Question 1

Firms should hire additional units of a resource as long as the

Accepted Answer

A)   marginal product of the resource exceeds the price of the resource multiplied by the quantity of output produced.
B)   marginal product of the resource is less than the price of the resource.
C)   price of the output produced is positive.
D)   marginal revenue product of the resource exceeds the cost of employing an additional unit of the resource.E) B) and D)
F) B) and C)

Question 2

Table 12-6
The firm hires labor competitively and sells its product in a competitive price-taker market.
 
-Refer to Table 12-6. If the market wage rate is $25 per day, how many workers should the firm hire if it wants to maximize profits?

Accepted Answer

A)   4
B)   5
C)   6
D)   7E) All of the above
F) B) and D)

Question 3

Table 12-6
The firm hires labor competitively and sells its product in a competitive price-taker market.
 
-Refer to Table 12-6. What is the marginal revenue product of the fifth unit of labor?

Accepted Answer

A)   $6
B)   $36
C)   $54
D)   $324E) All of the above
F) C) and D)

Question 4

The marginal product of labor is the

Accepted Answer

A)   value marginal product of labor multiplied by the price of the good produced.
B)   total output of labor divided by the quantity of labor used.
C)   additional output resulting from employing one additional unit of labor.
D)   same as the marginal revenue product of labor in price-taker markets.E) C) and D)
F) B) and D)

Question 5

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)   As the price of coffee increases, the quantity demanded for coffee declines.
C)   A boom in the housing market leads to an increase in the demand for lumber and electricians.
D)   An increase in beer advertising on television leads to an increase in per capita beer consumption.E) A) and C)
F) A) and B)

Question 6

The demand for a resource is generally more

Accepted Answer

A)   elastic in the short run because it takes time to alter the ratio of resources used in many production processes.
B)   inelastic in the short run because it takes time to alter the ratio of resources used in many production processes.
C)   elastic in the short run because an increase in the price of the resource may not be expected to last.
D)   inelastic in the short run because once resource suppliers find out they can charge a higher price, they will do so in the long run.E) A) and B)
F) B) and C)

Question 7

As the price of land decreases along its demand curve, the relative price of land

Accepted Answer

A)   increases because the prices of other resources have also decreased.
B)   decreases because the prices of other resources have also decreased.
C)   increases because the prices of other resources have increased.
D)   decreases because the prices of other resources are held constant.
E)   remains constant because the prices of other resources also increase.F) B) and E)
G) None of the above

Question 8

When the price of steel rises, Ford uses more aluminum in the production of its cars. This is an example of

Accepted Answer

A)   substitution in consumption.
B)   substitution in production.
C)   a change in the marginal productivity of a resource.
D)   derived demand.E) C) and D)
F) A) and D)

Question 9

An unanticipated decline in the demand for legal services will

Accepted Answer

A)   increase both the wages of lawyers and the rate of return they can expect to derive from their legal education.
B)   lead to a shortage in the market for legal services.
C)   reduce the wages of lawyers but not the quantity of legal services supplied.
D)   reduce the wages of lawyers and the rate of return on a legal education..E) All of the above
F) A) and D)

Question 10

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 coursesE) None of the above
F) C) and D)

Question 11

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) C) and D)
F) A) and C)

Question 12

Physical and human capital investments are

Accepted Answer

A)   different in that the opportunity for economic profit is present for physical capital but not for human capital investments.
B)   different in that human capital decisions do not involve future income considerations, while physical capital investments do.
C)   similar in that nonmonetary considerations play an equally important role in both.
D)   similar in that both involve forgoing current income (and consumption)  in an effort to achieve higher future income (and consumption) .E) A) and C)
F) A) and B)

Question 13

An increase in the price of a resource would cause

Accepted Answer

A)   producers to substitute other inputs for the resource.
B)   consumers to increase consumption of the goods that increase in price as the result of the higher resource price.
C)   an increase in the demand for products that use the resource intensely.
D)   a reduction in the price of goods produced with the resource.E) C) and D)
F) B) and C)

Question 14

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.E) A) and B)
F) None of the above

Question 15

Economists refer to expenditures on training, education, and skill development designed to increase the productivity of an individual as

Accepted Answer

A)   overhead expenditures.
B)   investments in human capital.
C)   sunk expenditures.
D)   social capital.E) B) and D)
F) A) and D)

Question 16

For a price searcher, marginal revenue product (MRP)  differs from the value of marginal product (VMP)  because

