Question 1

For a firm selling its product in an imperfectly competitive market,the marginal revenue product of labor can be found by:

Accepted Answer

A)  adding marginal product to total product as one more unit of labor is employed. 
B)  adding marginal revenue to total product as one more unit of labor is employed. 
C)  multiplying marginal product by product price. 
D)  multiplying marginal product by marginal revenue. 
A)  adding marginal product to total product as one more unit of labor is employed. 
B)  adding marginal revenue to total product as one more unit of labor is employed. 
C)  multiplying marginal product by product price. 
D)  multiplying marginal product by marginal revenue. D

Question 2

Answer the question on the basis of the following information: Harry owns a barber shop and charges $6 per haircut.By hiring one barber at $10 per hour,the shop can provide 24 haircuts per eight-hour day.By hiring a second barber at the same wage rate,the shop can now provide a total of 42 haircuts per day. Refer to the given information.Harry should:

Accepted Answer

A)  hire the second barber because he will add $28 to profits. 
B)  hire the second barber because he will add $108 to profits. 
C)  not hire the second barber because he is less productive than the first barber. 
D)  not hire the second barber because he will diminish profits. 
A)  hire the second barber because he will add $28 to profits. 
B)  hire the second barber because he will add $108 to profits. 
C)  not hire the second barber because he is less productive than the first barber. 
D)  not hire the second barber because he will diminish profits. A

Question 3

Assume that an appliance manufacturer is employing variable resources X and Y in such amounts that the MRPs of the last units of X and Y employed are $100 and $60 respectively.Resource X can be hired at $50 per unit and resource Y at $20 per unit.The firm:

Accepted Answer

A)  should hire more of both X and Y. 
B)  should hire more of Y and less of X. 
C)  is producing with the least-costly combination of X and Y but could increase its profits by employing more of X and less of Y. 
D)  is using the least-cost combination of X and Y but could increase its profits by employing less of both X and Y. 
A)  should hire more of both X and Y. 
B)  should hire more of Y and less of X. 
C)  is producing with the least-costly combination of X and Y but could increase its profits by employing more of X and less of Y. 
D)  is using the least-cost combination of X and Y but could increase its profits by employing less of both X and Y. A

Question 4

The elasticity of resource demand measures the:

Accepted Answer

A)  responsiveness of workers to changes in wage rates. 
B)  responsiveness of producers to changes in resource prices. 
C)  ratio of marginal revenue product to resource price. 
D)  sensitivity of marginal revenue product to changes in product price. 
A)  responsiveness of workers to changes in wage rates. 
B)  responsiveness of producers to changes in resource prices. 
C)  ratio of marginal revenue product to resource price. 
D)  sensitivity of marginal revenue product to changes in product price.

Question 5

Answer the question on the basis of the information given in the following table: $\begin{array}{c}
\begin{array}{c}
\
Employment\
\hline
0\
1 \
2 \
3 \
4 \
5 \
6
\end{array}
\begin{array}{c}
Total\
Product\
\hline
0\
12\
22\
30\
36\
40\
42\
\end{array}
\begin{array}{c}
\text { Product }\
\text { Price } \
\hline \$ 3 \
3 \
3 \
3 \
3 \
3 \
3
\end{array}
\end{array}$ Refer to the given data.If the firm is hiring workers under purely competitive conditions at a wage rate of $22,it will employ:

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 6

Suppose that a union successfully negotiated a 10 percent wage increase and the quantity of labor demanded increased by 10 percent.We can conclude that:

Accepted Answer

A)  the labor demand curve must have independently shifted to the right. 
B)  labor demand is highly elastic. 
C)  the coefficient of labor demand elasticity is less than 1. 
D)  labor demand is unit-elastic. 
A)  the labor demand curve must have independently shifted to the right. 
B)  labor demand is highly elastic. 
C)  the coefficient of labor demand elasticity is less than 1. 
D)  labor demand is unit-elastic.

Question 7

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 8

Assume the price of capital falls relative to the price of labor and,as a result,the demand for labor increases.Therefore:

Accepted Answer

A)  capital is very highly substitutable for labor. 
B)  the output effect is greater than the substitution effect. 
C)  the income effect is greater than the output effect. 
D)  the substitution effect is greater than the output effect. 
A)  capital is very highly substitutable for labor. 
B)  the output effect is greater than the substitution effect. 
C)  the income effect is greater than the output effect. 
D)  the substitution effect is greater than the output effect.

