Deck 11: Resource Markets

Question 1

The manager of an Amazon Fulfilment Center estimates that hiring another shipping clerk would increase total revenue by $700 per week and increase total cost by $600 per week.He should _____

A)hire another clerk if the cost is less than $600.
B)hire another clerk regardless of the cost.
C)not hire another clerk if the revenue is greater than $700.
D)not hire another clerk regardless of the revenue.
E)hire another clerk because revenue would increase by $100 per week.

Answer 1

E

Question 2

As the price of land falls,the relative price of land _____

A)increases, because the prices of other land that could produce the same output have also decreased.
B)decreases, because the prices of other land that could produce the same output have also decreased.
C)increases, because the prices of other land that could produce the same output have increased.
D)decreases, because the prices of other land that could produce the same output are held constant.
E)remains constant, because the prices of other land that could produce the same output also increase.

Answer 2

D

Question 3

Resource owners will supply additional units of a resource as long as _____

A)the marginal utility of the additional units of the resource exceeds their price.
B)doing so decreases their income taxes.
C)all resource earnings are economic rent.
D)their total utility does not become negative.
E)doing so increases their utility.

Answer 3

E

Question 4

In product markets,_____

A)households are the demanders and firms are the suppliers.
B)households are the suppliers and firms are the demanders.
C)price and quantity demanded are positively related.
D)price and quantity supplied are inversely related.
E)price and quantity demanded are not related.

Question 5

The resource market is different from the product market because _____

A)firms don't maximize profit in the resource market.
B)households don't maximize utility in the resource market.
C)firms are demanders and households are suppliers in the resource market.
D)supply and demand do not apply in the resource market.
E)supply and demand do not apply in the product market.

Question 6

An author who writes newspaper columns for $75 each is deciding whether to purchase a personal computer with a laser printer.She determines that with a computer she would be able to write two more columns per month than she could on her typewriter.She should _____

A)buy the computer if the monthly payment is less than $300.
B)buy the computer regardless of its price.
C)not buy the computer if the monthly payment is greater than $75.
D)not buy the computer regardless of the price.
E)buy the computer if the monthly payment is less than $150.

Question 7

If the price of a resource falls,other things constant,the _____

A)demand for the final product produced by the resource will decrease.
B)demand for a substitute product will increase.
C)demand for a substitute resource will fall.
D)supply of that resource will rise.
E)supply of a substitute resource will fall.

Question 8

In resource markets,_____

A)firms demand the resources that maximize profit.
B)firms demand the resources that minimize profit.
C)firms supply the resources that maximize utility.
D)firms supply the resources that minimize utility.
E)firms and profit are not related.

Question 9

In product markets,firms _____

A)supply the goods and services that maximize profit.
B)supply the goods and services that minimize profit.
C)demand the goods and services that maximize profit.
D)demand the goods and services that minimize profit.
E)firms and profit are not related.

Question 10

A producer demands another unit of a resource as long as its marginal revenue _____

A)exceeds its additional revenue.
B)is less than its marginal cost.
C)exceeds its marginal cost.
D)is equal to its total cost.
E)exceeds its fixed cost.

Question 11

As the price of a resource decreases,_____

A)the demand for the final product produced by the resource decreases.
B)the quantity demanded of that resource decreases.
C)the supply of that resource increases.
D)producers are more willing and able to hire that resource.
E)producers are less willing and able to hire that resource.

Question 12

Which of the following is not an example of a derived demand?

A)increased interest in gardening during the spring leading to an increase in the demand for hoes and shovels
B)strong ticket sales for a concert causing the producers to schedule an extra show and demand more ushers
C)an increased use of robots leading to a decrease in the demand for labor
D)the development of alternative fuels made from corn leading to an increase in the demand for corn
E)increasing demand for music leading to the construction of more recording studios

Question 13

Along the demand curve for a resource,_____

A)the prices of other resources are assumed constant.
B)the marginal product of that resource remains constant.
C)the total cost of production is assumed constant.
D)the price of that particular resource is assumed constant.
E)the quantity of that particular resource is assumed constant.

