Question 1

A profit-maximizing restaurant owner will hire more busboys to keep more tables clean and quickly available to new customers, as long as the

Accepted Answer

A)   marginal product of busboys exceeds the marginal product of other employees.
B)   hourly wage of busboys is lower than that of cashiers and cooks.
C)   marginal revenue product of busboys exceeds their wage rate.
D)   wage of busboys exceeds the wage of other employees.E) A) and B)
F) B) and C)

Question 2

Table 12-5
 
-Refer to Table 12-5. What is the marginal product of the fourth worker?

Accepted Answer

A)   65
B)   70
C)   75
D)   80E) C) and D)
F) All of the above

Question 3

If a firm is using a resource hired in a perfectly competitive market, and if the marginal resource cost is less than its marginal revenue product,

Accepted Answer

A)   more of the resource should be used.
B)   less of the resource should be used.
C)   the firm should pay a lower price for the resource.
D)   the firm should pay a higher price for the resource.
E)   the firm is using the optimal amount of the resource.F) All of the above
G) D) and E)

Question 4

In recent years, the ratio of earnings of the typical U.S. college graduate to the earnings of the typical high school graduate without additional education has

Accepted Answer

A)   risen as the demand for skilled labor has increased relative to the demand for unskilled labor.
B)   risen as the demand for skilled labor has decreased relative to the demand for unskilled labor.
C)   fallen as the demand for skilled labor has increased relative to the demand for unskilled labor.
D)   fallen as the demand for skilled labor has decreased relative to the demand for unskilled labor.E) A) and B)
F) None of the above

Question 5

A decrease in resource prices will increase the incentive of

Accepted Answer

A)   users to purchase the resource.
B)   suppliers to provide more of the resource.
C)   firms to find and develop substitutes for the resource.
D)   consumers to look for alternatives that do not contain the resource.E) B) and C)
F) C) and D)

Question 6

The marginal revenue product of a resource is equal to the value of marginal product when the product produced by the resource is sold in

Accepted Answer

A)   a competitive price-taker market.
B)   a competitive price-searcher market.
C)   an oligopolistic market.
D)   a monopolistic industry.E) A) and C)
F) None of the above

Question 7

If unskilled labor is relatively plentiful and cheap in many foreign countries, then as the United States expands its trade with these foreign countries, the domestic demand for

Accepted Answer

A)   unskilled labor will rise and skilled labor will fall.
B)   skilled labor will rise and unskilled labor will fall.
C)   both skilled and unskilled labor will rise proportionately.
D)   both skilled and unskilled labor will be unaffected, assuming no barriers to free trade.E) A) and D)
F) B) and C)

Question 8

The following figure 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 $45 per day, how many guards should the shop hire?

Accepted Answer

A)   2
B)   3
C)   4
D)   5
E)   6F) A) and D)
G) C) and E)

Question 9

An increase in the demand for a product will cause

Accepted Answer

A)   both the demand for and prices of the resources used to produce the product to decline.
B)   both the demand for and prices of the resources used to produce the product to increase.
C)   the demand for the resources used to produce the product to increase and their prices to decline.
D)   the demand for the resources used to produce the product to decline and their prices to increase.E) B) and C)
F) None of the above

Question 10

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)   dentistsE) A) and B)
F) B) and C)

Question 11

Which of the following is the most accurate definition of a worker's "marginal revenue product"?

Accepted Answer

A)   the change in the firm's profits as the result of hiring an additional worker
B)   the change in the firm's total revenue as the result of hiring an additional worker
C)   the change in the firm's output as the result of hiring an additional worker
D)   the change in the firm's cost as the result of hiring an additional workerE) A) and B)
F) A) and C)

Question 12

The change in the total revenue of a firm that results from employing one additional unit of a factor of production is defined as the

Accepted Answer

A)   total revenue product of the resource.
B)   marginal product of the resource.
C)   marginal revenue product of the resource.
D)   average revenue product of the resource.E) B) and C)
F) A) and D)

Question 13

When the marginal revenue product of an input is less than its price, the

Accepted Answer

A)   producer should expand the use of that input.
B)   price of the input will automatically rise in a free market.
C)   producer should reduce the use of that input.
D)   marginal physical product of that input must be below its average physical product.E) A) and B)
F) A) and C)

Question 14

Suppose that workers immigrate to Minnesota from Canada. Which of the following correctly describes what would happen in the market for labor in Minnesota?

