Deck 14: The Demand and Supply of Resources

Question 1

Which of the following situations does not represent derived demand?

A)the demand for bakers
B)the demand for home ovens
C)the demand for fast-food fryers
D)the demand for office space
E)the demand for trainers

Answer 1

B

Question 2

Which of the following is NOT a factor of production?

A)land
B)output
C)inputs
D)entrepreneurship
E)capital

Answer 2

B

Question 3

Factors of production are:

A)goods and services.
B)used to make goods and services.
C)purchased by the consumer for personal use.
D)sold by the consumer for income.
E)the property of firms.

Answer 3

B

Question 4

Use the following information to answer the questions that follow.
Nicky L,owner of NLD Incorporated,knows that the marginal product of labor (MPL)for his workers can be defined as follows:
MPL = 32 - L
The total output a given level of workers can produce is found as:
Q = 32L - L²
He also knows that the price of his output is $3.His profits can be found as:
Profit = P
Q - W
L
The King Kupcake firm's worker productivity is presented in the accompanying table.When King Kupcake hires its 300th worker,what is that worker's marginal product of labor?

A)300 cupcakes
B)200 cupcakes
C)100 cupcakes
D)2 cupcakes
E)3 cupcakes

Question 5

Use the following information to answer the questions that follow.
Nicky L,owner of NLD Incorporated,knows that the marginal product of labor (MPL)for his workers can be defined as follows:
MPL = 32 - L
The total output a given level of workers can produce is found as:
Q = 32L - L²
He also knows that the price of his output is $3.His profits can be found as:
Profit = P
Q - W
L
What is the value of additional output produced by the twelfth worker?

A)$20
B)$100
C)$10
D)$60
E)$80

Question 6

Use the accompanying graph,which depicts Mighty Max's labor demand for his duffle-bag business,to answer the questions that follow.

If the wage is $20,Mighty Max will hire __________ workers.

A)20
B)30
C)40
D)50
E)60

Question 7

The fact that workers must share a limited amount of space and equipment results in __________ marginal productivity.

A)increasing
B)constant
C)fluctuating
D)unpredictable
E)decreasing

Question 8

Derived demand best describes the demand for which of the following options?

A)cupcakes
B)water bottles
C)hair stylists
D)cat food
E)cars

Question 9

If the price of output is $2 and the wage for workers is $4,how many workers will the firm hire?

A)1
B)2
C)3
D)4
E)5

Question 10

Use the following information to answer the questions that follow.
Nicky L,owner of NLD Incorporated,knows that the marginal product of labor (MPL)for his workers can be defined as follows:
MPL = 32 - L
The total output a given level of workers can produce is found as:
Q = 32L - L²
He also knows that the price of his output is $3.His profits can be found as:
Profit = P
Q - W
L
The government raises the minimum wage.Which graph reflects this situation?

A)Graph A
B)Graph B
C)Graph C
D)Graph D
E)Graph E

Question 11

Derived demand is:

A)consumer demand for goods and services.
B)based on the prices of factors of production.
C)the demand for factors of production directly by business.
D)the demand for factors of production dependent on consumer demand for output.
E)calculated for firms.

Question 12

If the price of output falls from $5 to $2,the value of the marginal product of labor of all workers:

A)increases.
B)remains unchanged.
C)increases at an increasing rate.
D)decreases at an increasing rate.
E)decreases.

Question 13

Which of the following describes the marginal product of labor?

A)It is the additional amount of consumer goods that can be bought from an additional hour's worth of work.
B)It is the additional amount of inputs a firm demands based on a change in consumer demand for the output.
C)It is the additional amount of output that can be produced from hiring one more worker.
D)It is the decreasing amount of output that can be produced from hiring one more worker.
E)It is the value of production from the last worker hired.

Question 14

If the price of output is $5,the value of the marginal product of labor of the third worker is:

A)$8.
B)$30.
C)$40.
D)$38.
E)$190.

Question 15

Use the accompanying graph,which depicts Mighty Max's labor demand for his duffle-bag business,to answer the questions that follow.

If 80 workers are hired,you know that the wage rate must be:

A)$25.
B)$20.
C)$15.
D)$10.
E)$5.

