Question 1

A firm is observed using 15 units of input X when the price of X is $2. If the price of X increases to $4, the firm uses only 6 units of it. What is the price elasticity of demand for input X? (Use the simple formula for percentage change: [(new# −old#) /old#] × 100%.)

Accepted Answer

A)  1/2 = 0.5
B)  3/5 = 0.6
C)  5/3 = 1.67
D)  2E) None of the above
F) A) and B)

Question 2

Assume Manfred's Shoe Shine Parlor hires labor, its only variable input, under purely competitive conditions. Shoe shines are also sold competitively.  If the wage rate is $11 and Manfred's only fixed input is capital, the total cost of which is $40, then what will be his economic profit?

Accepted Answer

A)  102
B)  56
C)  62
D)  47E) None of the above
F) A) and C)

Question 3

A firm's demand curve for labor

Accepted Answer

A)  is its marginal product curve.
B)  will shift to the left if the price of the product the labor is producing should fall.
C)  is perfectly elastic if the firm is selling its product in a purely competitive market.
D)  reflects a direct (positive) relationship between the number of workers hired and the money wage rate.E) B) and D)
F) A) and B)

Question 4

Marginal resource cost is

Accepted Answer

A)  the increase in a firm's total cost caused by hiring one additional unit of an input.
B)  a firm's cost of hiring one group of inputs, such as capital or labor.
C)  the firm's demand curve for a productive resource.
D)  determined by the marginal physical product schedule for an input.E) A) and B)
F) A) and C)

Question 5

In firm X labor costs are 85 percent of production costs, while in firm Y labor costs are 40 percent of production costs. A 20 percent increase in wages would increase production costs by

Accepted Answer

A)  23 percent in firm X and 20 percent in firm Y.
B)  19 percent in firm X and 15 percent in firm Y.
C)  15 percent in firm X and 6 percent in firm Y.
D)  17 percent in firm X and 8 percent in firm Y.E) A) and B)
F) A) and C)

Question 6

Refer to the given data. Suppose that the union that provides labor to firms in this market successfully negotiates an increase in the wage rate from $16 to$19. As a result of the wage increase, firms will hire

Accepted Answer

A)  fewer workers, and the total paid out for wages will increase.
B)  fewer workers, and the total paid out for wages will decline.
C)  fewer workers, and the total paid out for wages will remain unchanged.
D)  more capital, if capital and labor are used in fixed proportions in production.E) B) and C)
F) All of the above

Question 7

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 $4 per unit, and the wage rate is $30 per worker. The marginal revenue product of the third worker is

Accepted Answer

A)  $5
B)  $148
C)  $-10
D)  $20E) A) and D)
F) All of the above

Question 8

If the price of a good increases, then in the market for the type of labor needed to produce this good,

Accepted Answer

A)  employment will decrease.
B)  the labor supply will increase.
C)  the marginal product (MP) of labor will increase.
D)  the marginal revenue product (MRP) of labor will increase.E) B) and D)
F) All of the above

Question 9

Resource prices are important because they affect resource allocation and income distribution.

Accepted Answer

A) True 
 B)False

Question 10

Does it matter whether capital and labor are substitutes or complements when figuring out what will happen to the demand for labor if the price of capital increases? Explain.

Accepted Answer

Yes, it does matter. If labor and capita...

Question 11

Which of the following is equivalent to the costs that firms incur in acquiring economic resources?

Accepted Answer

A)  revenues from the product
B)  income of the resources
C)  money flowing from the resources
D)  profits from the resources employedE) All of the above
F) None of the above

Question 12

What are examples of occupations expected to be the fastest growing from 2016-2026? What economic principle of resource pricing best explains these trends?

Accepted Answer

Most of the occupations are service occu...

Question 13

The less the elasticity of product demand, the greater the elasticity of resource demand.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following decreases in labor demand is due to a change in product demand?

Accepted Answer

A)  An increase in the price of paper increases the cost of making books, thus decreasing the demand for bookbinders.
B)  The widespread availability of news on the web reduces the demand for newspaper workers.
C)  An increase in the price of steel increases the cost of producing cars and trucks, thus decreasing the demand for automobile workers.
D)  A decline in productivity in retailing decreases the demand for retail sales workers.E) All of the above
F) B) and D)

Question 15

A profit-maximizing firm's daily total revenue is $155 with 3 workers, $200 with 4 workers, and $230 with 5 workers. The cost of each worker is $40 per day. The firm should

Accepted Answer

A)  not hire a fourth worker.
B)  hire four workers.
C)  hire five workers.
D)  hire more than five workers.E) A) and D)
F) A) and C)

Question 16

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.E) C) and D)
F) A) and D)

Question 17

Refer to the given table. This firm is

Accepted Answer

A)  selling its product in a purely competitive market.
B)  selling its product in an imperfectly competitive market.
C)  hiring workers in a purely competitive market.
D)  hiring workers in an imperfectly competitive market.E) A) and B)
F) All of the above

Question 18

Refer to the table. The marginal product of the third unit of the resource is

Accepted Answer

A)  3.
B)  4.
C)  5.
D)  6.E) B) and C)
F) None of the above

Question 19

Refer to the diagram. If a firm produces output Q ₁ at a unit cost of c, then the

Accepted Answer

A)  firm is operating in a purely competitive industry.
B)  firm is maximizing profits.
C)  marginal product per dollars' worth of each resource employed is not the same.
D)  firm is fulfilling the least-cost rule in employing resources.E) A) and D)
F) None of the above

Question 20

Assume that the coefficient of elasticity of product demand is 0.5 in industry A and is 3.2 in industry B. Other things equal, labor demand will be

Accepted Answer

A)  more elastic in industry A than in B.
B)  relatively elastic in both industries A and B.
C)  more elastic in industry B than in A.
D)  relatively inelastic in both industries A and B.E) None of the above
F) All of the above

Exam 16: The Demand for Resources

Refer to the given data. Suppose that the union that provides labor to firms in this market successfully negotiates an increase in the wage rate from $16 to$19. As a result of the wage increase, firms will hire

Correct Answer
verified

Marginal resource cost is

Correct Answer
verified

The less the elasticity of product demand, the greater the elasticity of resource demand.