Question 9

Other things equal,we would expect the labor demand curve of a monopolistic seller to:

Accepted Answer

A)  decline more rapidly than that of a purely competitive seller. 
B)  decline less rapidly than that of a purely competitive seller. 
C)  decline at the same rate as that of a purely competitive seller. 
D)  be more elastic than that of a purely competitive seller. 
A)  decline more rapidly than that of a purely competitive seller. 
B)  decline less rapidly than that of a purely competitive seller. 
C)  decline at the same rate as that of a purely competitive seller. 
D)  be more elastic than that of a purely competitive seller.

Question 10

Resource pricing is important because:

Accepted Answer

A)  resource prices are a major determinant of money incomes. 
B)  resource prices allocate scarce resources among alternative uses. 
C)  resource prices,along with resource productivity,are important to firms in minimizing their costs. 
D)  of all of these reasons. 
A)  resource prices are a major determinant of money incomes. 
B)  resource prices allocate scarce resources among alternative uses. 
C)  resource prices,along with resource productivity,are important to firms in minimizing their costs. 
D)  of all of these reasons.

Question 11

Answer the question on the basis of the information given in the following table: $\begin{array}{c}
\begin{array}{c}
\
Employment\
\hline
0\
1 \
2 \
3 \
4 \
5 \
6
\end{array}
\begin{array}{c}
Total\
Product\
\hline
0\
12\
22\
30\
36\
40\
42\
\end{array}
\begin{array}{c}
\text { Product }\
\text { Price } \
\hline \$ 3 \
3 \
3 \
3 \
3 \
3 \
3
\end{array}
\end{array}$ Refer to the given data.Which of the following best represents the labor demand schedule for this firm?

Accepted Answer

A) 
$\begin{array}{cc}
\text { WR } & \mathbf{Q}_{d} \
\hline \$ 35 & 1 \
29 & 2 \
23 & 3 \
17 & 4
\end{array}$ 
B) 
$\begin{array}{cc}
\text { WR } & \mathbf{Q}_{d} \
\hline \$ 35 & 2 \
29 & 3 \
23 & 4 \
17 & 5
\end{array}$ 
C) 
$\begin{array}{cc}
\text { WR } & \mathbf{Q}_{d} \
\hline \$ 35 & 3 \
29 & 4 \
23 & 5 \
17 & 6
\end{array}$ 
D) 
$\begin{array}{cc}
{W R}&\mathbf{Q_{d}}\\hline
{\$ 40} & {1} \
35 & 2 \
30 & 3 \
25 & 4
\end{array}$ 
A) 
$\begin{array}{cc}
\text { WR } & \mathbf{Q}_{d} \
\hline \$ 35 & 1 \
29 & 2 \
23 & 3 \
17 & 4
\end{array}$ 
B) 
$\begin{array}{cc}
\text { WR } & \mathbf{Q}_{d} \
\hline \$ 35 & 2 \
29 & 3 \
23 & 4 \
17 & 5
\end{array}$ 
C) 
$\begin{array}{cc}
\text { WR } & \mathbf{Q}_{d} \
\hline \$ 35 & 3 \
29 & 4 \
23 & 5 \
17 & 6
\end{array}$ 
D) 
$\begin{array}{cc}
{W R}&\mathbf{Q_{d}}\\hline
{\$ 40} & {1} \
35 & 2 \
30 & 3 \
25 & 4
\end{array}$

Question 12

Answer the question on the basis of the following information.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. Refer to the given information.The marginal revenue product of the second worker is:

Accepted Answer

A)  $24. 
B)  $8. 
C)  $15. 
D)  $9. 
A)  $24. 
B)  $8. 
C)  $15. 
D)  $9.

Question 13

Which of the following statements is correct?

Accepted Answer

A)  If the profit-maximizing rule is fulfilled,it necessarily follows that the cost-minimization rule is being fulfilled. 
B)  The profit-maximizing and the cost-minimizing rules are such that the fulfilling of one has no bearing on the fulfilling of the other. 
C)  If the profit-maximizing rule is fulfilled,the cost-minimization rule may or may not be fulfilled. 
D)  If the cost-minimization rule is fulfilled,it necessarily follows that the profit-maximizing rule is being fulfilled. 
A)  If the profit-maximizing rule is fulfilled,it necessarily follows that the cost-minimization rule is being fulfilled. 
B)  The profit-maximizing and the cost-minimizing rules are such that the fulfilling of one has no bearing on the fulfilling of the other. 
C)  If the profit-maximizing rule is fulfilled,the cost-minimization rule may or may not be fulfilled. 
D)  If the cost-minimization rule is fulfilled,it necessarily follows that the profit-maximizing rule is being fulfilled.

