker is more than $500 per week. 
A)  No, because the MRP of the fifth worker is less than $500 per week. 
B)  No, because the MRP of the fifth worker is more than $500 per week. 
C)  Yes, because the MRP of the fifth worker is less than $500 per week. 
D)  Yes, because the MRP of the fifth worker is more than $500 per week.

Question 3

Troll Corporation sells dolls for $10.00 each in a market that is perfectly competitive. Increasing the number of workers from 100 to 101 would cause output to rise from 500 to 550 dolls per day. The marginal revenue product for the 101st worker is

Accepted Answer

A)  $10.00. 
B)  $500. 
C)  $5,000. 
D)  $1,010. 
A)  $10.00. 
B)  $500. 
C)  $5,000. 
D)  $1,010.

Question 4

Figure 12-3
  
-Refer to Figure 12-3. This figure depicts labor demand and supply in a nonunionized labor market. The original equilibrium is at point A. If a labor union subsequently establishes a union shop and negotiates an hourly wage of $20, then the employment level

Accepted Answer

A)  increases from 6,000 to 10,000. 
B)  increases from 3,000 to 10,000. 
C)  decreases from 10,000 to 3,000. 
D)  decreases from 6,000 to 3,000. 
A)  increases from 6,000 to 10,000. 
B)  increases from 3,000 to 10,000. 
C)  decreases from 10,000 to 3,000. 
D)  decreases from 6,000 to 3,000.

Question 5

Other things constant, if the demand for computer scientists rises,

Accepted Answer

A)  the wages of computer scientists will tend to fall. 
B)  employment of computer scientists will tend to rise. 
C)  there will be a surplus of computer scientists. 
D)  there will be a shortage of computer scientists. 
A)  the wages of computer scientists will tend to fall. 
B)  employment of computer scientists will tend to rise. 
C)  there will be a surplus of computer scientists. 
D)  there will be a shortage of computer scientists.

Question 6

Consider the labor market for nurses, which initially is in equilibrium. Suppose the output price for nursing services increases. Holding all else equal, what effect will this have on the labor market for nurses?

Accepted Answer

A)  The equilibrium wage will increase, and the equilibrium quantity of nurses will increase. 
B)  The equilibrium wage will increase, and the equilibrium quantity of nurses will decrease. 
C)  The equilibrium wage will decrease, and the equilibrium quantity of nurses will increase. 
D)  The equilibrium wage will decrease, and the equilibrium quantity of nurses will decrease. 
A)  The equilibrium wage will increase, and the equilibrium quantity of nurses will increase. 
B)  The equilibrium wage will increase, and the equilibrium quantity of nurses will decrease. 
C)  The equilibrium wage will decrease, and the equilibrium quantity of nurses will increase. 
D)  The equilibrium wage will decrease, and the equilibrium quantity of nurses will decrease.

Question 7

Which of the following is the best definition of "physical capital"?

Accepted Answer

A)  the labor utilized in the production process 
B)  man-made resources used to produce other goods 
C)  natural resources in their original state 
D)  the ownership of stock shares issued by a corporation 
A)  the labor utilized in the production process 
B)  man-made resources used to produce other goods 
C)  natural resources in their original state 
D)  the ownership of stock shares issued by a corporation

Question 8

Use the table to answer the following question.  
If the market wage rate is $130 per week, how many workers should be employed if the firm wants to maximize profit?

Accepted Answer

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

Question 9

Table 12-4
  
-Refer to Table 12-4. What is total output when 4 workers are hired?

Accepted Answer

A)  30 
B)  40 
C)  120 
D)  160 
A)  30 
B)  40 
C)  120 
D)  160

Question 10

Ten cases of spring water are sold for $6 each, and the marginal product of the last unit of labor is 5. If the price of a case increases from $6 to $8, then the marginal revenue product of the last unit of labor would

Accepted Answer

A)  decrease by $10. 
B)  increase by $40. 
C)  decrease by $30. 
D)  increase by $10. 
E)  not change. 
A)  decrease by $10. 
B)  increase by $40. 
C)  decrease by $30. 
D)  increase by $10. 
E)  not change.

Question 11

Relative to a mobile factor of production, economic theory suggests that the price elasticity of supply for a highly immobile factor of production (for example, land) will be

Accepted Answer

A)  more elastic. 
B)  less elastic. 
C)  of unitary elasticity. 
D)  this is a trick question; the price elasticity of supply for factors of production is not affected by factor mobility. 
A)  more elastic. 
B)  less elastic. 
C)  of unitary elasticity. 
D)  this is a trick question; the price elasticity of supply for factors of production is not affected by factor mobility.