Question 14

In resource markets,_____

A)households demand the resources that maximize profit.
B)households demand the resources that minimize profit.
C)households supply the resources that maximize utility.
D)households supply the resources that minimize utility.
E)households and utility are not related.

Question 15

As the price of a resource increases,_____

A)the demand for the final product produced by the resource decreases.
B)the quantity demanded of that resource decreases.
C)the supply of that resource increases.
D)producers are more willing and able to hire that resource.
E)producers are less willing and able to hire that resource.

Question 16

Derived demand refers to _____

A)the demand curve derived from utility functions.
B)an individual demand curve derived from a market demand curve.
C)a market demand curve derived from individual demand curves.
D)the demand for a resource derived from the demand for the product produced by that resource.
E)the demand for a product derived from the demand for the resource used to make that product.

Question 17

In resource markets,_____

A)households are the demanders and firms are the suppliers.
B)households are the suppliers and firms are the demanders.
C)price and quantity demanded are positively related.
D)price and quantity supplied are inversely related.
E)price and quantity demanded are not related.

Question 18

The firm should hire another worker as long as the additional revenue from employing another worker _____

A)exceeds the additional cost.
B)is less than the additional cost.
C)is less than the marginal cost.
D)is equal to the total cost.
E)exceeds the fixed cost.

Question 19

In the resource market,the demand for labor is a(n)_____

A)substitution demand.
B)complementary demand.
C)income demand.
D)derived demand.
E)marginal demand.

Question 20

In product markets,households _____

A)demand the goods and services that maximize utility.
B)demand the goods and services that minimize utility.
C)supply the goods and services that maximize utility.
D)supply the goods and services that minimize utility.
E)households and utility are not related.

Question 21

Which of the following is an example of derived demand?

A)As income rises, the demand for TVs rises.
B)As the price of digital cameras decreases, the demand for camera lenses increases.
C)If the demand for tires decreases, the demand for rubber also decreases.
D)When the price of gasoline rises, the demand for automobile repair falls.
E)If consumers expect the price of coffee to rise, the demand for coffee rises.

Question 22

The market supply curve of a resource is _____

A)downward sloping.
B)upward sloping.
C)horizontal at the market price.
D)vertical.
E)determined by firms.

Question 23

Other things constant,similar resources in alternative uses will be paid _____

A)different amounts based on their different uses.
B)different amounts based on the alternative uses.
C)different amounts if resources are mobile.
D)similar amounts if resources are not mobile.
E)similar amounts if resources are mobile.

Question 24

Both sugar and fructose can be used in the production of candy.If the price of sugar increases,_____

A)the demand for sugar increases as the relative price of sugar decreases.
B)sugar becomes relatively more expensive than fructose only if the price of fructose falls.
C)sugar becomes relatively more expensive than fructose, other things constant.
D)the price of fructose immediately increases.
E)the price of fructose immediately decreases.

Question 25

The market supply curve of labor is _____

A)upward sloping.
B)perfectly inelastic.
C)U-shaped.
D)downward sloping.
E)perfectly elastic.

Question 26

Exhibit 11.1

Refer to Exhibit 11.1.If this represents the resource market for truck drivers,what does the upward supply curve mean?

A)The cost of transporting goods by trucks has increased.
B)The cost of transporting goods by trucks has decreased.
C)Fewer people can afford to undergo the extensive training to become truck drivers.
D)More people can afford to undergo the extensive training to become truck drivers.
E)The cost of transporting goods by air has increased, so the cost of transporting goods by trucks has decreased.

Question 27

Exhibit 11.1

Refer to Exhibit 11.1.What does the intersection of the upward-sloping supply curve of labor with the downward-sloping demand curve for labor determine?

A)minimum wage, W, and the level of employment, E
B)maximum wage, W, and the level of employment, E
C)equilibrium wage, W, and the level of employment, E
D)supply and demand of wages
E)supply and demand of employment

Question 28

Corn is a major ingredient in tacos.If the demand for tacos increases,_____

A)the supply of corn increases.
B)the supply of corn decreases.
C)the demand for corn increases.
D)the demand for corn decreases.
E)the price of corn falls.

Question 29

People have a strong interest in selling their resources _____

A)in the same labor market.
B)in different labor markets.
C)overseas.
D)to the lowest bidder.
E)to the highest bidder.

