Question 1

The marginal revenue product of a resource depends on the following factors, except

Accepted Answer

A)  the price of the resource. 
B)  the price of the product. 
C)  the quantity of the resource employed. 
D)  the marginal product of the resource. 
A)  the price of the resource. 
B)  the price of the product. 
C)  the quantity of the resource employed. 
D)  the marginal product of the resource.

Question 2

From 2014 to 2024, the U.S. Bureau of Labor Statistics expects that there will be a fall in demand for

Accepted Answer

A)  manufactured building and mobile home installers. 
B)  physical therapists. 
C)  commercial drivers. 
D)  occupational therapy assistants. 
A)  manufactured building and mobile home installers. 
B)  physical therapists. 
C)  commercial drivers. 
D)  occupational therapy assistants.

Question 3

A farmer who has fixed amounts of land and capital finds that total product is 24 for the first worker hired, 32 when two workers are hired, 37 when three are hired, and 40 when four are hired. The farmer's product sells for $3 per unit, and the wage rate is $13 per worker. What is the farmer's profit-maximizing output?

Accepted Answer

A)  20 
B)  32 
C)  37 
D)  40 
A)  20 
B)  32 
C)  37 
D)  40

Question 4

A profit-maximizing firm will employ labor up to the point where the

Accepted Answer

A)  MRP of labor = MRC of labor. 
B)  MP of labor = MRC of labor. 
C)  MC = MRP. 
D)  MP = MC. 
A)  MRP of labor = MRC of labor. 
B)  MP of labor = MRC of labor. 
C)  MC = MRP. 
D)  MP = MC.

Question 5

Which of the following increases in labor demand is due to a change in the product demand?

Accepted Answer

A)  Access to computers increases the productivity of mail order businesses, thus increasing the demand for their workers. 
B)  Tourism increases in popularity, increasing the demand for workers at tourist resorts. 
C)  A decrease in the price of trucks decreases the cost of transporting goods, thus increasing the demand for truckers. 
D)  A change in work rules increases output per worker in the auto industry, thus increasing the demand for autoworkers. 
A)  Access to computers increases the productivity of mail order businesses, thus increasing the demand for their workers. 
B)  Tourism increases in popularity, increasing the demand for workers at tourist resorts. 
C)  A decrease in the price of trucks decreases the cost of transporting goods, thus increasing the demand for truckers. 
D)  A change in work rules increases output per worker in the auto industry, thus increasing the demand for autoworkers.

Question 6

Other things being the same, if the demand for labor is inelastic,

Accepted Answer

A)  decreases in wage rates will result in greater payrolls. 
B)  increases in wage rates will result in greater payrolls. 
C)  increases in wage rates will result in smaller payrolls. 
D)  decreases in wage rates will increase both employment and worker incomes. 
A)  decreases in wage rates will result in greater payrolls. 
B)  increases in wage rates will result in greater payrolls. 
C)  increases in wage rates will result in smaller payrolls. 
D)  decreases in wage rates will increase both employment and worker incomes.

Question 7

Which of the following statements is true? Other things equal, the demand for labor will be less elastic the

Accepted Answer

A)  easier it is to substitute capital for labor. 
B)  greater the elasticity of resource supply. 
C)  greater the elasticity of product demand. 
D)  smaller the ratio of labor costs to total costs. 
A)  easier it is to substitute capital for labor. 
B)  greater the elasticity of resource supply. 
C)  greater the elasticity of product demand. 
D)  smaller the ratio of labor costs to total costs.

Question 8

If technology dictates that labor and capital must be used in fixed proportions, an increase in the price of capital will cause a firm to use

Accepted Answer

A)  more labor as a consequence of the substitution effect. 
B)  more labor as a consequence of the output effect. 
C)  less labor as a consequence of the substitution effect. 
D)  less labor as a consequence of the output effect. 
A)  more labor as a consequence of the substitution effect. 
B)  more labor as a consequence of the output effect. 
C)  less labor as a consequence of the substitution effect. 
D)  less labor as a consequence of the output effect.

Question 9

Assume that a restaurant is hiring labor in an amount such that the MRC of the last worker is $16 and her MRP is $12. On the basis of this information, we can say that

Accepted Answer

A)  profits will be increased by hiring additional workers. 
B)  profits will be increased by hiring fewer workers. 
C)  marginal revenue product must exceed average revenue product. 
D)  the restaurant is maximizing profits. 
A)  profits will be increased by hiring additional workers. 
B)  profits will be increased by hiring fewer workers. 
C)  marginal revenue product must exceed average revenue product. 
D)  the restaurant is maximizing profits.

Question 10

The marginal revenue product of labor and the marginal resource cost of labor are both measured in the same units, that is, in dollars per unit of labor.

Accepted Answer

A) True 
 B)False

Question 11

Other things being equal, a labor union will find it harder to obtain a wage increase for its members the

Accepted Answer

A)  less elastic is the demand for the product labor produces. 
B)  easier it is to substitute other resources for labor. 
C)  greater the amount of unionization in the industry. 
D)  less elastic is the demand for labor. 
A)  less elastic is the demand for the product labor produces. 
B)  easier it is to substitute other resources for labor. 
C)  greater the amount of unionization in the industry. 
D)  less elastic is the demand for labor.

Question 12

Which of the following statements is most accurate about the occupations projected to be the most rapidly declining in the U.S. in terms of percentage decreases?