Accepted Answer

A)   MRP equals MP times product price (P) , while VMP equals MP times marginal revenue (MR) .
B)   VMP equals MP times product price (P) , while MRP equals MP times marginal revenue (MR) .
C)   VMP equals MP times marginal cost (M
C)  , while MRP equals MP times marginal revenue (MR) .
D)   They do not differ; they are the same for every firm.E) B) and C)
F) A) and B)

Question 17

The following schedule shows how many jars of Jaynie's Jam can be produced daily with various amounts of labor (assume that the jam is sold in a competitive price-taker market) . 
If Jaynie must pay each worker $65 per day and she can sell her jam for $10 per jar, how many workers should she hire if she wants to maximize profits?

Accepted Answer

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

Question 18

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.E) B) and C)
F) A) and C)

Question 19

An increase in the demand for a resource

Accepted Answer

A)   will cause the price of that resource to fall.
B)   may be the result of a decrease in the demand for products utilizing this resource.
C)   will cause the price of the resource to fall by a smaller amount in the short run than in the long run.
D)   will increase the price of the resource and, thereby, increase the incentive of potential suppliers to provide the resource in the future.E) A) and B)
F) B) and C)

Question 20

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) B) and E)
G) A) and D)

Exam 25: The Supply of and Demand for Productive Resources

Firms should hire additional units of a resource as long as the

Correct Answer
verified

Correct Answer
verified

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 Answer
verified

As the price of land decreases along its demand curve, the relative price of land

Correct Answer
verified

Table 12-6 The firm hires labor competitively and sells its product in a competitive price-taker market. -Refer to Table 12-6. What is the marginal revenue product of the fifth unit of labor?

Correct Answer
verified

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

Correct Answer
verified

The marginal product of labor is the

Correct Answer
verified

If the price of cotton increases

Correct Answer
verified

An increase in the price of a resource would cause

Correct Answer
verified

An unanticipated decline in the demand for legal services will

Correct Answer
verified

For a price searcher, marginal revenue product (MRP) differs from the value of marginal product (VMP) because

Correct Answer
verified

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 Answer
verified

Table 12-6 The firm hires labor competitively and sells its product in a competitive price-taker market. -Refer to Table 12-6. If the market wage rate is $25 per day, how many workers should the firm hire if it wants to maximize profits?

Correct Answer
verified

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

Correct Answer
verified

Economists refer to expenditures on training, education, and skill development designed to increase the productivity of an individual as

Correct Answer
verified

The optimal level of resource use comes when

Correct Answer
verified

An increase in the demand for a resource

Correct Answer
verified

Physical and human capital investments are

Correct Answer
verified

When the price of steel rises, Ford uses more aluminum in the production of its cars. This is an example of

Correct Answer
verified

The demand for a resource is generally more

Correct Answer
verified

Exam 25: The Supply of and Demand for Productive Resources

Firms should hire additional units of a resource as long as the

Correct AnswerverifiedShow Answer

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

As the price of land decreases along its demand curve, the relative price of land

Correct AnswerverifiedShow Answer

Table 12-6 The firm hires labor competitively and sells its product in a competitive price-taker market. -Refer to Table 12-6. What is the marginal revenue product of the fifth unit of labor?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The marginal product of labor is the

Correct AnswerverifiedShow Answer

If the price of cotton increases

Correct AnswerverifiedShow Answer

An increase in the price of a resource would cause

Correct AnswerverifiedShow Answer

An unanticipated decline in the demand for legal services will

Correct AnswerverifiedShow Answer

For a price searcher, marginal revenue product (MRP) differs from the value of marginal product (VMP) because

Correct AnswerverifiedShow Answer

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

Table 12-6 The firm hires labor competitively and sells its product in a competitive price-taker market. -Refer to Table 12-6. If the market wage rate is $25 per day, how many workers should the firm hire if it wants to maximize profits?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Economists refer to expenditures on training, education, and skill development designed to increase the productivity of an individual as

Correct AnswerverifiedShow Answer

The optimal level of resource use comes when

Correct AnswerverifiedShow Answer

An increase in the demand for a resource

Correct AnswerverifiedShow Answer

Physical and human capital investments are

Correct AnswerverifiedShow Answer

When the price of steel rises, Ford uses more aluminum in the production of its cars. This is an example of

Correct AnswerverifiedShow Answer

The demand for a resource is generally more

Correct AnswerverifiedShow Answer

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