Question 1

An unexpected decrease in the demand for accountants will lead to

Accepted Answer

A)  an increase in the earnings of accountants. 
B)  an increase in the incentive of students to prepare for a career in accounting. 
C)  a reduction in the future supply of accountants. 
D)  an increase in the employment opportunities of accountants.

Question 2

Assume that skilled labor costs twice as much as unskilled labor, a profit-maximizing firm will

Accepted Answer

A)  always hire more skilled labor because it is more productive. 
B)  always hire more unskilled labor because it is cheaper. 
C)  hire until it equalizes the two marginal products. 
D)  hire until the marginal product of unskilled labor is one-half that of skilled labor. 
E)  hire until the marginal product of unskilled labor is two times that of skilled labor.

Question 3

When the price of steel rises, Ford uses more aluminum in the production of its cars. This is an example of

Accepted Answer

A)  substitution in consumption. 
B)  substitution in production. 
C)  a change in the marginal productivity of a resource. 
D)  derived demand.

Question 4

Suppose a new oxygen-enrichment process will cut in half the energy required to smelt copper. The firm selling licenses for this patented process will experience a greater demand for its product when

Accepted Answer

A)  the price of copper falls and smelters become more desperate to economize. 
B)  energy prices are expected to fall. 
C)  energy prices are expected to rise. 
D)  the price of steel, a substitute for copper, declines.

Question 5

Developments in the computer software industry have made it extremely easy for firms to keep their books, conduct their own audits, and fill out the various tax forms. If accountants are an input in the accounting services industry, what will likely happen in the market for accountants? Is there a difference between the short run and the long run?

Accepted Answer

The answer of Developments in the computer software industry have...

Question 6

The demand for a resource is generally more

Accepted Answer

A)  elastic in the short run because it takes time to alter the ratio of resources used in many production processes. 
B)  inelastic in the short run because it takes time to alter the ratio of resources used in many production processes. 
C)  elastic in the short run because an increase in the price of the resource may not be expected to last. 
D)  inelastic in the short run because once resource suppliers find out they can charge a higher price, they will do so in the long run.

Question 7

An apple orchard currently hires 10 workers. The owner estimates that hiring an additional worker would increase apple yields by 20 bushels per day. The price of apples is $15 per bushel. The owner should hire the extra worker if the wage rate is no greater than

Accepted Answer

A)  $50 per day. 
B)  $150 per day. 
C)  $200 per day. 
D)  $300 per day.

Question 8

The demand for a factor of production will be more inelastic

Accepted Answer

A)  when the cost of the factor is small relative to the total cost of the product. 
B)  the more elastic the demand for the final product. 
C)  the easier it is to substitute other resources for the factor. 
D)  the more elastic the supply of products produced with the resource.

Question 9

Other things constant, if the demand for computer scientists rises,

Accepted Answer

A)  the wages of computer scientists will tend to fall. 
B)  employment of computer scientists will tend to rise. 
C)  there will be a surplus of computer scientists. 
D)  there will be a shortage of computer scientists.

Question 10

Relative to a mobile factor of production, economic theory suggests that the price elasticity of supply for a highly immobile factor of production (for example, land) will be

Accepted Answer

A)  more elastic. 
B)  less elastic. 
C)  of unitary elasticity. 
D)  this is a trick question; the price elasticity of supply for factors of production is not affected by factor mobility.

Question 11

When a resource price is below equilibrium,

Accepted Answer

A)  excess supply will be present. 
B)  excess demand will be present. 
C)  the supply of the resource will be inelastic. 
D)  the demand for the resource will be inelastic.

Question 12

Which of the following is the best definition of "physical capital"?

Accepted Answer

A)  the labor utilized in the production process 
B)  man-made resources used to produce other goods 
C)  natural resources in their original state 
D)  the ownership of stock shares issued by a corporation

Question 13

Table 12-5
 
-Refer to Table 12-5. At which number of workers does diminishing marginal product begin?

Accepted Answer

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

Question 14

Jayden runs a company that sells its product for $250 each. When he employs 10 workers, they can sell 60 products per week, while only 54 products are sold when 9 workers are employed. What is the weekly marginal revenue product of the tenth worker?

Accepted Answer

A)  $250 
B)  $1,250 
C)  $1,500 
D)  $15,000

Question 15

If the demand for workers with doctorate degrees in economics increases, we would expect

Accepted Answer

A)  the wages of economists to increase in the short run and the number of economists employed to increase in the long run. 
B)  the supply of economists to increase in the short run and their wages to rise in the long run. 
C)  a rapid increase in the supply of economists, causing wages to remain constant. 
D)  the wages of economists to decrease in the short run and the number of economists employed to increase in the long run.

Question 16

The supply curve of truck drivers is upward sloping and demand curve is downward sloping. A reduction in the price of hauling freight by truck relative to the price of hauling freight by rail will ____ the equilibrium wage of truck drivers and ____ the number of drivers employed.

Accepted Answer

A)  decrease; decrease 
B)  decrease; increase 
C)  increase; decrease 
D)  increase; increase

Question 17

Other things constant, if the demand for a final product is quite elastic, the demand for a resource used to produce the product will tend to be

Accepted Answer

A)  highly inelastic. 
B)  of unitary elasticity. 
C)  a curve sloping upward to the right. 
D)  quite elastic as well.

Question 18

The marginal revenue product of a resource is best described as the

Accepted Answer

A)  selling price of the last unit of output produced. 
B)  increment of total cost resulting from the use of an additional unit of the resource. 
C)  marginal product of the resource divided by the unit price of the good produced. 
D)  change in total revenue resulting from employing an additional unit of the resource.

Question 19

A competitive car wash currently hires 4 workers, who together can wash 80 cars per day. The market price of car washes is $5 per wash, and the price of workers is $60 per day. The car wash should hire a fifth worker if it would increase total production to at least

Accepted Answer

A)  92 cars per day. 
B)  100 cars per day. 
C)  104 cars per day. 
D)  110 cars per day.

Question 20

Which of the following most clearly illustrates the concept of "derived demand"?

Accepted Answer

A)  An increase in the price of steak causes the demand for poultry to increase. 
B)  As the price of coffee increases, the quantity demanded for coffee declines. 
C)  A boom in the housing market leads to an increase in the demand for lumber and electricians. 
D)  An increase in beer advertising on television leads to an increase in per capita beer consumption.

Exam 12: The Supply of and Demand for Productive Resources