Question 1

Other things equal, the less competitive the market in which a firm sells its product, the less elastic will be its resource demand curve.

Accepted Answer

A) True 
 B)False

Question 2

The labor demand curve of a purely competitive seller

Accepted Answer

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.E) B) and C)
F) B) and D)

Question 3

If one worker can pick $30 worth of grapes and two workers together can pick $50 worth of grapes, the

Accepted Answer

A)  marginal revenue product of each worker is $25.
B)  marginal revenue product of the first worker is $20.
C)  marginal revenue product of the second worker is $20.
D)  data given are insufficient to determine the marginal revenue product of either worker.E) All of the above
F) A) and B)

Question 4

What is the profit-maximizing condition for the use of a resource?

Accepted Answer

To maximize profit, a firm should hire a...

Question 5

A business is employing inputs such that the marginal product of labor is 40 and the marginal product of capital is 90. The price of labor is $20, and the price of capital is $30. If the business wants to minimize costs while keeping output constant, 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.E) A) and B)
F) B) and C)

Question 6

The introduction of automatic elevator equipment allowed firms to handle the movement of people in a multistory building at less cost, thus decreasing the demand for elevator operators. The best explanation for this change is that the

Accepted Answer

A)  marginal product of elevator operators was equal to its price.
B)  marginal product of automatic elevator equipment was equal to its price.
C)  marginal product of automatic elevator equipment divided by its price was greater than that for elevator operators.
D)  marginal product of elevator operators divided by its price was greater than that for automatic elevator equipment.E) A) and D)
F) All of the above

Question 7

A profit-maximizing firm will use additional units of resources for production until

Accepted Answer

A)  total, average, and marginal cost are equal.
B)  total, average, and marginal revenue are equal.
C)  the marginal revenue product equals the marginal resource cost.
D)  the marginal revenue product is greater than the marginal resource cost.E) A) and D)
F) A) and C)

Question 8

Assuming pure competition, which of the following are equivalents?

Accepted Answer

A)  MRP L / Pₗ = MRP C / Pc and Pₓ = 1/MC
B)  MRP L / Pₗ = MRPc / Pc and Pₓ = AVC
C)  Pₓ = MC and MRPₗ / Pₗ = MRP C / Pc = 1
D)  Pₓ = MC and MP L / Pₗ = MPc / PcE) All of the above
F) B) and D)

Question 9

If the substitution effect outweighs the output effect, an increase in the price of a substitute resource will increase the demand for labor.

Accepted Answer

A) True 
 B)False

Question 10

Assume that an appliance manufacturer is employing variable resources X and Y in such amounts that the MRPs of the last units of X and Y employed are $50 and $90, respectively. Resource X can be hired at $100 per unit and resource Y at $40 per unit. The firm

Accepted Answer

A)  should hire less of X and more of Y.
B)  should hire more of both X and Y.
C)  is producing with the least-costly combination of X and Y but could increase its profits by employing more of X and less of Y.
D)  is using the least-costly combination of X and Y but could increase its profits by employing less of both X and Y.E) C) and D)
F) B) and C)

Question 11

Assume Manfred's Shoe Shine Parlor hires labor, its only variable input, under purely competitive conditions. Shoe shines are also sold competitively.  At what price does each shoe shine sell?

Accepted Answer

A)  $6.50
B)  $3
C)  $8
D)  $7E) A) and D)
F) A) and B)

Question 12

A firm operating in competitive input and output markets purchases new technology, which shifts the total product schedule from A to B, as shown in the data in the table. At the market wage rate of $30 and product price of $5, this firm will

Accepted Answer

A)  hire the same number of laborers in both situations.
B)  increase the number of laborers hired from 4 to 6.
C)  decrease the number of laborers hired from 4 to 3.
D)  increase the number of laborers hired from 4 to 5.E) B) and C)
F) None of the above D

Question 13

A winner-takes-all market, like that for entertainers, exhibits huge differences between the top talents and the next tier of artists in all of the following aspects, except

Accepted Answer

A)  marginal revenue product.
B)  talent.
C)  earnings.
D)  media hype.E) A) and B)
F) A) and C) B

Question 14

How will a change in productivity change the demand for a resource? What three factors will affect productivity?

Accepted Answer

An increase in the productivity of a res...

