Exam 16: The Demand for Resources

A) If the profit-maximizing rule is fulfilled, it necessarily follows that the cost-minimization rule is being fulfilled.
B) The profit-maximizing and the cost-minimizing rules are such that fulfilling one has no bearing on fulfilling the other.
C) If the profit-maximizing rule is fulfilled, the cost-minimization rule may or may not be fulfilled.
D) If the cost-minimization rule is fulfilled, it necessarily follows that the profit-maximizing rule is being fulfilled.

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A) inelastic.
B) elastic.
C) unit-elastic.
D) infinitely elastic.

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A) ATC for that output.
B) MC for that output.
C) P of that output.
D) TR of that output.

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A) the increase in total resource cost associated with the production of one more unit of output.
B) the increase in total resource cost associated with the hire of one more unit of the resource.
C) total resource cost divided by the number of inputs employed.
D) the change in total revenue associated with the employment of one more unit of the resource.

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A) slopes downward because the firm must lower price to sell more output.
B) slopes downward because labor productivity increases as successive workers are hired.
C) is perfectly elastic because the firm is hiring an insignificant portion of the total labor supply.
D) slopes downward because the marginal product of successive workers declines.

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A) the resulting distribution of income is likely to be too equal to maintain production incentives.
B) income from inherited property is inconsistent with the theory.
C) purely competitive conditions characterize most resource markets.
D) it fails to recognize that resource demand is derived from product demand.

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A) firm's total outlay on resources is minimized.
B) marginal revenue product of each resource is equal to its price.
C) price of each resource employed is the same.
D) marginal revenue product of the last unit of each resource hired is the same.

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A) adding marginal product to total product as one more unit of labor is employed.
B) adding marginal revenue to total product as one more unit of labor is employed.
C) multiplying marginal product by product price.
D) multiplying marginal product by marginal revenue.

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A) price of the resource increases.
B) productivity of the resource increases.
C) price of the good being produced declines.
D) price of a complementary resource rises.

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A) use more labor and less fertilizer.
B) use more fertilizer and less labor.
C) use more labor and more fertilizer.
D) continue using the same amounts of each input.

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A) charge a higher price for its product.
B) make no change in the units of the resource used.
C) increase the units of the resource used in order to increase profits.
D) decrease the units of the resource used in order to increase profits.

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A) increase production by a larger amount than a firm with some monopoly power in its product market.
B) increase production by a smaller amount than a firm with some monopoly power in its product market.
C) decrease production by a larger amount than a firm with some monopoly power in its product market.
D) decrease production by a smaller amount than a firm with some monopoly power in its product market.

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A) depends on the demand for the product it helps to produce.
B) depends on the demand for a complementary factor.
C) is derived from the state of the economy.
D) is derived from government policy.

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