Question 1

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 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 resource X is producing. 
C)  A decrease in the price of substitute resource Y. 
D)  An increase in the productivity of resource X.

Question 2

If the wage rate increases:

Accepted Answer

A)  a purely competitive producer will hire less labor,but an imperfectly competitive producer will not. 
B)  an imperfectly competitive producer will hire less labor,but a purely competitive producer will not. 
C)  a purely competitive producer and an imperfectly competitive producer will both hire less labor. 
D)  an imperfectly competitive producer may find it profitable to hire either more or less labor. 
A)  a purely competitive producer will hire less labor,but an imperfectly competitive producer will not. 
B)  an imperfectly competitive producer will hire less labor,but a purely competitive producer will not. 
C)  a purely competitive producer and an imperfectly competitive producer will both hire less labor. 
D)  an imperfectly competitive producer may find it profitable to hire either more or less labor.

Question 3

If the substitution effect outweighs the output effect,an increase in the price of a substitute resource will increase the demand for labor.

Accepted Answer

A) True 
 B)False

Question 4

If a firm is hiring variable resources D and F in perfectly competitive input markets,it will minimize the cost of producing any level of output by employing D and F in such amounts that:

Accepted Answer

A)  the price of each input equals its MP. 
B)  MPD = MPF. 
C)  MPD/PD = MPF/PF. 
D)  MPD/PF = MPF/PD. 
A)  the price of each input equals its MP. 
B)  MPD = MPF. 
C)  MPD/PD = MPF/PF. 
D)  MPD/PF = MPF/PD.

Question 5

Assuming pure competition,which of the following are equivalents?

Accepted Answer

A)  MRPL/PL = MRPC/PC and Px = 1/MC. 
B)  MRPL/PL = MRPC/PC and Px = AVC. 
C)  Px = MC and MRPL/PL = MRPC/PC = 1. 
D)  Px = MC and MPL/PL = MPC/PC. 
A)  MRPL/PL = MRPC/PC and Px = 1/MC. 
B)  MRPL/PL = MRPC/PC and Px = AVC. 
C)  Px = MC and MRPL/PL = MRPC/PC = 1. 
D)  Px = MC and MPL/PL = MPC/PC.

Question 6

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.How many workers should the farmer hire?

Accepted Answer

A)  1. 
B)  2. 
C)  3. 
D)  4. 
A)  1. 
B)  2. 
C)  3. 
D)  4.

Question 7

The labor demand curve of a firm:

Accepted Answer

A)  will shift to the left if the price of the product the labor is producing falls. 
B)  is perfectly elastic if the firm is selling its product in a purely competitive market. 
C)  reflects a direct relationship between the number of workers hired and the money wage rate. 
D)  is the same as its marginal product curve. 
A)  will shift to the left if the price of the product the labor is producing falls. 
B)  is perfectly elastic if the firm is selling its product in a purely competitive market. 
C)  reflects a direct relationship between the number of workers hired and the money wage rate. 
D)  is the same as its marginal product curve.

Question 8

The profit-maximizing and the least-cost combination of inputs are:

Accepted Answer

A)  the result of unrelated decisions. 
B)  always identical. 
C)  such that the minimization of costs always results in profit maximization. 
D)  such that the maximization of profits always entails the least-cost combination of inputs. 
A)  the result of unrelated decisions. 
B)  always identical. 
C)  such that the minimization of costs always results in profit maximization. 
D)  such that the maximization of profits always entails the least-cost combination of inputs.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Answer the question on the basis of the following information for Manfred's Shoe Shine Parlor.Assume Manfred hires labor,its only variable input,under purely competitive conditions.Shoe shines are also sold competitively. $\begin{array}{c}
\begin{array}{c}
 \text {Units of}\
\underline{\text {Labor}}\
0\
1\
2\
3\
4\
5\
6\
7
\end{array}
\begin{array}{c}
\text {Total}\
\underline{\text {Product}}\
0\
14\
\
30\
35\
39\
\
44
\end{array}
\begin{array}{c}
\text {Marginal}\
\underline{\text {Product}}\
\
14\
10\
\
\
\
\
2
\end{array}
\begin{array}{c}
\text {Total}\
\underline{\text {Revenue}}\
\
\$ 42 \
\
90\
\
117\
126\
132
\end{array}
\end{array}$
  Refer to the given data.What is the marginal product of the sixth worker?

Accepted Answer

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

Question 11

If a 10 percent wage increase in a particular labor market results in a 5 percent decline in employment in that market,labor demand is:

Accepted Answer

A)  unit-elastic. 
B)  elastic. 
C)  inelastic. 
D)  perfectly elastic. 
A)  unit-elastic. 
B)  elastic. 
C)  inelastic. 
D)  perfectly elastic.

Question 12

The demand for labor is a derived demand,whereas the demand for capital is not.

Accepted Answer

A) True 
 B)False

Question 13

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 product of the second worker is:

Accepted Answer

A)  24. 
B)  8. 
C)  5. 
D)  1. 
A)  24. 
B)  8. 
C)  5. 
D)  1.