Question 30

The market supply curve of capital is _____

A)upward sloping.
B)perfectly inelastic.
C)U-shaped.
D)downward sloping.
E)perfectly elastic.

Question 31

Exhibit 11.1

Refer to Exhibit 11.1.If a truck moving company hires truck drivers,it is _____

A)a demander of labor in the resource market.
B)a supplier of labor in the resource market.
C)a demander of labor in the product market.
D)a supplier of labor in the product market.
E)a supplier of goods and services in the resource market.

Question 32

Suppose the wage for drive-through clerks is $7 an hour at Jason Burger and $6.50 at Martha's.The jobs are alike in all other aspects.We would expect _____

A)an increase in the supply of and demand for drive-through clerks at Jason Burger.
B)an increase in the supply and a decrease in the demand for drive-through clerks at Jason Burger.
C)a decrease in the supply of drive-through clerks at Jason Burger but no change in demand.
D)an increase in the supply of drive-through clerks at Jason Burger but no change in demand.
E)a decrease in the supply of and demand for drive-through clerks at Jason Burger.

Question 33

Along the downward-sloping demand curve of lifeguards at local public pools,_____

A)the wage paid to lifeguards is held constant.
B)the number of lifeguards is held constant.
C)the wage paid to lifeguards at private clubs is held constant.
D)the admission price to these public pools decreases as the wage rate for lifeguards increases.
E)the admission price to these public pools rises as the wage rate for lifeguards increases.

Question 34

A temporary resource price differential is a price difference _____

A)caused by the inherent quality of that resource.
B)caused by the lack of resource mobility.
C)caused by differences in the time and money involved in developing the necessary job skills.
D)that causes more workers to move to higher-paid areas.
E)caused by minimum wage legislation.

Question 35

As the price of a resource increases,_____

A)the demand for that resource increases in the resource market.
B)the supply of that resource decreases in the resource market.
C)resources shift from lower-paid uses to higher-paid uses.
D)resources shift from higher-paid uses to lower-paid uses.
E)the demand for the final product decreases.

Question 36

Exhibit 11.1

Refer to Exhibit 11.1.If this represents the resource market for truck drivers,what is the truck driver's pay derived from?

A)from wage ceilings
B)from wage floors
C)from the quantity of trucks
D)from the supply for transporting goods
E)from the demand for transporting goods

Question 37

A firm's demand for a resource is a(n)_____

A)final demand.
B)derived demand.
C)secondary demand.
D)induced demand.
E)marginal demand.

Question 38

Which of the following is not an example of a derived demand?

A)As more high school graduates go on to college, more professors are hired.
B)As consumers buy more computers, they demand more powerful computers.
C)As more people want haircuts in the summer, more people become barbers.
D)As people buy more tennis shoes instead of sandals, they buy more shoelaces.
E)Increased demand for overnight delivery speeds up orders for new delivery trucks.

Question 39

The market demand curve for a resource is the _____

A)horizontal sum of the demand curves for that resource in all its various uses.
B)demand curve for the goods produced by that resource.
C)demand for that resource in its best use.
D)sum of the demand curves for that resource in its best two uses.
E)vertical sum of the demand curve for that resource in all its various uses.

Question 40

What will happen if carpenters can earn more building homes than making furniture?

A)The supply of and demand for carpenters in building homes will increase.
B)The supply for carpenters in building homes will increase and the demand will decrease.
C)The supply for carpenters in building homes will decrease.
D)The supply for carpenters in building homes will increase, demand will not change.
E)The supply of and demand for carpenters in building homes will both decrease.

Question 41

Which of the following can lead to temporary differentials in resource prices?

A)an increase in the demand for a product produced by the resource
B)differences in the inherent qualities of resources
C)differences in the time and money involved in developing necessary skills
D)differences in the nonmonetary rewards of a job
E)differences in the prices of similar resources

Question 42

The price differences of fertile land and scrubland can be explained by the differences in _____

A)the demand for land.
B)the supply of land.
C)their inherent qualities.
D)the efficiency of the real estate brokers engaged in buying and selling the land.
E)the income of the citizens.