Correct Answer
verified

Resource prices are important because they affect resource allocation and income distribution.

Correct Answer
verified

A firm is observed using 15 units of input X when the price of X is $2. If the price of X increases to $4, the firm uses only 6 units of it. What is the price elasticity of demand for input X? (Use the simple formula for percentage change: [(new# −old#) /old#] × 100%.)

Correct Answer
verified

Which of the following is equivalent to the costs that firms incur in acquiring economic resources?

Correct Answer
verified

Refer to the given table. This firm is

Correct Answer
verified

Refer to the diagram. If a firm produces output Q ₁ at a unit cost of c, then the

Correct Answer
verified

If the price of a good increases, then in the market for the type of labor needed to produce this good,

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Does it matter whether capital and labor are substitutes or complements when figuring out what will happen to the demand for labor if the price of capital increases? Explain.

Correct Answer
verified
Yes, it does matter. If labor and capita...
View Answer

A profit-maximizing firm's daily total revenue is $155 with 3 workers, $200 with 4 workers, and $230 with 5 workers. The cost of each worker is $40 per day. The firm should

Correct Answer
verified

Refer to the table. The marginal product of the third unit of the resource is

Correct Answer
verified

Which of the following decreases in labor demand is due to a change in product demand?

Correct Answer
verified

Assume that the coefficient of elasticity of product demand is 0.5 in industry A and is 3.2 in industry B. Other things equal, labor demand will be

Correct Answer
verified

Assume Manfred's Shoe Shine Parlor hires labor, its only variable input, under purely competitive conditions. Shoe shines are also sold competitively. If the wage rate is $11 and Manfred's only fixed input is capital, the total cost of which is $40, then what will be his economic profit?

Correct Answer
verified

In firm X labor costs are 85 percent of production costs, while in firm Y labor costs are 40 percent of production costs. A 20 percent increase in wages would increase production costs by

Correct Answer
verified

What are examples of occupations expected to be the fastest growing from 2016-2026? What economic principle of resource pricing best explains these trends?

Correct Answer
verified
Most of the occupations are service occu...
View Answer

A firm's demand curve for labor

Correct Answer
verified

Exam 16: The Demand for Resources

Refer to the given data. Suppose that the union that provides labor to firms in this market successfully negotiates an increase in the wage rate from $16 to$19. As a result of the wage increase, firms will hire

Correct AnswerverifiedShow Answer

Marginal resource cost is

Correct AnswerverifiedShow Answer

The less the elasticity of product demand, the greater the elasticity of resource demand.

Correct AnswerverifiedShow Answer

Resource prices are important because they affect resource allocation and income distribution.

Correct AnswerverifiedShow Answer

A firm is observed using 15 units of input X when the price of X is $2. If the price of X increases to $4, the firm uses only 6 units of it. What is the price elasticity of demand for input X? (Use the simple formula for percentage change: [(new# −old#) /old#] × 100%.)

Correct AnswerverifiedShow Answer

Which of the following is equivalent to the costs that firms incur in acquiring economic resources?

Correct AnswerverifiedShow Answer

Refer to the given table. This firm is

Correct AnswerverifiedShow Answer

Refer to the diagram. If a firm produces output Q ₁ at a unit cost of c, then the

Correct AnswerverifiedShow Answer

If the price of a good increases, then in the market for the type of labor needed to produce this good,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Does it matter whether capital and labor are substitutes or complements when figuring out what will happen to the demand for labor if the price of capital increases? Explain.

Correct AnswerverifiedYes, it does matter. If labor and capita...View AnswerShow Answer

A profit-maximizing firm's daily total revenue is $155 with 3 workers, $200 with 4 workers, and $230 with 5 workers. The cost of each worker is $40 per day. The firm should

Correct AnswerverifiedShow Answer

Refer to the table. The marginal product of the third unit of the resource is

Correct AnswerverifiedShow Answer

Which of the following decreases in labor demand is due to a change in product demand?

Correct AnswerverifiedShow Answer

Assume that the coefficient of elasticity of product demand is 0.5 in industry A and is 3.2 in industry B. Other things equal, labor demand will be

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. If the wage rate is $11 and Manfred's only fixed input is capital, the total cost of which is $40, then what will be his economic profit?

Correct AnswerverifiedShow Answer

In firm X labor costs are 85 percent of production costs, while in firm Y labor costs are 40 percent of production costs. A 20 percent increase in wages would increase production costs by

Correct AnswerverifiedShow Answer

What are examples of occupations expected to be the fastest growing from 2016-2026? What economic principle of resource pricing best explains these trends?

Correct AnswerverifiedMost of the occupations are service occu...View AnswerShow Answer

A firm's demand curve for labor

Correct AnswerverifiedShow Answer

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Yes, it does matter. If labor and capita...
View Answer

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Correct Answer
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Most of the occupations are service occu...
View Answer

Correct Answer
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