Question 14

The equation MPL/PL = MPC/PC:

Accepted Answer

A)  designates the MR = MC level of output. 
B)  assumes imperfect competition in the hiring of labor and capital. 
C)  is a sufficient condition for the maximization of profits. 
D)  is a necessary,but not sufficient,condition for the maximization of profits. 
A)  designates the MR = MC level of output. 
B)  assumes imperfect competition in the hiring of labor and capital. 
C)  is a sufficient condition for the maximization of profits. 
D)  is a necessary,but not sufficient,condition for the maximization of profits.

Question 15

The demand for a resource depends primarily on:

Accepted Answer

A)  the supply of that resource. 
B)  the demand for the product or service that it helps produce. 
C)  the price of that input. 
D)  the elasticity of supply of substitute inputs. 
A)  the supply of that resource. 
B)  the demand for the product or service that it helps produce. 
C)  the price of that input. 
D)  the elasticity of supply of substitute inputs.

Question 16

The demand curve for labor would shift leftward as the result of:

Accepted Answer

A)  an increase in the price of the product labor is producing. 
B)  a decrease in the productivity of labor. 
C)  an increase in the price of labor. 
D)  a decrease in the price of capital,provided the output effect exceeds the substitution effect. 
A)  an increase in the price of the product labor is producing. 
B)  a decrease in the productivity of labor. 
C)  an increase in the price of labor. 
D)  a decrease in the price of capital,provided the output effect exceeds the substitution effect.

Question 17

A competitive employer should hire additional labor as long as:

Accepted Answer

A)  the MRP exceeds the wage rate. 
B)  the wage rate is less than MP. 
C)  average product exceeds MP. 
D)  MC exceeds MR. 
A)  the MRP exceeds the wage rate. 
B)  the wage rate is less than MP. 
C)  average product exceeds MP. 
D)  MC exceeds MR.

Question 18

We say that the demand for labor is a derived demand because:

Accepted Answer

A)  labor is a necessary input in the production of every good or service. 
B)  we demand the product that labor helps produce rather than labor service per se. 
C)  the forces of supply and demand do not apply directly to labor markets. 
D)  labor is hired using the MRP = MRC rule. 
A)  labor is a necessary input in the production of every good or service. 
B)  we demand the product that labor helps produce rather than labor service per se. 
C)  the forces of supply and demand do not apply directly to labor markets. 
D)  labor is hired using the MRP = MRC rule.

Question 19

Which of the following statements best illustrates the concept of derived demand?

Accepted Answer

A)  As income goes up,the demand for farm products will increase by a smaller relative amount. 
B)  A decline in the price of margarine will reduce the demand for butter. 
C)  A decline in the demand for shoes will cause the demand for leather to decline. 
D)  When the price of gasoline goes up,the demand for motor oil will decline. 
A)  As income goes up,the demand for farm products will increase by a smaller relative amount. 
B)  A decline in the price of margarine will reduce the demand for butter. 
C)  A decline in the demand for shoes will cause the demand for leather to decline. 
D)  When the price of gasoline goes up,the demand for motor oil will decline.

Question 20

The more elastic the demand for a product,the less elastic will be the demand for the resources employed in producing it.

Accepted Answer

A) True 
 B)False

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

If the wage rate increases:

If the substitution effect outweighs the output effect,an increase in the price of a substitute resource will increase the demand for labor.

If a firm is hiring variable resources D and F in perfectly competitive input markets,it will minimize the cost of producing any level of output by employing D and F in such amounts that:

Assuming pure competition,which of the following are equivalents?

The labor demand curve of a firm:

The profit-maximizing and the least-cost combination of inputs are:

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

If a 10 percent wage increase in a particular labor market results in a 5 percent decline in employment in that market,labor demand is:

The demand for labor is a derived demand,whereas the demand for capital is not.

The equation MP_L/P_L = MP_C/P_C:

The demand for a resource depends primarily on:

The demand curve for labor would shift leftward as the result of:

A competitive employer should hire additional labor as long as:

We say that the demand for labor is a derived demand because:

Which of the following statements best illustrates the concept of derived demand?

The more elastic the demand for a product,the less elastic will be the demand for the resources employed in producing it.

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

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

If the wage rate increases:

If the substitution effect outweighs the output effect,an increase in the price of a substitute resource will increase the demand for labor.

If a firm is hiring variable resources D and F in perfectly competitive input markets,it will minimize the cost of producing any level of output by employing D and F in such amounts that:

Assuming pure competition,which of the following are equivalents?

The labor demand curve of a firm:

The profit-maximizing and the least-cost combination of inputs are:

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

If a 10 percent wage increase in a particular labor market results in a 5 percent decline in employment in that market,labor demand is:

The demand for labor is a derived demand,whereas the demand for capital is not.

The equation MPL/PL = MPC/PC:

The demand for a resource depends primarily on:

The demand curve for labor would shift leftward as the result of:

A competitive employer should hire additional labor as long as:

We say that the demand for labor is a derived demand because:

Which of the following statements best illustrates the concept of derived demand?

The more elastic the demand for a product,the less elastic will be the demand for the resources employed in producing it.

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

The equation MP_L/P_L = MP_C/P_C: