Question 1

A farmer who has fixed amounts of land and capital finds that total product is 24 for the first worker hired, 32 when two workers are hired, 37 when three are hired, and 40 when four are hired.The farmer's product sells for $3 per unit, and the wage rate is $13 per worker.What is the farmer's profit-maximizing output?

Accepted Answer

A)  20
B)  32
C)  37
D)  40

Question 2

Which of the following increases in labor demand is due to a change in the price of a related resource?

Accepted Answer

A)  Software sales rise, thus increasing the demand for software developers.
B)  Snowboarding increases in popularity, thus increasing the demand for the workers who make snowboards.
C)  A decrease in the price of wood decreases the cost of furniture, thus increasing the demand for furniture workers.
D)  A technological change increases output per worker in the computer industry, thus increasing the demand for computer workers.

Question 3

Suppose the price of the product that labor is producing increases and simultaneously the price of capital, which is substitutable for labor, decreases.Assuming that the substitution effect is greater than the output effect, the demand for labor

Accepted Answer

A)  will increase.
B)  will decrease.
C)  may either increase or decrease.
D)  will not change.

Question 4

A firm's demand schedule for a resource is the firm's marginal product schedule for the resource.

Accepted Answer

A) True 
 B)False

Question 5

An example of derived demand in the auto industry is the demand for

Accepted Answer

A)  new automobiles.
B)  used automobiles.
C)  auto workers.
D)  drivers' insurance.

Question 6

Which would result in a decrease in the elasticity of demand for a particular resource?

Accepted Answer

A)  a decrease in the rate at which the marginal product of that resource declines
B)  an increase in the elasticity of demand for the product that the resource helps to produce
C)  a decrease in the percentage of the firm's total costs accounted for by the resource
D)  an increase in the substitutability of other resources for the particular resource

Question 7

Marginal revenue product measures the

Accepted Answer

A)  amount by which the addition of one more worker increases a firm's total revenue.
B)  decline in product price that a firm must accept to sell the extra output of one more worker.
C)  increase in total resource cost resulting from the hire of one extra unit of a resource.
D)  increase in total revenue resulting from the production of one more unit of a product.

Question 8

A firm combines two resources, A and B, to produce an output, Q.Their respective marginal revenue products are $30 and $21.A costs $15 a unit and B $7 a unit.To reduce the cost of Q,

Accepted Answer

A)  more B and less A should be used.
B)  more A and less B should be used.
C)  more of both resources should be used.
D)  less of both resources should be used.

Question 9

If a firm is hiring variable resources D and F in perfectly competitive input markets, it will minimize the cost of producing any level of output by employing D and F in such amounts that

Accepted Answer

A)  the price of each input equals its MP.
B)  MPD = MPF.
C)  MPD / PD = MPF / PF.
D)  MPD / PF = MPF / PD.

Question 10

Suppose capital is readily substitutable for labor and that the price of capital falls.We can conclude that the

Accepted Answer

A)  substitution effect will tend to reduce the demand for labor.
B)  output effect will tend to reduce the demand for labor.
C)  demand for labor will necessarily decline.
D)  demand for labor will necessarily increase.

Question 11

Refer to the table, which gives data for a firm that is hiring labor in a purely competitive market.If the wage rate is $11, how many workers will the firm choose to employ?

Accepted Answer

A)  5.
B)  4.
C)  3.
D)  2.Blooms: Understand

Question 12

Other things equal, we would expect the labor demand curve of a monopolistic seller to

Accepted Answer

A)  decline more rapidly than that of a purely competitive seller.
B)  decline less rapidly than that of a purely competitive seller.
C)  decline at the same rate as that of a purely competitive seller.
D)  be more elastic than that of a purely competitive seller.

Question 13

All firms have to incur costs because of

Accepted Answer

A)  the resources they use.
B)  buyers they sell to.
C)  the profits they earn.
D)  revenues they receive.

Question 14

Assume labor is the only variable input and that an additional input of labor increases total output from 72 to 80 units.If the product sells for $6 per unit in a purely competitive market, the MRP of this additional worker is

Accepted Answer

A)  $6.
B)  $8.
C)  $48.
D)  $80.

Question 15

A farmer who has fixed amounts of land and capital finds that total product is 24 for the first worker hired, 32 when two workers are hired, 37 when three are hired, and 40 when four are hired.The farmer's product sells for $3 per unit, and the wage rate is $13 per worker.How many workers should the farmer hire?

Accepted Answer

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

Question 16

Changes in the price of a product would not shift the demand for the resources needed to produce the product.

Accepted Answer

A) True 
 B)False

Question 17

A firm is employing inputs such that the marginal product of labor is 25 and the marginal product of capital is 40.The price of labor is $5, and the price of capital is $8.If the firm wants to minimize costs, then it should

Accepted Answer

A)  use more labor and less capital.
B)  use less labor and less capital.
C)  use less labor and more capital.
D)  make no change in resource use.

Question 18

Refer to the table, which gives data for a firm that is hiring labor in a purely competitive market.If the wage rate is $20, how many workers will the firm choose to employ?