Question 43

The difference between the average earnings of eye surgeons and those of janitors is _____

A)an example of a temporary differential caused by a lack of resource mobility.
B)an example of a permanent differential caused by differences in the time and money involved in developing the necessary skills.
C)an example of a permanent differential caused by differences in nonmonetary aspects of the job.
D)a temporary difference that will be eliminated through the reallocation of resources to different uses.
E)an example of a permanent differential caused by a difference in the inherent quality of the resource.

Question 44

Resource price differentials that trigger the reallocation of resources to equalize payments for similar resources are known as _____

A)permanent resource price differentials.
B)reallocation differentials.
C)compensatory resource price differentials.
D)sustainable resource price differentials.
E)temporary resource price differentials.

Question 45

Consider two resource markets,A and B,where the demand curves for the resources slope downward.The supply curve of resource A is horizontal,and the supply curve of resource B is vertical.In market A,the equilibrium price is $6,and the equilibrium quantity is 100 units.In market B,the equilibrium price is $20,and the equilibrium quantity is 30 units.Which of the following is true?

A)All of the resource earnings in market A are opportunity costs.
B)All of the resource earnings in both markets are opportunity costs.
C)All of the resource earnings in market B are opportunity costs.
D)None of the resource earnings in either market are an opportunity cost.
E)None of the resource earnings in either market are economic rent.

Question 46

Resource price differentials that do not trigger the reallocation of resources are known as _____

A)temporary resource price differentials.
B)market resource price differentials.
C)conditional resource price differentials.
D)permanent resource price differentials.
E)selective resource price differentials.

Question 47

If all returns to a resource are in the form of economic rent,_____

A)the demand curve for that resource is horizontal.
B)the demand curve for that resource is vertical.
C)the supply curve of that resource is horizontal.
D)the supply curve of that resource is vertical.
E)the demand curve for that resource is upward sloping.

Question 48

The greater the economic rent as a proportion of total earnings,_____

A)the less elastic the resource supply.
B)the more elastic the resource demand.
C)the more elastic the resource supply.
D)the less elastic the resource demand.
E)the more elastic the firm's supply of its final product.

Question 49

Permanent differentials in resource prices will cause _____

A)a change in the supply of resources.
B)the allocation of fewer resources to lower-paid uses.
C)the equalization of payments for the same resource in different uses.
D)no change in the allocation of resources.
E)the allocation of more resources to higher-paid uses.

Question 50

If the supply of beach houses is fixed and perfectly inelastic,_____

A)the demand for the beach houses determines their price and the level of economic rent.
B)the supply of the beach houses determines their price and the level of economic rent.
C)the supply of the beach houses determines their price, and the demand for the beach houses determines the level of economic rent.
D)the demand for the beach houses determines their price, and the supply of the beach houses determines the level of economic rent.
E)the supply curve for beach houses is horizontal.

Question 51

If all returns to a resource are in the form of economic rent,_____

A)the price of that resource is determined exclusively by supply.
B)the price of that resource is determined exclusively by demand.
C)the equilibrium quantity of that resource is zero.
D)the equilibrium price of that resource is determined by government.
E)the equilibrium price of that resource is zero.

Question 52

Consider two resource markets,A and B,where the demand curves for the resources slope downward.The supply curve of resource A is horizontal,and the supply curve of resource B is vertical.In market A,the equilibrium price is $6 and the equilibrium quantity is 100 units.In market B,the equilibrium price is $20 and the equilibrium quantity is 30 units.Which of the following is true?

A)Total resource earnings are the same in both markets.
B)Total resource earnings are greater in market A.
C)Total resource earnings are greater in market B.
D)All earnings from resource A are economic rent.
E)All earnings from resource B are its opportunity costs.

Question 53

Which of the following is an example of a temporary price differential in a resource market?

A)land downtown being more expensive than land in the suburbs
B)a famous professional basketball player being paid more than the average professional basketball player
C)cable television installers having a higher wage than telephone installers
D)an airline pilot being paid more than a flight attendant
E)a worker in a toxic waste plant earning more than a teacher

Question 54

Exhibit 11.1

Refer to Exhibit 11.1.If the labor market is initially in equilibrium,why would supply shift to the left?

