Question 1

Other things equal, the relationship between the relative importance of a given type of labor in a firm's total costs and the elasticity of demand for that labor is such that the

Accepted Answer

A)  demand for labor will be elastic only if labor accounts for less than 50 percent of total costs.
B)  demand for labor will be elastic only if labor accounts for 50 percent or more of total costs.
C)  larger the labor cost to total cost ratio, the smaller will be the elasticity of labor demand.
D)  larger the labor cost to total cost ratio, the greater will be the elasticity of labor demand.E) A) and B)
F) None of the above

Question 2

Wayne's Jacket Shop sells Wayne's jackets for $20 each. Wayne finds that when he hires different numbers of workers, the corresponding total revenues are as shown in the table. What is the marginal revenue product of the third worker?

Accepted Answer

A)  $600
B)  $667
C)  $400
D)  $6,000E) B) and D)
F) A) and D)

Question 3

The MRP curve for labor

Accepted Answer

A)  intersects the firm's labor demand curve from above.
B)  is the firm's labor demand curve.
C)  lies below the firm's labor demand curve.
D)  lies above the firm's labor demand curve.E) C) and D)
F) A) and B)

Question 4

Refer to the given data. For the $16 to $14 range of wage rates, labor demand is

Accepted Answer

A)  perfectly elastic.
B)  elastic.
C)  unit elastic.
D)  inelastic.E) B) and C)
F) A) and C)

Question 5

The table gives marginal product data for resources a and b. The output of these independent resources sells in a purely competitive market at $1 per unit. Assuming the prices of resources a and b are $5 and $8 respectively, what is the profit-maximizing combination of resources?

Accepted Answer

A)  7 of a and 7 of b
B)  6 of a and 4 of b
C)  4 of a and 4 of b
D)  5 of a and 7 of bE) C) and D)
F) None of the above

Question 6

An increase in the price of capital will reduce the demand for labor if capital and labor are complementary resources.

Accepted Answer

A) True 
 B)False

Question 7

Refer to the table. Assume that the quantities of other resources employed by the firm remain constant. How many units of resource Y would the firm employ at a price of $50 per unit of Y?

Accepted Answer

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

Question 8

A firm is hiring resources X, Y, and Z in the profit-maximizing amounts when

Accepted Answer

A)  MRP x/ Pₓ equals MRP y/ Pᵧ equals MRP z/ Pz equals 1.
B)  the sum of the MRPs of the three resources is at a minimum.
C)  the marginal revenue productivity of all three resources is the same.
D)  the marginal revenue product of the last dollar spent on each of the three resources is the same.E) None of the above
F) All of the above

Question 9

The demand for computers is derived from the demand for the capital resources that are used to produce computers.

Accepted Answer

A) True 
 B)False

Question 10

Assume that a restaurant is hiring labor in an amount such that the MRC of the last worker is $14 and her MRP is $10. On the basis of this information, we can say that

Accepted Answer

A)  profits will be increased by hiring additional workers.
B)  profits will be increased by hiring fewer workers.
C)  marginal revenue product must exceed average revenue product.
D)  the restaurant is maximizing profits.E) A) and D)
F) All of the above

Question 11

Holding revenues constant, cost minimization by firms is equivalent to

Accepted Answer

A)  sales maximization.
B)  price optimization.
C)  profit maximization.
D)  quantity minimization.E) None of the above
F) All of the above

Question 12

A firm's demand schedule for a resource is the firm's marginal product schedule for the resource.

Accepted Answer

A) True 
 B)False

Question 13

The fact that monopoly and monopsony exist in resource markets means that

Accepted Answer

A)  the marginal productivity theory of income distribution is valid.
B)  resource prices do not always measure contributions to output.
C)  the resulting income distribution is ethically correct.
D)  income shares do not exhaust the total output.E) A) and B)
F) A) and C)

Question 14

From 2016 to 2026, the U.S. Bureau of Labor Statistics expects that there will be a fall in demand for

Accepted Answer

A)  word processors and typists.
B)  physical therapists.
C)  commercial drivers.
D)  occupational therapy assistants.E) A) and B)
F) A) and C)

Question 15

Refer to the graph. Other things equal, a decrease in the price of a substitute resource would cause a

Accepted Answer

A)  move from a to b on D₁.
B)  shift from D₂ to D₃, assuming the output effect exceeds the substitution effect.
C)  shift from D₃ to D₂, assuming the output effect exceeds the substitution effect.
D)  move from b to a on D₁.E) C) and D)
F) B) and D)

Question 16

When they were first introduced, ATMs

Accepted Answer

A)  were a substitute for bank tellers, but eventually became a complement.
B)  were a substitute for bank tellers, and their existence has continued to depress the demand for tellers.
C)  were a complement to bank tellers, but over time have replaced them.
D)  had no effect on the demand for bank tellers.E) All of the above
F) B) and D)

Question 17

Refer to the graph. Other things equal, an increase in the price of substitute resource would cause a

Accepted Answer

A)  shift from D₂ to D₃, assuming the substitution effect exceeds the output effect.
B)  move from a to b on D₁.
C)  move from b to a on D₁.
D)  shift from D₃ to D₂, assuming the substitution effect exceeds the output effect.E) C) and D)
F) A) and B)

Question 18

The demand for a resource will shift left if the price of a substitute resource decreases.