Question 15

The demand for a resource depends primarily on

Accepted Answer

A)  the supply of that resource.
B)  the demand for the product or service that it helps produce.
C)  the price of that input.
D)  the elasticity of supply of substitute inputs.E) A) and B)
F) A) and C)

Question 16

The strength of the demand for a resource depends on the following factors, except the

Accepted Answer

A)  supply of the resource.
B)  productivity of the resource.
C)  price of the product the resource helps to produce.
D)  demand for the product the resource helps to produce.E) C) and D)
F) All of the above

Question 17

Which of the following occupations is not among the 10 projected fastest-growing U.S. occupations in terms of percentage increases from 2016 to 2026?

Accepted Answer

A)  school teachers
B)  statisticians
C)  physical therapist assistants
D)  wind turbine service techniciansE) B) and C)
F) A) and D)

Question 18

Which of the following statements is true? Other things equal, the demand for labor will be less elastic the

Accepted Answer

A)  easier it is to substitute capital for labor.
B)  greater the elasticity of resource supply.
C)  greater the elasticity of product demand.
D)  smaller the ratio of labor costs to total costs.E) C) and D)
F) All of the above

Question 19

If the marginal revenue product (MRP) of labor is less than the wage rate,

Accepted Answer

A)  the firm is making profits.
B)  the firm is incurring losses.
C)  more labor should be employed.
D)  less labor should be employed.E) A) and D)
F) A) and B) D

Question 20

A firm will find it profitable to hire workers up to the point at which their

Accepted Answer

A)  marginal resource cost equals their wage rate.
B)  wage rate equals product price.
C)  MP is equal to their MRP.
D)  marginal resource cost is equal to their MRP.E) All of the above
F) A) and B)

Exam 16: The Demand for Resources

Other things equal, the less competitive the market in which a firm sells its product, the less elastic will be its resource demand curve.

Correct AnswerverifiedShow Answer

The labor demand curve of a purely competitive seller

Correct AnswerverifiedShow Answer

If one worker can pick $30 worth of grapes and two workers together can pick $50 worth of grapes, the

Correct AnswerverifiedShow Answer

What is the profit-maximizing condition for the use of a resource?

Correct AnswerverifiedTo maximize profit, a firm should hire a...View AnswerShow Answer

A business is employing inputs such that the marginal product of labor is 40 and the marginal product of capital is 90. The price of labor is $20, and the price of capital is $30. If the business wants to minimize costs while keeping output constant, then it should

Correct AnswerverifiedShow Answer

The introduction of automatic elevator equipment allowed firms to handle the movement of people in a multistory building at less cost, thus decreasing the demand for elevator operators. The best explanation for this change is that the

Correct AnswerverifiedShow Answer

A profit-maximizing firm will use additional units of resources for production until

Correct AnswerverifiedShow Answer

Assuming pure competition, which of the following are equivalents?

Correct AnswerverifiedShow Answer

If the substitution effect outweighs the output effect, an increase in the price of a substitute resource will increase the demand for labor.

Correct AnswerverifiedShow Answer

Assume that an appliance manufacturer is employing variable resources X and Y in such amounts that the MRPs of the last units of X and Y employed are $50 and $90, respectively. Resource X can be hired at $100 per unit and resource Y at $40 per unit. The firm

Correct AnswerverifiedShow Answer

Assume Manfred's Shoe Shine Parlor hires labor, its only variable input, under purely competitive conditions. Shoe shines are also sold competitively. At what price does each shoe shine sell?

Correct AnswerverifiedShow Answer

A firm operating in competitive input and output markets purchases new technology, which shifts the total product schedule from A to B, as shown in the data in the table. At the market wage rate of $30 and product price of $5, this firm will

Correct AnswerverifiedD

A winner-takes-all market, like that for entertainers, exhibits huge differences between the top talents and the next tier of artists in all of the following aspects, except

Correct AnswerverifiedB

How will a change in productivity change the demand for a resource? What three factors will affect productivity?

Correct AnswerverifiedAn increase in the productivity of a res...View AnswerShow Answer

The demand for a resource depends primarily on

Correct AnswerverifiedShow Answer

The strength of the demand for a resource depends on the following factors, except the

Correct AnswerverifiedShow Answer

Which of the following occupations is not among the 10 projected fastest-growing U.S. occupations in terms of percentage increases from 2016 to 2026?

Correct AnswerverifiedShow Answer

Which of the following statements is true? Other things equal, the demand for labor will be less elastic the

Correct AnswerverifiedShow Answer

If the marginal revenue product (MRP) of labor is less than the wage rate,

Correct AnswerverifiedD

A firm will find it profitable to hire workers up to the point at which their

Correct AnswerverifiedShow Answer

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To maximize profit, a firm should hire a...
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D

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B

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An increase in the productivity of a res...
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D

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