Accepted Answer

A)   The equilibrium wage would increase, as would the quantity of labor. With more workers, the added output from an extra worker is larger.
B)   The equilibrium wage would decrease, as would the quantity of labor. With fewer workers, the added output from an extra worker is smaller.
C)   The equilibrium wage would decrease, and the quantity of labor would increase. With more workers, the added output from an extra worker is smaller.
D)   The equilibrium wage would decrease, and the quantity of labor would increase. With more workers, the added output from an extra worker is larger.E) None of the above
F) A) and B)

Question 15

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.E) A) and B)
F) B) and D)

Question 16

When an employer pays the cost of educating a worker, it is likely that the employer

Accepted Answer

A)   is demonstrating altruistic motives.
B)   is pursuing some objective other than profit-maximization.
C)   hopes to recapture its investment in the form of increased labor productivity.
D)   receives reimbursement from the government for the cost of the education.E) B) and D)
F) None of the above

Question 17

The supply curve of a human resource will be more elastic the

Accepted Answer

A)   easier it is to obtain the skill and knowledge necessary to provide the resource.
B)   more elastic the demand for the product.
C)   more inelastic the demand for the product.
D)   higher the skill level necessary to perform the job.E) All of the above
F) B) and D)

Question 18

When the price of a resource goes up and firms seek other suitable resources, this is called the

Accepted Answer

A)   substitution in production effect.
B)   substitution in demand effect.
C)   elasticity effect.
D)   inelasticity effect.E) B) and C)
F) None of the above

Question 19

A decrease in the marginal product of labor would be represented by

Accepted Answer

A)   increase in labor demand.
B)   decrease in labor demand.
C)   increase in the quantity demanded of labor.
D)   decrease in the quantity demanded of labor.
E)   an increase in wages.F) A) and B)
G) A) and C)

Question 20

A profit-maximizing farmer will apply additional units of fertilizer until the marginal revenue product (MRP)  of fertilizer is half the MRP of skilled labor when a unit of fertilizer

Accepted Answer

A)   costs twice as much as a unit of skilled labor.
B)   costs half as much as a unit of skilled labor.
C)   is half as productive, on average, as a unit of skilled labor.
D)   is twice as productive, on average, as a unit of skilled labor.E) A) and B)
F) None of the above

Exam 12: The Supply of and Demand for Productive Resources

A decrease in the marginal product of labor would be represented by

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If unskilled labor is relatively plentiful and cheap in many foreign countries, then as the United States expands its trade with these foreign countries, the domestic demand for

Correct AnswerverifiedShow Answer

Suppose that workers immigrate to Minnesota from Canada. Which of the following correctly describes what would happen in the market for labor in Minnesota?

Correct AnswerverifiedShow Answer

The supply curve of a human resource will be more elastic the

Correct AnswerverifiedShow Answer

When an employer pays the cost of educating a worker, it is likely that the employer

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Table 12-5 -Refer to Table 12-5. What is the marginal product of the fourth worker?

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

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When the price of a resource goes up and firms seek other suitable resources, this is called the

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A decrease in resource prices will increase the incentive of

Correct AnswerverifiedShow Answer

Which of the following is the most accurate definition of a worker's "marginal revenue product"?

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An increase in the demand for a product will cause

Correct AnswerverifiedShow Answer

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

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The following figure 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 $45 per day, how many guards should the shop hire?

Correct AnswerverifiedShow Answer

When the marginal revenue product of an input is less than its price, the

Correct AnswerverifiedShow Answer

The marginal revenue product of a resource is equal to the value of marginal product when the product produced by the resource is sold in

Correct AnswerverifiedShow Answer

A profit-maximizing restaurant owner will hire more busboys to keep more tables clean and quickly available to new customers, as long as the

Correct AnswerverifiedShow Answer

The change in the total revenue of a firm that results from employing one additional unit of a factor of production is defined as the

Correct AnswerverifiedShow Answer

In recent years, the ratio of earnings of the typical U.S. college graduate to the earnings of the typical high school graduate without additional education has

Correct AnswerverifiedShow Answer

A profit-maximizing farmer will apply additional units of fertilizer until the marginal revenue product (MRP) of fertilizer is half the MRP of skilled labor when a unit of fertilizer

Correct AnswerverifiedShow Answer

If a firm is using a resource hired in a perfectly competitive market, and if the marginal resource cost is less than its marginal revenue product,

Correct AnswerverifiedShow Answer

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