Question 1

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 2

The optimal level of resource use comes when

Accepted Answer

A) MRP exceeds input price. 
B) MRP is less than input price. 
C) MRP equals input price. 
D) use of the resource exhausts the producer's funds.

Question 3

If the price of cotton increases

Accepted Answer

A) consumers will buy more cotton clothes. 
B) consumers will increase their purchases of clothing made of other materials. 
C) clothing producers will stop making cotton clothes. 
D) clothing producers will not be able to adjust their output.

Question 4

Figure 12-3
 
-Refer to Figure 12-3. This figure depicts labor demand and supply in a nonunionized labor market. The original equilibrium is at point A. If a labor union subsequently establishes a union shop and negotiates an hourly wage of $20, then there will be an excess

Accepted Answer

A) supply of 3,000 workers. 
B) demand of 7,000 workers. 
C) supply of 4,000 workers. 
D) supply of 7,000 workers.

Question 5

Which of the following is an example of an investment in human capital?

Accepted Answer

A) a law student who works as a waiter in the summer 
B) on-the-job training received by an apprentice welder 
C) payments into a retirement pension plan by a skilled laborer 
D) all of the above are correct.

Question 6

If the price of crude oil fell significantly, which of the following would be most likely to happen?

Accepted Answer

A) The price of air travel would increase. 
B) The demand for large cars would increase. 
C) The price of gasoline would increase. 
D) The wages of workers in the automobile industry would fall.

Question 7

Figure 12-1
 
-If one short-run supply curve in Figure 12-1 was for truck drivers and the other was for nuclear physicists (also short-run), which one would probably be the supply curve for physicists?

Accepted Answer

A) Q₂ 
B) Q₃ 
C) Sb 
D) Sa

Question 8

If skilled labor is three times the cost of unskilled labor, a profit-maximizing firm will vary the quantity of each type of labor until the

Accepted Answer

A) marginal product of each is the same. 
B) amount of unskilled labor used is three times the quantity of skilled labor used. 
C) amount of unskilled labor used is one-third the quantity of skilled labor used. 
D) marginal product of unskilled labor is one-third that of skilled labor.

Question 9

Which one of the following labor resources will likely have the most inelastic supply schedule in the short run?

Accepted Answer

A) filling station attendants 
B) sales clerks 
C) construction laborers 
D) dentists

Question 10

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 11

Figure 12-1
 
-If Figure 12-1 indicated the short-run and long-run supply curves for a resource, which of the following would probably be the long-run supply curve of the resource?

Accepted Answer

A) Q₂ 
B) Q₃ 
C) Sb 
D) Sa

Question 12

A technological advance that increases labor productivity will

Accepted Answer

A) lower wages. 
B) decrease the demand for labor as fewer workers are needed. 
C) decrease the supply of labor as fewer workers are needed. 
D) increase the demand for labor as MP rises. 
E) decrease the demand for labor as MP falls.

Question 13

Why is a college graduate more likely to get a job in management than is someone with only a high school diploma, even when the job has nothing to do with a specific type of education?

Accepted Answer

The answer of Why is a college graduate more likely...

Question 14

The following table indicates the reductions in total losses due to theft if a jewelry store hires additional security guards. 
If the security guards can be hired for $65 per day, how many guards should the shop hire?

Accepted Answer

A) 3 
B) 4 
C) 5 
D) 6

Question 15

Which of the following is the best example of an investment in human capital?

Accepted Answer

A) the purchase of an industrial development bond 
B) the purchase of company stock by a worker 
C) a student working as a waiter to pay for college 
D) a laid-off stockbroker who is taking nursing courses

Question 16

Marginal revenue product is the

Accepted Answer

A) additional revenue from one additional dollar increase in price. 
B) change in the revenue product resulting from one additional unit of input. 
C) additional revenue from one additional unit of input. 
D) change in revenue resulting in one additional dollar in price.

Question 17

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 18

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) An increase in the demand for new houses leads to an increase in the demand for construction workers. 
C) An increase in consumer income leads to an increase in the demand for services provided by the government. 
D) An increase in the demand for new cars causes the demand for used automobiles to rise.

Question 19

Which of the following would tend to decrease the demand for coal miners?

Accepted Answer

A) an increase in the wages of coal miners 
B) an increase in the price of oil 
C) a decrease in the demand for coal 
D) an increase in the supply of coal miners

Question 20

In a price-taker industry, the marginal revenue derived from the sale of an additional unit of the product is equal to the market price of the product. In these circumstances,

Accepted Answer

A) value of marginal product is less than marginal revenue product. 
B) value of marginal product is greater than marginal revenue product. 
C) value of marginal product equals marginal revenue product. 
D) marginal product equals marginal cost.

Exam 12: The Supply of and Demand for Productive Resources