Question 16

Use the following information to answer the questions that follow.
Nicky L,owner of NLD Incorporated,knows that the marginal product of labor (MPL)for his workers can be defined as follows:
MPL = 32 - L
The total output a given level of workers can produce is found as:
Q = 32L - L²
He also knows that the price of his output is $3.His profits can be found as:
Profit = P
Q - W
L
What wage would be required to allow Nicky L to hire the twenty-fifth worker?

A)$3
B)$7
C)$21
D)$125
E)$25

Question 17

Use the following information to answer the questions that follow.
Nicky L,owner of NLD Incorporated,knows that the marginal product of labor (MPL)for his workers can be defined as follows:
MPL = 32 - L
The total output a given level of workers can produce is found as:
Q = 32L - L²
He also knows that the price of his output is $3.His profits can be found as:
Profit = P
Q - W
L
If the wage is $8 and the price of a cupcake is $4,find King Kupcake's profits at the optimal amount of labor.

A)$2,200
B)$2,600
C)$4,600
D)$5,000
E)$7,500

Question 18

The diminishing marginal product of labor exists when the last worker hired produces:

A)more output than the previous worker.
B)more value than the previous worker.
C)less value than the previous worker.
D)the same amount of output as the previous worker.
E)less output than the previous worker.

Question 19

The area underneath a firm's labor demand curve and above the market wage is the graphical representation of the firm's:

A)revenues.
B)costs.
C)profits.
D)losses.
E)hiring decisions.

Question 20

Use the following information to answer the questions that follow.
Nicky L,owner of NLD Incorporated,knows that the marginal product of labor (MPL)for his workers can be defined as follows:
MPL = 32 - L
The total output a given level of workers can produce is found as:
Q = 32L - L²
He also knows that the price of his output is $3.His profits can be found as:
Profit = P
Q - W
L
What additional amount of output does the thirtieth worker contribute?

A)150 units
B)60 units
C)2 units
D)14 units
E)9 units

Question 21

Use the accompanying graph,which depicts Mighty Max's labor demand for his duffle-bag business,to answer the questions that follow.

Assume that the price per duffle bag rises from $10 to $20.What is the value of the marginal product of labor of the twentieth worker?

A)$30
B)$40
C)$50
D)$60
E)$70

Question 22

The backward-bending labor supply curve occurs because workers value leisure:

A)and income differently as wages change.
B)consistently more than they do income at all wages.
C)consistently less than they do income at all wages.
D)and income by the same amount at all wages.
E)and income by fluctuating,unpredictable amounts at any wage.

Question 23

Refer to the accompanying graphs to answer the questions that follow.





Choose the graph that represents the following situation: Consumer demand for Patty's Pickles increases as customers find out that pickles are highly nutritious.

A)Graph A
B)Graph B
C)Graph C
D)Graph D
E)Graph E

Question 24

Use the accompanying graph,which depicts Mighty Max's labor demand for his duffle-bag business,to answer the questions that follow.

If workers become more productive in a given occupation,they will likely see their employment __________.

A)fall
B)double
C)rise
D)stay the same
E)go into overtime

Question 25

Donna owns a temp agency.She sees demand for her workers increase because firms prefer a more contingent workforce.The value of the marginal product of labor of her temps:

A)stays the same.
B)increases because the temps produce more per hour.
C)decreases because the temps know they are going to get jobs.
D)increases because the price of their services is higher.
E)falls because job uncertainty lowers productivity.

Question 26

Use the accompanying graph,which depicts Mighty Max's labor demand for his duffle-bag business,to answer the questions that follow.

Amy just applied for a position with Rory's firm.Rory knows that Amy will earn $20 an hour and can produce a value of the marginal product of labor (VMPL)of $40.Rory will __________ Amy because her VMPL is __________.

A)hire; positive
B)not hire; positive
C)hire; negative
D)not hire; negative
E)maybe hire; positive

Question 27

The substitution effect describes the:

A)incentive to work more when the wage rises.
B)incentive to work less when the wage rises.
C)decision whether to work more or less.
D)decision whether to join the labor force.
E)incentive to change jobs.

Question 28

Cupcakes previously sold for $3 and now sell for $5.The number of workers that King Kupcakes hires will __________.

A)fall.
B)remain unchanged,but employees will have to work overtime.
C)increase.
D)stay the same.
E)increase indefinitely.

Question 29

Refer to the accompanying graphs to answer the questions that follow.





Choose the graph that represents the following situation: A documentary on bottled water demonstrates the high impact this product has on the environment.In response,consumers drastically reduce their consumption of this product.