Accepted Answer

A) True 
 B)False

Question 19

Under pure competition, the market price of an output is $3. The output schedule of a firm using input X is listed in the table. If the price of input X is $12, how many units of input X will the firm employ to maximize profits?

Accepted Answer

A)  4
B)  5
C)  7
D)  9E) All of the above
F) None of the above

Exam 16: The Demand for Resources

Wayne's Jacket Shop sells Wayne's jackets for $20 each. Wayne finds that when he hires different numbers of workers, the corresponding total revenues are as shown in the table. What is the marginal revenue product of the third worker?

Correct Answer
verified

The demand for computers is derived from the demand for the capital resources that are used to produce computers.

Correct Answer
verified

The fact that monopoly and monopsony exist in resource markets means that

Correct Answer
verified

Assume that a restaurant is hiring labor in an amount such that the MRC of the last worker is $14 and her MRP is $10. On the basis of this information, we can say that

Correct Answer
verified

A firm is hiring resources X, Y, and Z in the profit-maximizing amounts when

Correct Answer
verified

A firm's demand schedule for a resource is the firm's marginal product schedule for the resource.

Correct Answer
verified

From 2016 to 2026, the U.S. Bureau of Labor Statistics expects that there will be a fall in demand for

Correct Answer
verified

An increase in the price of capital will reduce the demand for labor if capital and labor are complementary resources.

Correct Answer
verified

Refer to the graph. Other things equal, a decrease in the price of a substitute resource would cause a

Correct Answer
verified

When they were first introduced, ATMs

Correct Answer
verified

Under pure competition, the market price of an output is $3. The output schedule of a firm using input X is listed in the table. If the price of input X is $12, how many units of input X will the firm employ to maximize profits?

Correct Answer
verified

Refer to the graph. Other things equal, an increase in the price of substitute resource would cause a

Correct Answer
verified

The demand for a resource will shift left if the price of a substitute resource decreases.

Correct Answer
verified

Other things equal, the relationship between the relative importance of a given type of labor in a firm's total costs and the elasticity of demand for that labor is such that the

Correct Answer
verified

The MRP curve for labor

Correct Answer
verified

Holding revenues constant, cost minimization by firms is equivalent to

Correct Answer
verified

Refer to the table. Assume that the quantities of other resources employed by the firm remain constant. How many units of resource Y would the firm employ at a price of $50 per unit of Y?

Correct Answer
verified

The table gives marginal product data for resources a and b. The output of these independent resources sells in a purely competitive market at $1 per unit. Assuming the prices of resources a and b are $5 and $8 respectively, what is the profit-maximizing combination of resources?

Correct Answer
verified

Refer to the given data. For the $16 to $14 range of wage rates, labor demand is

Correct Answer
verified

Exam 16: The Demand for Resources

Wayne's Jacket Shop sells Wayne's jackets for $20 each. Wayne finds that when he hires different numbers of workers, the corresponding total revenues are as shown in the table. What is the marginal revenue product of the third worker?

Correct AnswerverifiedShow Answer

The demand for computers is derived from the demand for the capital resources that are used to produce computers.

Correct AnswerverifiedShow Answer

The fact that monopoly and monopsony exist in resource markets means that

Correct AnswerverifiedShow Answer

Assume that a restaurant is hiring labor in an amount such that the MRC of the last worker is $14 and her MRP is $10. On the basis of this information, we can say that

Correct AnswerverifiedShow Answer

A firm is hiring resources X, Y, and Z in the profit-maximizing amounts when

Correct AnswerverifiedShow Answer

A firm's demand schedule for a resource is the firm's marginal product schedule for the resource.

Correct AnswerverifiedShow Answer

From 2016 to 2026, the U.S. Bureau of Labor Statistics expects that there will be a fall in demand for

Correct AnswerverifiedShow Answer

An increase in the price of capital will reduce the demand for labor if capital and labor are complementary resources.

Correct AnswerverifiedShow Answer

Refer to the graph. Other things equal, a decrease in the price of a substitute resource would cause a

Correct AnswerverifiedShow Answer

When they were first introduced, ATMs

Correct AnswerverifiedShow Answer

Under pure competition, the market price of an output is $3. The output schedule of a firm using input X is listed in the table. If the price of input X is $12, how many units of input X will the firm employ to maximize profits?

Correct AnswerverifiedShow Answer

Refer to the graph. Other things equal, an increase in the price of substitute resource would cause a

Correct AnswerverifiedShow Answer

The demand for a resource will shift left if the price of a substitute resource decreases.

Correct AnswerverifiedShow Answer

Other things equal, the relationship between the relative importance of a given type of labor in a firm's total costs and the elasticity of demand for that labor is such that the

Correct AnswerverifiedShow Answer

The MRP curve for labor

Correct AnswerverifiedShow Answer

Holding revenues constant, cost minimization by firms is equivalent to

Correct AnswerverifiedShow Answer

Refer to the table. Assume that the quantities of other resources employed by the firm remain constant. How many units of resource Y would the firm employ at a price of $50 per unit of Y?

Correct AnswerverifiedShow Answer

The table gives marginal product data for resources a and b. The output of these independent resources sells in a purely competitive market at $1 per unit. Assuming the prices of resources a and b are $5 and $8 respectively, what is the profit-maximizing combination of resources?

Correct AnswerverifiedShow Answer

Refer to the given data. For the $16 to $14 range of wage rates, labor demand is

Correct AnswerverifiedShow Answer

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