Accepted Answer

A)  The majority are in education related professions. 
B)  The majority are in health care related professions. 
C)  The majority are in manufacturing related professions. 
D)  The majority are in unskilled jobs. 
A)  The majority are in education related professions. 
B)  The majority are in health care related professions. 
C)  The majority are in manufacturing related professions. 
D)  The majority are in unskilled jobs.

Question 13

A competitive employer will hire inputs up to the point where the

Accepted Answer

A)  marginal product of the input reaches a maximum. 
B)  price of the input equals the price of the output. 
C)  price of the input equals the marginal product of the input. 
D)  price of the input equals the marginal revenue product of the input. 
A)  marginal product of the input reaches a maximum. 
B)  price of the input equals the price of the output. 
C)  price of the input equals the marginal product of the input. 
D)  price of the input equals the marginal revenue product of the input.

Question 14

When economists say that the demand for labor is a derived demand, they mean that it is

Accepted Answer

A)  dependent on government expenditures for public goods and services. 
B)  related to the demand for the product or service labor is producing. 
C)  based on the desire of businesses to exploit labor by paying below equilibrium wage rates. 
D)  based on the assumption that workers are trying to maximize their money incomes. 
A)  dependent on government expenditures for public goods and services. 
B)  related to the demand for the product or service labor is producing. 
C)  based on the desire of businesses to exploit labor by paying below equilibrium wage rates. 
D)  based on the assumption that workers are trying to maximize their money incomes.

Question 15

Marginal resource cost is

Accepted Answer

A)  the increase in total resource cost associated with the production of one more unit of output. 
B)  the increase in total resource cost associated with the hire of one more unit of the resource. 
C)  total resource cost divided by the number of inputs employed. 
D)  the change in total revenue associated with the employment of one more unit of the resource. 
A)  the increase in total resource cost associated with the production of one more unit of output. 
B)  the increase in total resource cost associated with the hire of one more unit of the resource. 
C)  total resource cost divided by the number of inputs employed. 
D)  the change in total revenue associated with the employment of one more unit of the resource.

Question 16

The marginal product of labor and the marginal revenue product of labor are both measured in the same units, that is, units of output.

Accepted Answer

A) True 
 B)False

Question 17

The MRP curve for labor

Accepted Answer

A)  is downsloping and shows the relationship between wage rates and the quantity of labor demanded. 
B)  is perfectly elastic if the firm is selling its output competitively. 
C)  is upsloping and lies above the labor supply curve. 
D)  will shift location when the wage rate changes. 
A)  is downsloping and shows the relationship between wage rates and the quantity of labor demanded. 
B)  is perfectly elastic if the firm is selling its output competitively. 
C)  is upsloping and lies above the labor supply curve. 
D)  will shift location when the wage rate changes.

Question 18

The less the elasticity of product demand, the greater the elasticity of resource demand.

Accepted Answer

A) True 
 B)False

Question 19

A firm is observed using 15 units of input X when the price of X is $2. If the price of X increases to $4, the firm uses only 6 units of it. What is the price elasticity of demand for input X? (Use the simple formula for percentage change: [(new# − old#)/old#] × 100%.)

Accepted Answer

A)  1/2 = 0.5 
B)  3/5 = 0.6 
C)  5/3 = 1.67 
D)  2 
A)  1/2 = 0.5 
B)  3/5 = 0.6 
C)  5/3 = 1.67 
D)  2

Question 20

If one worker can pick $30 worth of grapes and two workers together can pick $50 worth of grapes, the

Accepted Answer

A)  marginal revenue product of each worker is $25. 
B)  marginal revenue product of the first worker is $20. 
C)  marginal revenue product of the second worker is $20. 
D)  data given do not permit the determination of the marginal revenue product of either worker. 
A)  marginal revenue product of each worker is $25. 
B)  marginal revenue product of the first worker is $20. 
C)  marginal revenue product of the second worker is $20. 
D)  data given do not permit the determination of the marginal revenue product of either worker.

Exam 16: The Demand for Resources

The marginal revenue product of a resource depends on the following factors, except

From 2014 to 2024, the U.S. Bureau of Labor Statistics expects that there will be a fall in demand for

A profit-maximizing firm will employ labor up to the point where the

Which of the following increases in labor demand is due to a change in the product demand?

Other things being the same, if the demand for labor is inelastic,

Which of the following statements is true? Other things equal, the demand for labor will be less elastic the

If technology dictates that labor and capital must be used in fixed proportions, an increase in the price of capital will cause a firm to use

Assume that a restaurant is hiring labor in an amount such that the MRC of the last worker is $16 and her MRP is $12. On the basis of this information, we can say that

The marginal revenue product of labor and the marginal resource cost of labor are both measured in the same units, that is, in dollars per unit of labor.

Other things being equal, a labor union will find it harder to obtain a wage increase for its members the

Which of the following statements is most accurate about the occupations projected to be the most rapidly declining in the U.S. in terms of percentage decreases?

A competitive employer will hire inputs up to the point where the

When economists say that the demand for labor is a derived demand, they mean that it is

Marginal resource cost is

The marginal product of labor and the marginal revenue product of labor are both measured in the same units, that is, units of output.

The MRP curve for labor

The less the elasticity of product demand, the greater the elasticity of resource demand.

A firm is observed using 15 units of input X when the price of X is $2. If the price of X increases to $4, the firm uses only 6 units of it. What is the price elasticity of demand for input X? (Use the simple formula for percentage change: [(new# − old#)/old#] × 100%.)

If one worker can pick $30 worth of grapes and two workers together can pick $50 worth of grapes, the

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