A)Graph A
B)Graph B
C)Graph C
D)Graph D
E)Graph E

Question 30

Refer to the accompanying graphs to answer the questions that follow.





Choose the graph that represents the following situation: Out of fear of losing their jobs in a depressed economic climate,workers increase their rate of production.

A)Graph A
B)Graph B
C)Graph C
D)Graph D
E)Graph E

Question 31

Use the accompanying graph,which depicts Mighty Max's labor demand for his duffle-bag business,to answer the questions that follow.

Assume that the price of duffle bags is $10.If the marginal product of labor of the sixtieth worker drops by half,what is the value of the marginal product of labor of the sixtieth worker now?

A)$10
B)$15
C)$20
D)$25
E)$30

Question 32

As computer usage in companies and in the home has increased,the labor demand for IT workers has:

A)remained steady.
B)decreased.
C)fallen to zero.
D)infinitely increased.
E)increased.

Question 33

The income effect describes the:

A)incentive to change jobs.
B)decision whether to join the labor force.
C)decision to ask for a raise.
D)incentive to work more when the wage rises.
E)incentive to work less when the wage rises.

Question 34

Use the accompanying graph,which depicts Mighty Max's labor demand for his duffle-bag business,to answer the questions that follow.

If the wage of the fifth worker is $20 and her value of the marginal product of labor is $5,the firm:

A)benefits by stopping at this level of labor.
B)is likely to fire the fifth worker.
C)asks this fifth worker to work overtime.
D)benefits by hiring more workers.
E)is likely to lose profit by hiring more workers.

Question 35

The use of farm machinery to plant and harvest crops has increased because it is more productive than the typical farmhand.Demand for farmhands has:

A)remained steady.
B)shifted to other areas of the farm.
C)decreased.
D)fallen to zero.
E)increased.

Question 36

Use the accompanying graph,which depicts Mighty Max's labor demand for his duffle-bag business,to answer the questions that follow.

If the price of pencils falls,the marginal product of labor will __________ and the value of the marginal product of labor will __________.

A)fall; fall
B)remain unchanged; increase
C)rise; rise
D)remain unchanged; decrease
E)remain unchanged; remain unchanged

Question 37

The fundamental decision faced by workers is called:

A)labor demand.
B)labor supply.
C)income effect.
D)the labor-leisure trade-off.
E)the substitution effect.

Question 38

The accompanying graph depicts Mighty Max's labor demand for his duffle-bag business.The labor demand curve shown is calculated based on a duffel-bag price of $10.If the price increases to $20 per bag,what happens to the labor demand curve?

A)It shifts to the left.
B)It shifts to the right.
C)It remains unchanged.
D)The firm moves upward along the labor demand curve.
E)The firm moves downward along the labor demand curve.

Question 39

If more of the production process for automobiles were switched over to machines,the demand for auto-factory assembly-line workers would __________ for machine maintenance.

A)decline but increase
B)decline and also decline
C)increase but decline
D)increase and also increase
E)remained unchanged but increase

Question 40

Bobby knows that she is producing a value just equal to her wage.If the price of what she makes falls,Bobby knows that she:

A)will be able to keep her job.
B)is likely to work overtime.
C)will work less.
D)is likely to be fired.
E)will not be able to find work anywhere.

Question 41

Refer to the accompanying graphs to answer the questions that follow.





Choose the graph that reflects this scenario: Sallie decides that she values income much more strongly because she uses the money to buy goods she can enjoy more than free time.

A)Graph A
B)Graph B
C)Graph C
D)Graph D
E)Graph E

Question 42

When their wages rise,Bob works more and Lisa works less.We can infer that Bob values income __________ than Lisa.

A)less
B)the same
C)more
D)half as much
E)a third more

Question 43

Refer to the accompanying graphs to answer the questions that follow.





Immigration is when:

A)foreign persons enter another country.
B)foreign persons leave another country.
C)citizens move to another country.
D)citizens move within their own country.
E)foreign persons move within their own country.

Question 44

No matter how high his wage rises,Johann will always work more.His labor supply curve is:

A)downward-sloping.
B)horizontal.
C)vertical.
D)upward-sloping.
E)upward-sloping at an increasing rate.

Question 45

Refer to the accompanying graphs to answer the questions that follow.





Which graph shows a person who has a fixed quantity of hours that she is willing to work per week?

