Deck 14: The Demand and Supply of Resources

Question 1

Use the following information to answer the following questions:
Mickey L.Douglas,owner of MLD 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

Answer 1

2 units

Question 2

Use the following graph,which depicts Mighty Max's labor demand for his duffel bag business,to answer the following questions.The labor demand curve shown is calculated based on a duffel bag price of $10.

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

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

Answer 2

$15.

Question 3

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.

Answer 3

the demand for factors of production dependent on consumer demand for output.

Question 4

The worker productivity of Cutie Cupcakes is presented in the following table.Use the table to answer the following questions:

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

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

Question 5

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.

Question 6

Which of the following is NOT a factor of production?

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

Question 7

Refer to the following table to answer the following questions:

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

A) one
B) two
C) three
D) four
E) five

Question 8

The worker productivity of Cutie Cupcakes is presented in the following table.Use the table to answer the following questions:

When Cutie Cupcakes hires its three hundredth 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 9

The worker productivity of Cutie Cupcakes is presented in the following table.Use the table to answer the following questions:

If the wage is $8 and the price of a cupcake is $4,what are Cutie Cupcakes' profits at the optimal amount of labor?

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

Question 10

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

A) cupcakes
B) canned soda
C) computer chips
D) cat food
E) cars

Question 11

Refer to the following table to answer the following questions:

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 12

Use the following information to answer the following questions:
Mickey L.Douglas,owner of MLD 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 Mickey to hire the twenty-fifth worker?

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

Question 13

The diminishing marginal product of labor exists when the last worker hired produces ________ the previous worker.

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

Question 14

Refer to the following table to answer the following questions:

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 following information to answer the following questions:
Mickey L.Douglas,owner of MLD 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 16

Derived demand is NOT represented by the demand for

A) bakers.
B) home ovens.
C) fast-food fryers.
D) office space.
E) car engines.

Question 17

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 18

Use the following graph,which depicts Mighty Max's labor demand for his duffel bag business,to answer the following questions.The labor demand curve shown is calculated based on a duffel bag price of $10.

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

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

Question 19

The marginal product of labor is the

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

Question 20

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) diminishing

Question 21

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 22

Refer to the following graphs to answer the following questions:
A.
B.
C.
D.
E.

Choose the graph that represents the following situation: The government raises the minimum wage.

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

Question 23

Yolanda 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 24

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

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 26

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

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

Question 27

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 28

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 29

Refer to the following graphs to answer the following questions:
A.
B.
C.
D.
E.

Choose the graph that represents the following situation: Consumer demand for Princeton 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 30

Refer to the following graphs to answer the following questions:
A.
B.
C.
D.
E.

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 31

Use the following graph,which depicts Mighty Max's labor demand for his duffel bag business,to answer the following questions.The labor demand curve shown is calculated based on a duffel bag price of $10.

If the price increases from $10 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 32

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 33

As computer usage in companies and in the home has increased,the labor demand for information technology (IT)workers has

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

Question 34

Refer to the following graphs to answer the following questions:
A.
B.
C.
D.
E.

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 35

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 36

Use the following graph,which depicts Mighty Max's labor demand for his duffel bag business,to answer the following questions.The labor demand curve shown is calculated based on a duffel bag price of $10.

Assume that the price of duffel 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 37

If more of the production process for automobiles were switched over to machines,the demand for auto factory assembly line workers would ________ 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 38

Use the following graph,which depicts Mighty Max's labor demand for his duffel bag business,to answer the following questions.The labor demand curve shown is calculated based on a duffel bag price of $10.

If the wage of the fifth worker is $20 and his or her value of the marginal product of labor is $25,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) is likely to benefit by hiring more workers.
E) is likely to lose profit by hiring more workers.

Question 39

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 40

Use the following graph,which depicts Mighty Max's labor demand for his duffel bag business,to answer the following questions.The labor demand curve shown is calculated based on a duffel bag price of $10.

Assume that the price per duffel 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 41

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 42

When Noah'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 43

Refer to the following graphs to answer the following questions:
A.
B.11efbc7a_aae2_b1ce_a154_5b2bc6d63cd5_TB4871_00
C.
D.
E.

-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 44

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 45

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 46

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 47

Refer to the following graphs to answer the following questions:
A.
B.11efbc7a_aae2_b1ce_a154_5b2bc6d63cd5_TB4871_00
C.
D.
E.

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

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

Question 48

Refer to the following graphs to answer the following questions:
A.
B.11efbc7a_aae2_b1ce_a154_5b2bc6d63cd5_TB4871_00
C.
D.
E.

-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 49

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 50

If you know that the substitution effect dominates the income effect when Jasper'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 51

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

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

Question 52

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 53

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 54

Refer to the following graphs to answer the following questions:
A.
B.11efbc7a_aae2_b1ce_a154_5b2bc6d63cd5_TB4871_00
C.
D.
E.

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

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

Question 55

Rowan 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 56

Ummal 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 Ummal 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 citizens of Robbinsville notice that their friends and family in the neighboring city of Deville are earning higher wages.We would expect the labor supply in Robbinsville ________ 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 58

When Franklin earns more income but still works less,leisure is a ________ good for him.

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

Question 59

When their wages rise,Raymond works more and Brandi works less.We can infer that Raymond values income ________ than Brandi.

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

Question 60

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 61

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 62

Use the following table,which shows the supply and demand schedules for workers in the country of Hovian,to answer the following questions:

The equilibrium wage is

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

Question 63

Use the following table,which shows the supply and demand schedules for workers in the country of Hovian,to answer the following questions:

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 64

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 65

Use the following table,which shows the supply and demand schedules for workers in the country of Hovian,to answer the following questions:

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 66

Use the following table,which shows the supply and demand schedules for workers in the country of Hovian,to answer the following questions:

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 67

Use the following table,which shows the supply and demand schedules for workers in the country of Hovian,to answer the following questions:

The supply schedule indicates that the labor supply curve is

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

Question 68

The following graph represents Zendar's labor market.Use this graph to answer the following questions:

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 69

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 70

The following graph represents Zendar's labor market.Use this graph to answer the following questions:

What is the equilibrium number of workers in Zendar?

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

Question 71

The following graph represents Zendar's labor market.Use this graph to answer the following questions:

At a wage of ________,________ workers are demanded.

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

Question 72

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 73

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 74

The following graph represents Zendar's labor market.Use this graph to answer the following questions:

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 75

Use the following table,which shows the supply and demand schedules for workers in the country of Hovian,to answer the following questions:

Wages above ________ will cause a ________.

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

Question 76

The following graph represents Zendar's labor market.Use this graph to answer the following questions:

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

Question 77

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

A) fall; fall
B) increase; fall
C) stay the same; rise
D) decrease; rise
E) increase; increase

Question 78

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.The equilibrium wage in this labor market is

A) $10.
B) $12.
C) $36.
D) $56.
E) $80.

Question 79

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 80

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.