Question 1

Suppose a firm is hiring resources l and m under purely competitive conditions to produce product Y, which sells for $2 in a purely competitive market. The prices of l and m are $10 and $4, respectively. In equilibrium, the MPs of l and m, respectively, are

Accepted Answer

A)  1 and 1.
B)  2 and 5.
C)  10 and 4.
D)  5 and 2.

Question 2

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)  $4
D)  $3

Question 3

Suppose there is a decline in the demand for the product labor is producing. Furthermore, the price of capital, which is complementary to labor, increases. Thus, the demand for labor

Accepted Answer

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

Question 4

Hiring the least-costly combination of resources ensures that profits will be maximized.

Accepted Answer

A) True 
 B)False

Question 5

If a firm is selling in an imperfectly competitive product market, then

Accepted Answer

A)  average product will be less than marginal product for any number of workers hired.
B)  the marginal products of successive workers must be sold at lower prices.
C)  the marginal products of successive workers can be sold at higher prices.
D)  the marginal products of successive workers can be sold at a constant price.

Question 6

Suppose the demand for strawberries rises sharply, resulting in an increased price for strawberries. As it relates to strawberry pickers, we could expect the

Accepted Answer

A)  MRP curve to shift to the right.
B)  MRP curve to shift to the left.
C)  MRC curve to shift downward.
D)  MP curve to shift downward.

Question 7

Resource pricing is important because

Accepted Answer

A)  resource prices are a major determinant of money incomes.
B)  resource prices allocate scarce resources among alternative uses.
C)  resource prices, along with resource productivity, are important to firms in minimizing their costs.
D)  of all these reasons.

Question 8

When the elasticity coefficient for resource demand is less than one, resource demand is

Accepted Answer

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

Question 9

Assume a firm purchases resources a and b under purely competitive conditions and combines these resources to produce X. Product X is sold in a purely competitive market. The MPs of a and b are 6 and 3, respectively, and the prices of a and b are $12 and $6, respectively. If profit-maximizing equilibrium exists, the price of X will be

Accepted Answer

A)  $1.
B)  $0.5.
C)  $2.
D)  $5.

Question 10

The demand for telephone operators is expected by the U.S. Bureau of Labor Statistics to decline from 2016 to 2026, largely due to

Accepted Answer

A)  "labor-saving" technological change.
B)  a decline in the wages paid to this type of labor.
C)  an increase in the cost per unit of this type of labor.
D)  weakening demand for machine-sewn products.

Question 11

A major criticism of the marginal productivity theory of income distribution is that

Accepted Answer

A)  the demand for labor resources is price inelastic.
B)  achieving equality in incomes will take time.
C)  imperfectly competitive firms are only interested in profit maximization.
D)  property resources like land are unevenly distributed, which leads to income inequality.

Question 12

We say that the demand for labor is a derived demand because

Accepted Answer

A)  labor is a necessary input in the production of every good or service.
B)  we demand the product that labor helps produce rather than labor service per se.
C)  the forces of supply and demand do not apply directly to labor markets.
D)  labor is hired using the MRP = MRC rule.

Question 13

The demand curve for labor would shift leftward as the result of

Accepted Answer

A)  an increase in the price of the product labor is producing.
B)  a decrease in the productivity of labor.
C)  an increase in the price of labor.
D)  a decrease in the price of capital, provided the output effect exceeds the substitution effect.

Question 14

Refer to the table. The resource demand data indicate that the firm is

Accepted Answer

A)  buying its resource in an imperfectly competitive market.
B)  buying its resource in a perfectly competitive market.
C)  selling its product in a perfectly competitive market.
D)  selling its product in an imperfectly competitive market.

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. What is the farmer's profit-maximizing output?

Accepted Answer

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

Question 16

The marginal revenue product of an input in a competitive market decreases as a firm increases the quantity of the input employed because of the

Accepted Answer

A)  law of diminishing returns.
B)  law of diminishing marginal utility.
C)  homogeneity of the product.
D)  free mobility of resources.

Question 17

Refer to the table, which gives data for a firm that is hiring labor in a purely competitive market. If the wage rate is $56, how many workers will the firm choose to employ?