Question 14

If a firm is selling in an imperfectly competitive product market,then:

Accepted Answer

A)  average product will be less than marginal product for any number of workers hired. 
B)  the marginal products of successive workers must be sold at lower prices. 
C)  the marginal products of successive workers can be sold at higher prices. 
D)  the marginal products of successive workers can be sold at a constant price. 
A)  average product will be less than marginal product for any number of workers hired. 
B)  the marginal products of successive workers must be sold at lower prices. 
C)  the marginal products of successive workers can be sold at higher prices. 
D)  the marginal products of successive workers can be sold at a constant price.

Question 15

Answer the question on the basis of the following data: $\begin{array}{cccccc}
Quantity &MP of& MRP of &\text{Quantity of}& MP of &MRP of\
of Labor& Labor& Labor& Capital &Capital &Capital\
\hline
1 & 15 & \$ 45 & 1 & 8 & \$ 24 \
2 & 12 & 36 & 2 & 6 & 18 \
3 & 9 & 27 & 3 & 5 & 15 \
4 & 6 & 18 & 4 & 4 & 12 \
5 & 3 & 9 & 5 & 3 & 9 \
6 & 1 & 3 & 6 & 2 & 6
\end{array}$ Refer to the given data.This firm is selling its product in:

Accepted Answer

A)  an imperfectly competitive market at prices that decline as sales increase. 
B)  a purely competitive market at $3 per unit. 
C)  a purely competitive market at $2 per unit. 
D)  an imperfectly competitive market at $3 per unit. 
A)  an imperfectly competitive market at prices that decline as sales increase. 
B)  a purely competitive market at $3 per unit. 
C)  a purely competitive market at $2 per unit. 
D)  an imperfectly competitive market at $3 per unit.

Question 16

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 17

Other things equal,if wage rates increase by 20 percent,the greatest decline in employment will occur when labor costs are a:

Accepted Answer

A)  large proportion of total costs and product demand is elastic. 
B)  small proportion of total costs and product demand is elastic. 
C)  large proportion of total costs and product demand is inelastic. 
D)  small proportion of total costs and product demand is inelastic. 
A)  large proportion of total costs and product demand is elastic. 
B)  small proportion of total costs and product demand is elastic. 
C)  large proportion of total costs and product demand is inelastic. 
D)  small proportion of total costs and product demand is inelastic.

Question 18

Answer the question on the basis of the data contained in the following table.Assume that the firm is hiring labor in a purely competitive market. $\begin{array}{ccc}
\begin{array}{ccc}
\begin{array}{c}
\text { Units of } \
\text { Labor }\
\hline
\end{array} && \begin{array}{c}
\text { Total } \
\text { Product }\
\hline
\end{array} \
0 & & 0 \
1 & & 15 \
2 & & 28 \
3 & & 39 \
4 & & 48 \
5 & & 55 \
6 & & 60
\end{array}
\begin{array}{c}
Product\
Price\
\hline
 \$ 2.20\ 
 2.00 \
 1.80 \
 1.60 \
1.40 \
 1.20 \
 1.10 
\end{array}
\end{array}$ The given data reveal that:

Accepted Answer

A)  the firm is selling its product in a purely competitive market. 
B)  the firm is selling its product in an imperfectly competitive market. 
C)  there is no level of output at which this firm can operate at a profit. 
D)  the law of diminishing returns is not applicable to this firm. 
A)  the firm is selling its product in a purely competitive market. 
B)  the firm is selling its product in an imperfectly competitive market. 
C)  there is no level of output at which this firm can operate at a profit. 
D)  the law of diminishing returns is not applicable to this firm.

Question 19

Marginal revenue product (MRP)is the change in total product (total output)associated with hiring an additional unit of labor.

Accepted Answer

A) True 
 B)False

Question 20

In the United States,professional football players earn much higher incomes than professional soccer players.This occurs because:

Accepted Answer

A)  most football players are good soccer players while the reverse is not true. 
B)  consumers have a greater demand for football games than for soccer games. 
C)  football and soccer games are highly substitutable products for most consumers. 
D)  the marginal productivity of soccer players exceeds that of football players. 
A)  most football players are good soccer players while the reverse is not true. 
B)  consumers have a greater demand for football games than for soccer games. 
C)  football and soccer games are highly substitutable products for most consumers. 
D)  the marginal productivity of soccer players exceeds that of football players.