A)improved technology
B)a fall in input prices
C)less costly regulations
D)an increase in productivity
E)a more favorable wage in another labor market

Question 55

A guarded barbed wire fence separates East and West Bovinia.Soccer players are paid twice as much in West Bovinia as in East Bovinia.This is an example of _____

A)an inelastic supply of labor.
B)a temporary resource price differential.
C)a permanent resource price differential.
D)diminishing marginal revenue product.
E)increasing marginal revenue product.

Question 56

A temporary price differential in resource markets is _____

A)caused by inherent differences in nonmonetary aspects of a job.
B)caused by a failure of firms to maximize profits.
C)eliminated by resources moving from lower-valued to higher-valued uses.
D)caused by governments increasing the minimum wages of workers.
E)eliminated when resources earn an excess of their opportunity costs.

Question 57

Gooey Flakes is the only ready-to-eat cereal that has chocolate syrup in each flake.The machine that injects the syrup into the flakes has no alternative uses.Which of the following is true?

A)All of the machine's earnings are economic rent.
B)All of the machine's earnings are opportunity cost.
C)The supply curve for this machine is horizontal.
D)The demand curve for this machine is horizontal.
E)The demand curve for this machine is vertical.

Question 58

A relaxation of U.S.immigration laws and regulations would _____

A)reduce the wages of workers in poor countries.
B)turn some permanent resource differentials into temporary ones.
C)increase the demand for labor in the United States.
D)reduce the wages of U.S. workers.
E)increase the supply of labor in poor countries.

Question 59

Which of the following is an example of a permanent resource price differential?

A)When the price of oil increases, oil exploration increases.
B)When the price of CDs falls, CD production decreases.
C)When the demand for land in a growing city increases, its price increases more than the price of land in declining cities.
D)When the demand for computer programmers increased, more people went into that field.
E)When the price of oil rose, demand for solar panels increased.

Question 60

When resource markets are free to adjust,temporary resource price differentials will cause _____

A)the equalization of payments for similar resources in different uses.
B)the allocation of fewer resources to higher-paid uses.
C)a change in the supply of resources.
D)no change in the allocation of resources.
E)price differentials of the final product using the resource.

Question 61

Exhibit 11.2

Refer to Exhibit 11.2,which shows the labor market.The vertical axis measures wage in dollars,and the horizontal axis measures labor in hours.The total earnings of labor in equilibrium equal _____

A)$40.
B)$80.
C)$160.
D)$16.
E)$8.

Question 62

Exhibit 11.2

Refer to Exhibit 11.2,which shows the labor market.The vertical axis measures wage in dollars,and the horizontal axis measures labor in hours.The twentieth unit of labor is earning a wage of _____

A)$4, all of which is economic rent.
B)$4, none of which is economic rent.
C)$8, all of which is economic rent.
D)$8, some of which is economic rent.
E)$8, half of which is economic rent.

Question 63

If all of a resource's earnings reflect the opportunity costs of the resource,_____

A)the equilibrium price and quantity of that resource are determined by the intersection of the demand and supply curves in the product market.
B)the equilibrium price of that resource is zero.
C)the quantity of that resource is determined exclusively by supply.
D)the price of that resource is determined exclusively by demand.
E)the quantity of that resource is determined exclusively by demand.

Question 64

Exhibit 11.3

Refer to Exhibit 11.3,which shows the demand and supply curves of a resource.One hundred units of the resource are earning a resource price of _____

A)$10, all of which is economic rent.
B)$10, none of which is economic rent.
C)$4, all of which is economic rent.
D)$4, none of which is economic rent.
E)$10, some of which is economic rent.

Question 65

Exhibit 11.2

Refer to Exhibit 11.2,which shows the labor market.The vertical axis measures wage in dollars,and the horizontal axis measures labor in hours.Which unit of the resource is earning the least economic rent?

A)the fifth unit
B)the tenth unit
C)the fifteenth unit
D)the twentieth unit
E)the thirtieth unit

Question 66

Exhibit 11.4

Refer to Exhibit 11.4,which shows the demand and supply curves of a resource.The total resource earnings in equilibrium equal _____

A)$12.
B)$10.
C)$720.
D)$1,000.
E)$1,200.