Accepted Answer

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

Question 19

A farmer who has fixed amounts of land and capital finds that total product is 24 for the first worker hired, 32 when two workers are hired, 37 when three are hired, and 40 when four are hired.The farmer's product sells for $3 per unit, and the wage rate is $13 per worker.The marginal revenue product of the second worker is

Accepted Answer

A)  $24.
B)  $8.
C)  $15.
D)  $9.

Question 20

Marginal resource cost is

Accepted Answer

A)  the increase in a firm's total cost caused by hiring one additional unit of an input.
B)  a firm's cost of hiring one group of inputs, such as capital or labor.
C)  the firm's demand curve for a productive resource.
D)  determined by the marginal physical product schedule for an input.

Exam 16: The Demand for Resources

Marginal resource cost is

Correct Answer
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Refer to the table, which gives data for a firm that is hiring labor in a purely competitive market.If the wage rate is $20, how many workers will the firm choose to employ?

Correct Answer
verified

A firm combines two resources, A and B, to produce an output, Q.Their respective marginal revenue products are $30 and $21.A costs $15 a unit and B $7 a unit.To reduce the cost of Q,

Correct Answer
verified

If a firm is hiring variable resources D and F in perfectly competitive input markets, it will minimize the cost of producing any level of output by employing D and F in such amounts that

Correct Answer
verified

Suppose the price of the product that labor is producing increases and simultaneously the price of capital, which is substitutable for labor, decreases.Assuming that the substitution effect is greater than the output effect, the demand for labor

Correct Answer
verified

Other things equal, we would expect the labor demand curve of a monopolistic seller to

Correct Answer
verified

Assume labor is the only variable input and that an additional input of labor increases total output from 72 to 80 units.If the product sells for $6 per unit in a purely competitive market, the MRP of this additional worker is

Correct Answer
verified

Which would result in a decrease in the elasticity of demand for a particular resource?

Correct Answer
verified

All firms have to incur costs because of

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Suppose capital is readily substitutable for labor and that the price of capital falls.We can conclude that the

Correct Answer
verified

Changes in the price of a product would not shift the demand for the resources needed to produce the product.

Correct Answer
verified

Marginal revenue product measures the

Correct Answer
verified

A firm is employing inputs such that the marginal product of labor is 25 and the marginal product of capital is 40.The price of labor is $5, and the price of capital is $8.If the firm wants to minimize costs, then it should

Correct Answer
verified

Correct Answer
verified

A firm's demand schedule for a resource is the firm's marginal product schedule for the resource.

Correct Answer
verified

An example of derived demand in the auto industry is the demand for

Correct Answer
verified

Refer to the table, which gives data for a firm that is hiring labor in a purely competitive market.If the wage rate is $11, how many workers will the firm choose to employ?

Correct Answer
verified

Which of the following increases in labor demand is due to a change in the price of a related resource?

Correct Answer
verified

Exam 16: The Demand for Resources

Marginal resource cost is

Correct AnswerverifiedShow Answer

Refer to the table, which gives data for a firm that is hiring labor in a purely competitive market.If the wage rate is $20, how many workers will the firm choose to employ?

Correct AnswerverifiedShow Answer

A firm combines two resources, A and B, to produce an output, Q.Their respective marginal revenue products are $30 and $21.A costs $15 a unit and B $7 a unit.To reduce the cost of Q,

Correct AnswerverifiedShow Answer

If a firm is hiring variable resources D and F in perfectly competitive input markets, it will minimize the cost of producing any level of output by employing D and F in such amounts that

Correct AnswerverifiedShow Answer

Suppose the price of the product that labor is producing increases and simultaneously the price of capital, which is substitutable for labor, decreases.Assuming that the substitution effect is greater than the output effect, the demand for labor

Correct AnswerverifiedShow Answer

Other things equal, we would expect the labor demand curve of a monopolistic seller to

Correct AnswerverifiedShow Answer

Assume labor is the only variable input and that an additional input of labor increases total output from 72 to 80 units.If the product sells for $6 per unit in a purely competitive market, the MRP of this additional worker is

Correct AnswerverifiedShow Answer

Which would result in a decrease in the elasticity of demand for a particular resource?

Correct AnswerverifiedShow Answer

All firms have to incur costs because of

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose capital is readily substitutable for labor and that the price of capital falls.We can conclude that the

Correct AnswerverifiedShow Answer

Changes in the price of a product would not shift the demand for the resources needed to produce the product.

Correct AnswerverifiedShow Answer

Marginal revenue product measures the

Correct AnswerverifiedShow Answer

A firm is employing inputs such that the marginal product of labor is 25 and the marginal product of capital is 40.The price of labor is $5, and the price of capital is $8.If the firm wants to minimize costs, then it should

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A firm's demand schedule for a resource is the firm's marginal product schedule for the resource.

Correct AnswerverifiedShow Answer

An example of derived demand in the auto industry is the demand for

Correct AnswerverifiedShow Answer

Refer to the table, which gives data for a firm that is hiring labor in a purely competitive market.If the wage rate is $11, how many workers will the firm choose to employ?

Correct AnswerverifiedShow Answer

Which of the following increases in labor demand is due to a change in the price of a related resource?

Correct AnswerverifiedShow Answer

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