Question 1

The marginal resource cost of labor for a firm refers to the

Accepted Answer

A)  additional cost of each additional unit of labor employed. 
B)  additional cost of producing each extra unit of output. 
C)  same concept as the marginal cost of the firm. 
D)  same concept as the marginal revenue product of a firm. 
A)  additional cost of each additional unit of labor employed. 
B)  additional cost of producing each extra unit of output. 
C)  same concept as the marginal cost of the firm. 
D)  same concept as the marginal revenue product of a firm.

Question 2

The rising demand for health-care industry workers is due to the following factors, except

Accepted Answer

A)  aging of the U.S. population. 
B)  rising income levels in the U.S. 
C)  the continued presence of health insurance for U.S. consumers. 
D)  decreasing prices of labor in the health-care industry. 
A)  aging of the U.S. population. 
B)  rising income levels in the U.S. 
C)  the continued presence of health insurance for U.S. consumers. 
D)  decreasing prices of labor in the health-care industry.

Question 3

Assume Manfred's Shoe Shine Parlor hires labor, its only variable input, under purely competitive conditions. Shoe shines are also sold competitively. $\begin{array} {| c | c | c | c|} 
\text { Units of Labor } & \text { Total Product } & \begin{array} { c } 
\text { Marginal } \
\text { Product }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Revenue }
\end{array} \
\hline 0 & 0 & & \
\hline 1 & 14 & 14 & \$ 42 \
\hline 2 & & 10 & \
\hline 3 & 30 & & 90 \
\hline 4 & 35 & & \
\hline 5 & 39 & & 117 \
\hline 6 & & & 126 \
\hline 7 & 44 & 2 & 132 \
\hline
\end{array}$ How many units of output are produced when 2 workers are employed?

Accepted Answer

A)  4 
B)  16 
C)  24 
D)  10 
A)  4 
B)  16 
C)  24 
D)  10

Question 4

Which of the following statements is most accurate about the occupations projected to be the fastest growing in the U.S. in terms of percentage increases?

Accepted Answer

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

Question 5

Suppose that a union successfully negotiated a 10 percent wage increase and the quantity of labor demanded decreased by 10 percent. Given a fixed labor demand curve, we can conclude that

Accepted Answer

A)  the labor demand curve is upsloping. 
B)  labor demand is elastic. 
C)  labor demand is unit-elastic. 
D)  the coefficient of elasticity of labor demand is less than 1. 
A)  the labor demand curve is upsloping. 
B)  labor demand is elastic. 
C)  labor demand is unit-elastic. 
D)  the coefficient of elasticity of labor demand is less than 1.

Question 6

If two resources are complementary, a decrease in the price of one will reduce the demand for the other.

Accepted Answer

A) True 
 B)False

Question 7

A firm will be hiring labor and capital in profit-maximizing amounts when

Accepted Answer

A)  MRP capital/price of capital equals MRP labor/price of labor. 
B)  MRP capital/MRP labor equals price of labor/price of capital. 
C)  MRP capital/price of capital equals MRP labor/price of labor equals 1. 
D)  the MRP of the last unit hired of both labor and capital are the same. 
A)  MRP capital/price of capital equals MRP labor/price of labor. 
B)  MRP capital/MRP labor equals price of labor/price of capital. 
C)  MRP capital/price of capital equals MRP labor/price of labor equals 1. 
D)  the MRP of the last unit hired of both labor and capital are the same.

Question 8

Marginal resource cost is

Accepted Answer

A)  the increase in a firm's total cost caused by hiring one additional unit of an input. 
B)  a firm's cost of hiring one group of inputs, such as capital or labor. 
C)  the firm's demand curve for a productive resource. 
D)  determined by the marginal physical product schedule for an input. 
A)  the increase in a firm's total cost caused by hiring one additional unit of an input. 
B)  a firm's cost of hiring one group of inputs, such as capital or labor. 
C)  the firm's demand curve for a productive resource. 
D)  determined by the marginal physical product schedule for an input.

Question 9

Which of the following decreases in labor demand is due to a change in the price of a related resource?

Accepted Answer

A)  A decline in the demand for computers in Europe reduces the demand for workers in the domestic computer industry. 
B)  The rise of hair salons for both men and women reduces the demand for barbers. 
C)  A decrease in the educational skills of manufacturing workers decreases the demand for such workers. 
D)  An increase in the price of chemical equipment increases the cost of producing fertilizer, thus decreasing the demand for workers who make fertilizer. 
A)  A decline in the demand for computers in Europe reduces the demand for workers in the domestic computer industry. 
B)  The rise of hair salons for both men and women reduces the demand for barbers. 
C)  A decrease in the educational skills of manufacturing workers decreases the demand for such workers. 
D)  An increase in the price of chemical equipment increases the cost of producing fertilizer, thus decreasing the demand for workers who make fertilizer.