Question 12

If coal and oil are substitute inputs in the production of electricity, an increase in the price of oil

Accepted Answer

A)  will increase the demand for coal. 
B)  will reduce the demand for coal. 
C)  will increase the supply of coal. 
D)  will reduce the supply of coal. 
E)  will not affect the demand for coal. 
A)  will increase the demand for coal. 
B)  will reduce the demand for coal. 
C)  will increase the supply of coal. 
D)  will reduce the supply of coal. 
E)  will not affect the demand for coal.

Question 13

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 14

Developments in the computer software industry have made it extremely easy for firms to keep their books, conduct their own audits, and fill out the various tax forms. If accountants are an input in the accounting services industry, what will likely happen in the market for accountants? Is there a difference between the short run and the long run?

Accepted Answer

We would expect the demand for accountan

Question 15

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

Accepted Answer

A)  increase. 
B)  remain the same, but the quantity demanded will increase. 
C)  decrease. 
D)  increase or decrease depending on whether the demand for the product is elastic or inelastic. 
A)  increase. 
B)  remain the same, but the quantity demanded will increase. 
C)  decrease. 
D)  increase or decrease depending on whether the demand for the product is elastic or inelastic.

Question 16

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 17

Table 12-5
  
-Refer to Table 12-5. At which number of workers does diminishing marginal product begin?

Accepted Answer

A)  2 
B)  3 
C)  4 
D)  5 
A)  2 
B)  3 
C)  4 
D)  5

Question 18

Harold Brown runs a company that sells encyclopedia sets for $250. The following schedule indicates the number of sets per week that are sold as employment increases.  
If Brown's costs increase by $1,300 per week as additional workers are employed, how many workers should be employed in order to maximize profit?

Accepted Answer

A)  five 
B)  six 
C)  seven 
D)  eight 
A)  five 
B)  six 
C)  seven 
D)  eight

Question 19

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 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 20

An unexpected decrease in the demand for accountants will lead to

Accepted Answer

A)  an increase in the earnings of accountants. 
B)  an increase in the incentive of students to prepare for a career in accounting. 
C)  a reduction in the future supply of accountants. 
D)  an increase in the employment opportunities of accountants. 
A)  an increase in the earnings of accountants. 
B)  an increase in the incentive of students to prepare for a career in accounting. 
C)  a reduction in the future supply of accountants. 
D)  an increase in the employment opportunities of accountants.

Exam 25: The Supply of and Demand for Productive Resources

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

Jim Smith runs a company that sells encyclopedia sets for $200 each. When he employs 5 workers, they can sell 20 sets per week, while only 17 sets are sold when 4 workers are employed. If the wage of workers in this skill category is $500 per week, should the fifth worker be hired?

Troll Corporation sells dolls for $10.00 each in a market that is perfectly competitive. Increasing the number of workers from 100 to 101 would cause output to rise from 500 to 550 dolls per day. The marginal revenue product for the 101st worker is

Figure 12-3 -Refer to Figure 12-3. This figure depicts labor demand and supply in a nonunionized labor market. The original equilibrium is at point A. If a labor union subsequently establishes a union shop and negotiates an hourly wage of $20, then the employment level

Other things constant, if the demand for computer scientists rises,

Consider the labor market for nurses, which initially is in equilibrium. Suppose the output price for nursing services increases. Holding all else equal, what effect will this have on the labor market for nurses?

Which of the following is the best definition of "physical capital"?

Use the table to answer the following question. If the market wage rate is $130 per week, how many workers should be employed if the firm wants to maximize profit?

Table 12-4 -Refer to Table 12-4. What is total output when 4 workers are hired?

Ten cases of spring water are sold for $6 each, and the marginal product of the last unit of labor is 5. If the price of a case increases from $6 to $8, then the marginal revenue product of the last unit of labor would

Relative to a mobile factor of production, economic theory suggests that the price elasticity of supply for a highly immobile factor of production (for example, land) will be

If coal and oil are substitute inputs in the production of electricity, an increase in the price of oil

One way to invest in human capital is by

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

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

Table 12-5 -Refer to Table 12-5. At which number of workers does diminishing marginal product begin?

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 is $5 per day, how many workers should the firm employ if it wants to maximize profits?

An unexpected decrease in the demand for accountants will lead to

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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