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The table shows a total-product schedule for a resource. Assume that the quantities of other resources the firm employs remain constant. If the firm can produce 24 units at a price of $1.00, 42 units at a price of $0.80, and 54 units at a price of $0.60, then the firm is A) selling in a purely competitive market. B) selling in an imperfectly competitive market. C) minimizing its costs at a product price of $1.00. D) maximizing profits at a product price of $0.60. The table shows a total-product schedule for a resource. Assume that the quantities of other resources the firm employs remain constant. If the firm can produce 24 units at a price of $1.00, 42 units at a price of $0.80, and 54 units at a price of $0.60, then the firm is


A) selling in a purely competitive market.
B) selling in an imperfectly competitive market.
C) minimizing its costs at a product price of $1.00.
D) maximizing profits at a product price of $0.60.

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

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Other things being equal, a labor union will find it harder to obtain a wage increase for its members the


A) less elastic is the demand for the product labor produces.
B) easier it is to substitute other resources for labor.
C) greater the amount of unionization in the industry.
D) less elastic is the demand for labor.

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

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The introduction of ATMs in the banking industry illustrates that ATMs


A) can be substitutes for labor in handling cash deposits and withdrawals, but they can be complements for labor in other banking functions.
B) are more productive substitutes for labor in most banking transactions, thereby reducing the long-term demand for labor by banks.
C) increased the demand for labor by banks because the ATMs proved to be less productive substitutes for labor.
D) are much better complements for labor, causing banks to reduce the number of their branch locations.

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

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"Income receivers should be paid in accordance with the value of output each produces." This statement is consistent with the


A) monopoly theory of income distribution.
B) marginal productivity theory of income distribution.
C) least-cost, but not profit-maximizing, combination of inputs.
D) concept of compensating wage differences.

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

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Which will not be a determinant of the price elasticity of demand for an input?


A) the price of the input
B) the substitutability of other resources for the input
C) the elasticity of demand for the product it produces
D) the total cost of an input as a proportion of the total cost of producing units of output

E) A) and D)
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. If the wage rate is $11, how many workers will Manfred hire to maximize profits? A) 3 B) 4 C) 6 D) 5 If the wage rate is $11, how many workers will Manfred hire to maximize profits?


A) 3
B) 4
C) 6
D) 5

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

Correct Answer

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Refer to the graph. Other things equal, an increase in the price of a complementary resource would cause a A) move from a to b on D₁. B) shift from D₂ to D₃. C) shift from D₃ to D₂. D) move from b to a on D₁. Refer to the graph. Other things equal, an increase in the price of a complementary resource would cause a


A) move from a to b on D₁.
B) shift from D₂ to D₃.
C) shift from D₃ to D₂.
D) move from b to a on D₁.

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

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In a competitive resource market, a decrease in the demand for a productive resource, ceteris paribus, will cause all of the following except a(n)


A) decrease in the price of the resource.
B) increase in the price of the resource.
C) decrease in the total income earned by all units of the resource.
D) decrease in the number of units of the resource that are employed.

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

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The marginal revenue product of labor and the marginal resource cost of labor are both measured in the same units, that is, in dollars per unit of labor.

A) True
B) False

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The more inelastic the demand for a resource, the


A) less elastic its marginal revenue product curve.
B) more elastic its marginal revenue product curve.
C) greater the potential for resource substitution.
D) greater the productivity of the resource.

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

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Refer to the table, which gives data for a firm that is hiring labor in a purely competitive market. If the wage rate is $4.5, how many workers will the firm choose to employ? A) 2 B) 3 C) 5 D) 4 Refer to the table, which gives data for a firm that is hiring labor in a purely competitive market. If the wage rate is $4.5, how many workers will the firm choose to employ?


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

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

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The demand for labor is a derived demand, whereas the demand for capital is not.

A) True
B) False

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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 $3 per unit, and the wage rate is $13 per worker. The marginal revenue product of the second worker is


A) $8
B) $15
C) $9
D) $24

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

Correct Answer

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If the wage rate increases,


A) a purely competitive producer will hire less labor, but an imperfectly competitive producer will not.
B) an imperfectly competitive producer will hire less labor, but a purely competitive producer will not.
C) a purely competitive producer and an imperfectly competitive producer will both hire less labor.
D) an imperfectly competitive producer may find it profitable to hire either more or less labor.

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

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The demand for a resource depends on its productivity and the market value of the product it is producing.

A) True
B) False

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If resources A and B are complementary and employed in fixed proportions,


A) a change in the price of A will have no effect on the quantity of B employed.
B) an increase in the price of A may either increase or decrease the demand for B.
C) an increase in the price of A will increase the demand for B.
D) an increase in the price of A will decrease the demand for B.

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

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When economists say that the demand for labor is a derived demand, they mean that it is


A) dependent on government expenditures for public goods and services.
B) related to the demand for the product or service labor is producing.
C) based on the desire of businesses to exploit labor by paying below equilibrium wage rates.
D) based on the assumption that workers are trying to maximize their money incomes.

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

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Suppose a competitive firm in both the resource and product markets is using inputs such that the marginal product of labor is 16 and the price of labor is $4 per unit, while the marginal product of capital is 12 and the price of capital is $3 per unit. At the maximum profit equilibrium point, the price of the product is


A) $3.
B) $4.
C) $0.25.
D) between $3 and $4.

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

Correct Answer

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The elasticity of demand for labor varies inversely with the elasticity of demand for the product it is used to produce.

A) True
B) False

Correct Answer

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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. If the wage rate is $11, how many workers will Manfred hire to maximize profits? A) 1 B) 2 C) 5 D) 3 If the wage rate is $11, how many workers will Manfred hire to maximize profits?


A) 1
B) 2
C) 5
D) 3

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

Correct Answer

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Showing 21 - 40 of 359

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