A)Graph A
B)Graph B
C)Graph C
D)Graph D
E)Graph E

Question 46

When Josh's wage rises and he decides to work more hours,we know that the __________ effect has dominated the __________ effect.

A)substitution; income
B)labor; leisure
C)income; substitution
D)leisure; labor
E)substitution; leisure

Question 47

Beth is deciding whether to pick up more hours at work or to take a vacation.This decision best describes:

A)her hours decision.
B)her labor force participation decision.
C)the value she places on income.
D)the labor-leisure trade-off.
E)the necessity of income.

Question 48

Refer to the accompanying graphs to answer the questions that follow.





Which graph shows the income effect dominating the substitution effect of higher wages?

A)Graph A
B)Graph B
C)Graph C
D)Graph D
E)Graph E

Question 49

When the opportunity cost of leisure is high,people tend to work __________ hours.When it is low,people tend to work __________ hours.

A)the same; fewer
B)more; fewer
C)fewer; more
D)more; the same
E)fewer; the same

Question 50

Refer to the accompanying graphs to answer the questions that follow.





Which graph shows the substitution effect dominating the income effect of higher wages?

A)Graph A
B)Graph B
C)Graph C
D)Graph D
E)Graph E

Question 51

Refer to the accompanying graphs to answer the questions that follow.





Migration is when:

A)foreign persons enter a country.
B)foreign persons leave a country.
C)citizens move to another country.
D)citizens move within their own country.
E)foreign persons move within their own country.

Question 52

The accompanying table shows the supply and demand schedules for workers in the country of Hovian.The supply schedule indicates that the labor supply curve is:

A)backward bending.
B)upward-sloping.
C)downward-sloping.
D)vertical.
E)horizontal.

Question 53

Labor supply is the relationship between __________.

A)wages and willingness to hire workers
B)price of output and amount of output for sale
C)price of capital and amount of capital for sale
D)wages and willingness to work
E)wages and amount of output for sale

Question 54

Refer to the accompanying graphs to answer the questions that follow.





The minimum wage is increased to $15.This higher wage might __________ labor force participation,shifting the labor supply curve to the __________.

A)decrease; right
B)increase; left
C)decrease; left
D)increase; right
E)not change; right

Question 55

When people make more money,they sometimes take more vacation time.Based on this information,we can say that leisure is a(n):

A)substitute good.
B)complement good.
C)inferior good.
D)Giffen good.
E)normal good.

Question 56

Refer to the accompanying graphs to answer the questions that follow.





Rose travels back in time to deposit $100 in a high-interest-bearing savings account.When she returns to the present,she is a billionaire.We can expect Rose to work __________ hours because of the __________ effect.

A)more; substitution
B)more; income
C)fewer; substitution
D)more; labor-leisure
E)fewer; income

Question 57

The backward-bending labor supply curve has its shape because,at:

A)low wages,the income effect dominates the substitution effect,but the reverse occurs at high wages.
B)high wages,the substitution effect dominates the income effect,but the reverse occurs at low wages.
C)low wages,the substitution effect dominates the income effect,but the reverse occurs at high wages.
D)all wages,the income effect dominates the substitution effect.
E)all wages,the substitution effect dominates the income effect.

Question 58

More job opportunities open up in the South,prompting labor supply curves in northern states to __________ and in southern states to __________.

A)remain unchanged; shift right
B)shift right; shift right
C)shift left; shift right
D)shift left; remain unchanged
E)shift left; shift left

Question 59

If you know that the substitution effect dominates the income effect when Joe's wage rises,you can tell that his labor supply curve is:

A)upward-sloping.
B)downward-sloping.
C)vertical.
D)upward-sloping at an increasing rate.
E)downward-sloping at an increasing rate.

Question 60

When Jane earns more income but still works less,leisure is a __________ good for Jane.

A)substitute
B)complement
C)luxury
D)necessity
E)normal

Question 61

The labor market is said to be in equilibrium when:

A)everyone who wants to work is supplying his or her labor.
B)the number of workers is equal to the number of jobs available at a specific wage.
C)firms are unwilling to hire more workers.
D)workers keep their hours constant.
E)the number of available workers is increasing.

Question 62

The accompanying graph represents Zendar's labor market.Use this graph to answer the questions that follow.

What is the equilibrium number of workers in Zendar?

A)20
B)25
C)30
D)35
E)40

Question 63

There will be a __________ of workers when the wage is __________ the equilibrium wage.

