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List the factors that will shift the resource demand curve.

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A resource demand curve will s...

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If the price of labor increases relative to the price of capital, and as a result the quantity of capital hired increases, the output effect of the price increase is greater than the substitution effect.

A) True
B) False

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Refer to the graph, where TP = total product and L = labor input. The marginal product of labor (MP) A) is constant at all levels of L. B) increases at an increasing rate as L increases. C) decreases as the labor input L increases. D) increases at a decreasing rate as L increases. Refer to the graph, where TP = total product and L = labor input. The marginal product of labor (MP)


A) is constant at all levels of L.
B) increases at an increasing rate as L increases.
C) decreases as the labor input L increases.
D) increases at a decreasing rate as L increases.

E) All of the above
F) B) and D)

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Other things equal, if wage rates increase by 20 percent, the greatest decline in employment will occur when labor costs are a


A) large proportion of total costs and product demand is elastic.
B) small proportion of total costs and product demand is elastic.
C) large proportion of total costs and product demand is inelastic.
D) small proportion of total costs and product demand is inelastic.

E) A) and B)
F) All of the above

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Why is the demand for resources called a "derived" demand?

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Resource demand is a derived demand, whi...

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Refer to the given table. If the firm is hiring workers under purely competitive conditions at a wage rate of $10, it will employ A) 2 workers. B) 3 workers. C) 5 workers. D) 4 workers. Refer to the given table. If the firm is hiring workers under purely competitive conditions at a wage rate of $10, it will employ


A) 2 workers.
B) 3 workers.
C) 5 workers.
D) 4 workers.

E) A) and B)
F) C) and D)

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The relationship between the elasticity of product demand and the elasticity of demand for labor employed in its production is such that, other things being equal,


A) the more elastic the demand for the product, the less elastic the demand for labor.
B) the more elastic the demand for the product, the more elastic the demand for labor.
C) the elasticity of product demand only affects the elasticity of labor demand when the product market is purely competitive.
D) if product demand is perfectly elastic, labor demand will be perfectly inelastic.

E) None of the above
F) A) and D)

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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 12 and 6, respectively, and the prices of a and b are $6 and $3, respectively. If profit-maximizing equilibrium exists, the price of X will be


A) $1.
B) $2.
C) $0.50.
D) $5.

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

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If labor costs are 60 percent of production costs, then a 15 percent increase in wage rates would increase production costs by


A) 60 percent.
B) 45 percent.
C) 15 percent.
D) 9 percent.

E) A) and B)
F) All of the above

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Suppose the price of the product that labor is producing increases and simultaneously the price of capital, which is substitutable for labor, decreases. Assuming that the substitution effect is greater than the output effect, the demand for labor


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

E) All of the above
F) None of the above

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The labor demand curve of an imperfectly competitive seller is downsloping


A) solely because of diminishing marginal utility.
B) because of both diminishing returns and the necessity to lower price to sell more output.
C) solely because product price must be reduced to sell more output.
D) solely because of diminishing returns.

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

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The rapid spread of ATMs


A) dramatically reduced employment of bank tellers, and demand remains low because ATMs serve the same functions as bank tellers.
B) has resulted in the closure of many bank branches and led to a long-term decline in employment of bank tellers.
C) reduced the demand for bank tellers initially, but eventually tellers took on tasks that ATMs are not suited to handle.
D) has had no discernible impact on the demand for bank tellers.

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

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Assuming a competitive resource market, a firm is hiring resources in the profit-maximizing amounts when the


A) firm's total outlay on resources is minimized.
B) marginal revenue product of each resource is equal to its price.
C) price of each resource employed is the same.
D) marginal revenue product of the last unit of each resource hired is the same.

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

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An employer hiring in a competitive labor market should hire additional labor as long as


A) the MRP exceeds the wage rate.
B) the wage rate is less than MP.
C) average product exceeds MP.
D) MC exceeds MR.

E) A) and B)
F) C) and D)

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Assume a pencil manufacturer is employing resources C and D in such quantities that the MRPs of the last units hired are $80 and $50, respectively. The price of resource C is $90, and the price of D is $35. This firm


A) should hire less of C and more of D.
B) should hire more of both C and D.
C) should hire less of both C and D.
D) is using the least-cost combination of C and D.

E) All of the above
F) C) and D)

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Income from inherited wealth and property resources provides strong support for the marginal productivity theory of income distribution.

A) True
B) False

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The price of capital is $12 per machine-hour, and the price of labor is $3 per hour. The table gives production schedules for a firm, showing the possible combinations of capital and labor that will produce 100 units of output. Which combination will this cost-minimizing firm choose? The price of capital is $12 per machine-hour, and the price of labor is $3 per hour. The table gives production schedules for a firm, showing the possible combinations of capital and labor that will produce 100 units of output. Which combination will this cost-minimizing firm choose? A) A B) B C) C D) D


A) A
B) B
C) C
D) D

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

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Elasticity of resource demand is measured by the


A) absolute change in resource quantity demanded divided by the absolute change in resource price.
B) percentage change in resource quantity demanded divided by the percentage change in resource price.
C) absolute change in resource price divided by the absolute change in resource quantity demanded.
D) percentage change in resource price divided by the percentage change in resource quantity demanded.

E) B) and D)
F) None of the above

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If a factor of production has many close substitutes, we would expect that its price elasticity of demand would be


A) unity.
B) zero.
C) greater than one.
D) less than one, but greater than zero.

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

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Assume Manfred's Shoe Shine Parlor hires labor, its only variable input, under purely competitive conditions. Shoe shines are also sold competitively. Assume Manfred's Shoe Shine Parlor hires labor, its only variable input, under purely competitive conditions. Shoe shines are also sold competitively. How many units of output are produced when 2 workers are employed? A) 4 B) 16 C) 24 D) 10 How many units of output are produced when 2 workers are employed?


A) 4
B) 16
C) 24
D) 10

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

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Showing 301 - 320 of 359

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