Question 10

Assuming a firm is selling its output in a purely competitive market, its resource demand curve can be determined by

Accepted Answer

A)  multiplying total product by product price. 
B)  multiplying marginal product by product price. 
C)  dividing total revenue by marginal product. 
D)  comparing marginal product with various possible input prices. 
A)  multiplying total product by product price. 
B)  multiplying marginal product by product price. 
C)  dividing total revenue by marginal product. 
D)  comparing marginal product with various possible input prices.

Question 11

The demand for a productive resource is said to be "derived" because the demand for the factor

Accepted Answer

A)  depends on the demand for the product it helps to produce. 
B)  depends on the demand for a complementary factor. 
C)  is derived from the state of the economy. 
D)  is derived from government policy. 
A)  depends on the demand for the product it helps to produce. 
B)  depends on the demand for a complementary factor. 
C)  is derived from the state of the economy. 
D)  is derived from government policy.

Question 12

A competitive firm's marginal revenue product of labor will fall as it employs more labor because the price of labor decreases as more of it is employed.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following will not cause a shift in the demand for resource X?

Accepted Answer

A)  a decline in the price of resource X 
B)  an increase in the price of the product that resource X is producing 
C)  a decrease in the price of substitute resource Y 
D)  an increase in the productivity of resource X 
A)  a decline in the price of resource X 
B)  an increase in the price of the product that resource X is producing 
C)  a decrease in the price of substitute resource Y 
D)  an increase in the productivity of resource X

Question 14

All firms have to incur costs because of

Accepted Answer

A)  the resources they use. 
B)  buyers they sell to. 
C)  the profits they earn. 
D)  revenues they receive. 
A)  the resources they use. 
B)  buyers they sell to. 
C)  the profits they earn. 
D)  revenues they receive.

Question 15

The MRP of labor curve is the firm's labor demand curve.

Accepted Answer

A) True 
 B)False

Question 16

To achieve profit maximization, a firm must produce the profit-maximizing output with the least amount of economic resources.

Accepted Answer

A) True 
 B)False

Question 17

If the price of a good increases, then in the market for the type of labor needed to produce this good,

Accepted Answer

A)  employment will decrease. 
B)  the labor supply will increase. 
C)  the marginal product (MP) of labor will increase. 
D)  the marginal revenue product (MRP) of labor will increase. 
A)  employment will decrease. 
B)  the labor supply will increase. 
C)  the marginal product (MP) of labor will increase. 
D)  the marginal revenue product (MRP) of labor will increase.

Question 18

The demand for a resource will shift left if the price of a substitute resource decreases.

Accepted Answer

A) True 
 B)False

Question 19

Hiring the profit-maximizing combination of resources ensures that production costs will be minimized.

Accepted Answer

A) True 
 B)False

Question 20

A firm combines two resources, A and B, to produce an output, Q. Their respective marginal revenue products are $30 and $21. A costs $15 a unit and B $7 a unit. To reduce the cost of Q,

Accepted Answer

A)  more B and less A should be used. 
B)  more A and less B should be used. 
C)  more of both resources should be used. 
D)  less of both resources should be used. 
A)  more B and less A should be used. 
B)  more A and less B should be used. 
C)  more of both resources should be used. 
D)  less of both resources should be used.

Exam 16: The Demand for Resources

The marginal resource cost of labor for a firm refers to the

The rising demand for health-care industry workers is due to the following factors, except

Which of the following statements is most accurate about the occupations projected to be the fastest growing in the U.S. in terms of percentage increases?

Suppose that a union successfully negotiated a 10 percent wage increase and the quantity of labor demanded decreased by 10 percent. Given a fixed labor demand curve, we can conclude that

If two resources are complementary, a decrease in the price of one will reduce the demand for the other.

A firm will be hiring labor and capital in profit-maximizing amounts when

Marginal resource cost is

Which of the following decreases in labor demand is due to a change in the price of a related resource?

Assuming a firm is selling its output in a purely competitive market, its resource demand curve can be determined by

The demand for a productive resource is said to be "derived" because the demand for the factor

A competitive firm's marginal revenue product of labor will fall as it employs more labor because the price of labor decreases as more of it is employed.

Which of the following will not cause a shift in the demand for resource X?

All firms have to incur costs because of

The MRP of labor curve is the firm's labor demand curve.

To achieve profit maximization, a firm must produce the profit-maximizing output with the least amount of economic resources.

If the price of a good increases, then in the market for the type of labor needed to produce this good,

The demand for a resource will shift left if the price of a substitute resource decreases.

Hiring the profit-maximizing combination of resources ensures that production costs will be minimized.

A firm combines two resources, A and B, to produce an output, Q. Their respective marginal revenue products are $30 and $21. A costs $15 a unit and B $7 a unit. To reduce the cost of Q,

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

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Behavioral Economics

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Technology, Rd, and Efficiency

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Rent, Interest, and Profit

Natural Resource and Energy Economics

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Income Inequality, Poverty, and Discrimination

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The Balance of Payments, Exchange Rates, and Trade Deficits

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