A)surplus; at
B)shortage; below
C)shortage; above
D)shortage; at
E)surplus; below

Question 64

The accompanying graph represents Zendar's labor market.Use this graph to answer the questions that follow.

To have no surplus or shortage of workers in Zendar,what does the wage rate have to be?

A)$5
B)$10
C)$15
D)$20
E)$25

Question 65

After World War II,social norms relating to women's participation in the labor force relaxed and women were more likely to be employed outside the home.We would expect to see the labor supply curve:

A)stay the same.
B)shift left.
C)stay the same but move upward.
D)stay the same but move downward.
E)shift right.

Question 66

The labor supply curve is given by the equation L_S = 3W + 20 and the labor demand curve is given by the equation L_D = 80 - 2W.If the wage is $20,there will be a __________ of __________ workers.

A)surplus; 80
B)shortage; 40
C)shortage; 80
D)surplus; 40
E)surplus; 20

Question 67

At a wage of __________,__________ workers are demanded.

A)$5,10
B)$10,35
C)$15,40
D)$40,10
E)$45,45

Question 68

If the wage is set temporarily at $15,it will need to __________ to restore equilibrium.

A)decrease to zero
B)increase to $35
C)fall
D)increase
E)remain unchanged

Question 69

With a large group of citizens leaving a country,what will happen to the equilibrium wage and quantity of workers employed?

A)Both will fall.
B)Both will rise.
C)The equilibrium number of workers will rise and the wage will fall.
D)The equilibrium number of workers will fall and the wage will fall.
E)The equilibrium number of workers will fall and the wage will rise.

Question 70

The citizens of Kingsville notice that their friends and family in the neighboring city of Deville are earning higher wages.We would expect the labor supply in Kingsville __________ and the labor supply in Deville to __________.

A)shift right; shift right
B)shift left; shift left
C)remain unchanged; shift right
D)shift left; shift right
E)shift right; shift left

Question 71

There will be a surplus of __________ workers at a wage of __________.

A)75; $10
B)100; $20
C)135; $40
D)40; $40
E)50; $30

Question 72

At all wages below __________,there will be __________.

A)$10; a surplus
B)$25; a shortage
C)$40; a surplus
D)$35; no labor supplied
E)$20; no labor demanded

Question 73

Use the accompanying table,which shows the supply and demand schedules for workings in the country of Hovian,to answer the questions that follow.

The equilibrium wage is __________

A)$10.
B)$20.
C)$30.
D)$40.
E)$50.

Question 74

In the distant future,companies will be using technology that can replicate food.What will happen to the equilibrium wage and quantity of cooks?

A)The wage will rise and the number of cooks employed will rise.
B)Both will remain unchanged.
C)The wage will stay the same,but many cooks will leave the market.
D)The wage will rise,and the number of cooks employed will fall.
E)The wage and quantity demand will both decrease because firms won't hire as many cooks.

Question 75

There will be a __________ of workers when the wage is __________ the equilibrium wage.

A)surplus; at
B)surplus; below
C)surplus; above
D)shortage; above
E)shortage; at

Question 76

The government lowers the retirement age to 55.We would expect to see the labor supply curve:

A)stay the same.
B)shift left.
C)stay the same but move upward.
D)stay the same but move downward.
E)shift right.

Question 77

Companies begin to find that customers,when calling customer service,want to talk to real people rather than to a recording.What will happen to demand for receptionists and the market equilibrium wage?

A)Demand will fall; the equilibrium wage will fall.
B)Demand will increase; the equilibrium wage will fall.
C)Demand will stay the same; the equilibrium wage will rise.
D)Demand will decrease; the equilibrium wage will rise.
E)Demand will increase; the equilibrium wage will increase.

Question 78

Use the accompanying table,which shows the supply and demand schedules for workings in the country of Hovian,to answer the questions that follow.

Wages above __________ will cause a __________.

A)$10; surplus
B)$50; shortage
C)$20; surplus
D)$30; shortage
E)$40; shortage

Question 79

If the wage is temporarily set at $25,it will need to __________ to restore equilibrium.

A)rise
B)fall
C)remain unchanged
D)decrease to zero
E)increase to $30

Question 80

At a wage of __________,there is a __________ of __________ workers.

A)$10; surplus; 30
B)$40; shortage; 30
C)$10; shortage; 30
D)$35; shortage; 20
E)$25; surplus; 10