Question 67

Exhibit 11.3

Refer to Exhibit 11.3,which shows the demand and supply curves of a resource.The economic rent in equilibrium equals _____

A)$40.
B)$60.
C)$10.
D)$700.
E)$300.

Question 68

Exhibit 11.2

Refer to Exhibit 11.2,which shows the labor market.The vertical axis measures wage in dollars,and the horizontal axis measures labor in hours.Which unit of the resource is earning the highest economic rent?

A)the fifth unit
B)the tenth unit
C)the fifteenth unit
D)the twentieth unit
E)the thirtieth unit

Question 69

Exhibit 11.2

Refer to Exhibit 11.2,which shows the labor market.The vertical axis measures wage in dollars,and the horizontal axis measures labor in hours.The economic rent in equilibrium equals _____

A)$40.
B)$80.
C)$160.
D)$16.
E)$8.

Question 70

Exhibit 11.3

Refer to Exhibit 11.3,which shows the demand and supply curves of a resource.The opportunity cost of the resource in equilibrium equals _____

A)$40.
B)$60.
C)$100.
D)$700.
E)$300.

Question 71

Exhibit 11.2

Refer to Exhibit 11.2,which shows the labor market.The vertical axis measures wage in dollars,and the horizontal axis measures labor in hours.The opportunity cost of labor in equilibrium equals _____

A)$40.
B)$80.
C)$160.
D)$16.
E)$8.

Question 72

Exhibit 11.4

Refer to Exhibit 11.4,which shows the demand and supply curves of a resource.The equilibrium price of the resource is _____

A)$16.
B)$12.
C)$10.
D)less than $10.
E)more than $12 but less than $16.

Question 73

Exhibit 11.2

Refer to Exhibit 11.2,which shows the labor market.The vertical axis measures wage in dollars,and the horizontal axis measures labor in hours.The tenth unit of labor is earning a wage of _____

A)$4, all of which is economic rent.
B)$4, none of which is economic rent.
C)$8, all of which is economic rent.
D)$8, none of which is economic rent.
E)$8, half of which is economic rent.

Question 74

Exhibit 11.2

Refer to Exhibit 11.2,which shows the labor market.The vertical axis measures wage in dollars,and the horizontal axis measures labor in hours.The total labor earnings in equilibrium are represented by the area _____

A) a.
B) b.
C) c.
D) a + b.
E) b + c.

Question 75

Exhibit 11.2

Refer to Exhibit 11.2,which shows the labor market.The vertical axis measures wage in dollars,and the horizontal axis measures labor in hours.The economic rent in equilibrium is represented by the area _____

A) a.
B) b.
C) c.
D) a + b.
E) b + c.

Question 76

Exhibit 11.2

Refer to Exhibit 11.2,which shows the labor market.The vertical axis measures wage in dollars,and the horizontal axis measures labor in hours.The opportunity cost in equilibrium is represented by the area _____

A) a.
B) b.
C) c.
D) a + b.
E) b + c.

Question 77

Exhibit 11.3

Refer to Exhibit 11.3,which shows the demand and supply curves of a resource.Which unit of the resource is earning the highest economic rent?

A)the first unit
B)the tenth unit
C)the fifteenth unit
D)the hundredth unit
E)the fifth unit

Question 78

Exhibit 11.3

Refer to Exhibit 11.3,which shows the demand and supply curves of a resource.The total resource earnings in equilibrium equal _____

A)$40.
B)$60.
C)$400.
D)$1,000.
E)$300.

Question 79

A resource that earns only economic rent _____

A)cannot be employed in any other line of production.
B)has an upward-sloping supply curve.
C)has a downward-sloping supply curve.
D)has a marginal revenue product that is less valuable than its marginal cost.
E)has a perfectly elastic supply curve.

Question 80

Exhibit 11.4

Refer to Exhibit 11.4,which shows the demand and supply curves of a resource.The equilibrium quantity of the resource exchanged in the market is _____

A)more than 100 units.
B)100 units.
C)60 units.
D)less than 60 units.
E)more than 60 units but less than 100 units.