For a firm selling its product in an imperfectly competitive market,the marginal revenue product of labor can be found by:

Assume that an appliance manufacturer is employing variable resources X and Y in such amounts that the MRPs of the last units of X and Y employed are $100 and $60 respectively.Resource X can be hired at $50 per unit and resource Y at $20 per unit.The firm:

The elasticity of resource demand measures the:

Answer the question on the basis of the information given in the following table: Employment 0 1 2 3 4 5 6 Total Product 0 12 22 30 36 40 42 Product Price \ 3 3 3 3 3 3 3 Refer to the given data.If the firm is hiring workers under purely competitive conditions at a wage rate of $22,it will employ:

Suppose that a union successfully negotiated a 10 percent wage increase and the quantity of labor demanded increased by 10 percent.We can conclude that:

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

Assume the price of capital falls relative to the price of labor and,as a result,the demand for labor increases.Therefore:

Other things equal,we would expect the labor demand curve of a monopolistic seller to:

Resource pricing is important because:

Answer the question on the basis of the information given in the following table: Employment 0 1 2 3 4 5 6 Total Product 0 12 22 30 36 40 42 Product Price \ 3 3 3 3 3 3 3 Refer to the given data.Which of the following best represents the labor demand schedule for this firm?

Which of the following statements is correct?

If a firm is selling in an imperfectly competitive product market,then:

Answer the question on the basis of the following data: Quantity MPof MRPof Quantity of MPof MRPof ofLabor Labor Labor Capital Capital Capital 1 15 \ 45 1 8 \ 24 2 12 36 2 6 18 3 9 27 3 5 15 4 6 18 4 4 12 5 3 9 5 3 9 6 1 3 6 2 6 Refer to the given data.This firm is selling its product in:

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

Other things equal,if wage rates increase by 20 percent,the greatest decline in employment will occur when labor costs are a:

Answer the question on the basis of the data contained in the following table.Assume that the firm is hiring labor in a purely competitive market. Units of Labor Total Product 0 0 1 15 2 28 3 39 4 48 5 55 6 60 Product Price \ 2.20 2.00 1.80 1.60 1.40 1.20 1.10 The given data reveal that:

Marginal revenue product (MRP)is the change in total product (total output)associated with hiring an additional unit of labor.

In the United States,professional football players earn much higher incomes than professional soccer players.This occurs because:

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

Utility Maximization

Behavioral Economics

Businesses and the Cost of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition and Oligopoly

Technology RD and Efficiency

Wage Determination

Rent Interest and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Filters

Exam 15: The Demand for Resources

For a firm selling its product in an imperfectly competitive market,the marginal revenue product of labor can be found by:

Assume that an appliance manufacturer is employing variable resources X and Y in such amounts that the MRPs of the last units of X and Y employed are $100 and $60 respectively.Resource X can be hired at $50 per unit and resource Y at $20 per unit.The firm:

The elasticity of resource demand measures the:

Answer the question on the basis of the information given in the following table: Employment 0 1 2 3 4 5 6 Total Product 0 12 22 30 36 40 42 Product Price \ 3 3 3 3 3 3 3 Refer to the given data.If the firm is hiring workers under purely competitive conditions at a wage rate of $22,it will employ:

Suppose that a union successfully negotiated a 10 percent wage increase and the quantity of labor demanded increased by 10 percent.We can conclude that:

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

Assume the price of capital falls relative to the price of labor and,as a result,the demand for labor increases.Therefore:

Other things equal,we would expect the labor demand curve of a monopolistic seller to:

Resource pricing is important because:

Answer the question on the basis of the information given in the following table: Employment 0 1 2 3 4 5 6 Total Product 0 12 22 30 36 40 42 Product Price \ 3 3 3 3 3 3 3 Refer to the given data.Which of the following best represents the labor demand schedule for this firm?

Which of the following statements is correct?

If a firm is selling in an imperfectly competitive product market,then:

Answer the question on the basis of the following data: Quantity MPof MRPof Quantity of MPof MRPof ofLabor Labor Labor Capital Capital Capital 1 15 \ 45 1 8 \ 24 2 12 36 2 6 18 3 9 27 3 5 15 4 6 18 4 4 12 5 3 9 5 3 9 6 1 3 6 2 6 Refer to the given data.This firm is selling its product in:

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

Other things equal,if wage rates increase by 20 percent,the greatest decline in employment will occur when labor costs are a:

Answer the question on the basis of the data contained in the following table.Assume that the firm is hiring labor in a purely competitive market. Units of Labor Total Product 0 0 1 15 2 28 3 39 4 48 5 55 6 60 Product Price \ 2.20 2.00 1.80 1.60 1.40 1.20 1.10 The given data reveal that:

Marginal revenue product (MRP)is the change in total product (total output)associated with hiring an additional unit of labor.

In the United States,professional football players earn much higher incomes than professional soccer players.This occurs because:

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

Utility Maximization

Behavioral Economics

Businesses and the Cost of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition and Oligopoly

Technology RD and Efficiency

Wage Determination

Rent Interest and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Filters