Accepted Answer

A)  3
B)  2
C)  0
D)  1

Question 18

Employers will hire more units of a resource if the

Accepted Answer

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.

Question 19

If the price of labor falls relative to the price of capital, and as a result the quantity of capital employed decreases, then it can be concluded that

Accepted Answer

A)  the substitution effect is greater than the output effect.
B)  the output effect is greater than the substitution effect.
C)  the income effect is greater than the output effect.
D)  labor cannot be easily substituted for capital.

Question 20

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

Exam 16: The Demand for Resources

Resource pricing is important because

Correct Answer
verified

The demand curve for labor would shift leftward as the result of

Correct Answer
verified

Employers will hire more units of a resource if the

Correct Answer
verified

If a firm is selling in an imperfectly competitive product market, then

Correct Answer
verified

Refer to the table. The resource demand data indicate that the firm is

Correct Answer
verified

Correct Answer
verified

Hiring the least-costly combination of resources ensures that profits will be maximized.

Correct Answer
verified

If the price of labor falls relative to the price of capital, and as a result the quantity of capital employed decreases, then it can be concluded that

Correct Answer
verified

The demand for telephone operators is expected by the U.S. Bureau of Labor Statistics to decline from 2016 to 2026, largely due to

Correct Answer
verified

Correct Answer
verified

When the elasticity coefficient for resource demand is less than one, resource demand is

Correct Answer
verified

Correct Answer
verified

We say that the demand for labor is a derived demand because

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 $56, how many workers will the firm choose to employ?

Correct Answer
verified

Suppose there is a decline in the demand for the product labor is producing. Furthermore, the price of capital, which is complementary to labor, increases. Thus, the demand for labor

Correct Answer
verified

The marginal revenue product of an input in a competitive market decreases as a firm increases the quantity of the input employed because of the

Correct Answer
verified

Suppose the demand for strawberries rises sharply, resulting in an increased price for strawberries. As it relates to strawberry pickers, we could expect the

Correct Answer
verified

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

Correct Answer
verified

A major criticism of the marginal productivity theory of income distribution is that

Correct Answer
verified

Suppose a firm is hiring resources l and m under purely competitive conditions to produce product Y, which sells for $2 in a purely competitive market. The prices of l and m are $10 and $4, respectively. In equilibrium, the MPs of l and m, respectively, are

Correct Answer
verified

Exam 16: The Demand for Resources

Resource pricing is important because

Correct AnswerverifiedShow Answer

The demand curve for labor would shift leftward as the result of

Correct AnswerverifiedShow Answer

Employers will hire more units of a resource if the

Correct AnswerverifiedShow Answer

If a firm is selling in an imperfectly competitive product market, then

Correct AnswerverifiedShow Answer

Refer to the table. The resource demand data indicate that the firm is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Hiring the least-costly combination of resources ensures that profits will be maximized.

Correct AnswerverifiedShow Answer

If the price of labor falls relative to the price of capital, and as a result the quantity of capital employed decreases, then it can be concluded that

Correct AnswerverifiedShow Answer

The demand for telephone operators is expected by the U.S. Bureau of Labor Statistics to decline from 2016 to 2026, largely due to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When the elasticity coefficient for resource demand is less than one, resource demand is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

We say that the demand for labor is a derived demand because

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 $56, how many workers will the firm choose to employ?

Correct AnswerverifiedShow Answer

Suppose there is a decline in the demand for the product labor is producing. Furthermore, the price of capital, which is complementary to labor, increases. Thus, the demand for labor

Correct AnswerverifiedShow Answer

The marginal revenue product of an input in a competitive market decreases as a firm increases the quantity of the input employed because of the

Correct AnswerverifiedShow Answer

Suppose the demand for strawberries rises sharply, resulting in an increased price for strawberries. As it relates to strawberry pickers, we could expect the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A major criticism of the marginal productivity theory of income distribution is that

Correct AnswerverifiedShow Answer

Suppose a firm is hiring resources l and m under purely competitive conditions to produce product Y, which sells for $2 in a purely competitive market. The prices of l and m are $10 and $4, respectively. In equilibrium, the MPs of l and m, respectively, are

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified