Question 1

The elasticity of resource demand will be greater the

Accepted Answer

A)   smaller the portion of the product's total costs accounted for by the resource.
B)   less the elasticity of demand for the product it is producing.
C)   easier it is to substitute other resources in production.
D)   less the elasticity of resource supply.E) A) and B)
F) A) and C)

Question 2

Suppose the demand for strawberries rises sharply, resulting in an increased price for strawberries. As it relates to strawberry pickers, we could expect the

Accepted Answer

A)   MRP curve to shift to the right.
B)   MRP curve to shift to the left.
C)   MRC curve to shift downward.
D)   MP curve to shift downward.E) None of the above
F) A) and B)

Question 3

A change in a factor's price will have a greater effect on the quantity of the factor demanded the

Accepted Answer

A)   smaller the change in the factor's price.
B)   smaller the factor's share of total cost of production.
C)   more elastic is the demand for the product the factor helps to make.
D)   more inelastic is the demand for the product the factor helps to make.E) A) and C)
F) B) and C)

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Harry owns a barbershop and charges $6 per haircut. By hiring one barber at $10 per hour, the shop can provide 24 haircuts per eight-hour day. By hiring a second barber at the same wage rate, the shop can now provide a total of 42 haircuts per day. Harry should

Accepted Answer

A)   hire the second barber because he will add $28 to profits.
B)   hire the second barber because he will add $108 to profits.
C)   not hire the second barber, because he is less productive than the first barber.
D)   not hire the second barber, because he will diminish profits.E) C) and D)
F) None of the above

Question 6

An increase in the demand for HDTV sets leads to an increase in demand for LCD and LED TV screens. This situation arises because

Accepted Answer

A)   LCD and LED screens minimize the costs of production.
B)   the supply of LCD and LED screens has decreased.
C)   the demand for LCD and LED screens is a derived demand.
D)   of foreign production of LCD and LED screens.E) All of the above
F) A) and B)

Question 7

A competitive employer is using labor in such an amount that labor's MRP is $10 and its wage rate is $8. This firm

Accepted Answer

A)   should hire more labor because this will increase profits.
B)   should hire more labor, although this may either increase or decrease profits.
C)   is currently hiring the profit-maximizing amount of labor.
D)   is selling its product in an imperfectly competitive market.E) B) and C)
F) A) and C)

Question 8

A technological improvement that causes an increase in the marginal product of a resource will

Accepted Answer

A)   decrease the demand for the resource.
B)   increase the demand for the resource.
C)   decrease the marginal revenue product.
D)   increase the marginal resource cost.E) B) and D)
F) B) and C)

Question 9

Suppose a firm is hiring resources l and m under purely competitive conditions to produce product Y, which sells for $2 in a purely competitive market. The prices of l and m are $10 and $4, respectively. In equilibrium, the MPs of l and m, respectively, are

Accepted Answer

A)   1 and 1.
B)   2 and 5.
C)   10 and 4.
D)   5 and 2.E) B) and D)
F) C) and D)

Question 10

Before ATMs, the average bank branch employed 20 employees; after ATMs, the average branch employed 13 employees, but banks have opened more branches. These developments suggest that

Accepted Answer

A)   ATMs are purely substitutes for labor in banking.
B)   labor and ATMs are substitutes in some bank functions, complements in others.
C)   ATMs are purely complements for labor in banking.
D)   labor and ATMs are neither substitutes nor complements in banksâ€™ various functions.E) None of the above
F) C) and D)

Question 11

If a firm is hiring variable resources D and F in perfectly competitive input markets, it will minimize the cost of producing any level of output by employing D and F in such amounts that

Accepted Answer

A)   the price of each input equals its MP.
B)    MPD=MPF\mathrm { MP } _ { D } = \mathrm { MP } _ { F }MPD​=MPF​ 
C)    MPD/PD=MPF/PF\mathrm{MP} _ { D } / P _ { D } =\mathrm{MP} _ { F } / P _ { F }MPD​/PD​=MPF​/PF​ 
D)    MPD/PF=MPF/PD\mathrm { MP } _ { D } / P _ { F } = \mathrm { MP }_ { F } / P _ { D } MPD​/PF​=MPF​/PD​  E) B) and D)
F) None of the above

Question 12

If MPx > MPy, a firm should hire more x and less y.

Accepted Answer

A) True 
 B)False

Question 13

The demand for a resource is a derived demand based on the demand for the product it helps to produce.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

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 outputE) All of the above
F) C) 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) C) and D)
F) A) and B)

Question 16

The U.S. Bureau of Labor Statistics expects demand for labor in the textile and apparel sector to decline, largely because of

Accepted Answer

A)   decreasing demand for textiles and apparel.
B)   falling wages in this sector.
C)   import competition in the sector.
D)   rising wages for textile and apparel workers.E) B) and C)
F) B) and D)

Question 17

The demand for sewing machine operators is expected by the U.S. Bureau of Labor Statistics to decline sharply from 2014 to 2024, largely due to

Accepted Answer

A)   "labor-saving" technological change.
B)   a decline in the wages paid to this type of labor.
C)   an increase in the cost per unit of this type of labor.
D)   weakening demand for machine-sewn products.E) B) and C)
F) A) and B)

Question 18

Other things equal, the resource demand curve of an imperfectly competitive seller will

Accepted Answer

A)   lie below its marginal revenue product curve.
B)   be subject to increasing marginal productivity.
C)   be less elastic than that of a purely competitive seller.
D)   be more elastic than that of a purely competitive seller.E) B) and D)
F) B) and C)

Question 19

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,

Accepted Answer

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

Question 20

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

Accepted Answer

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

Exam 16: The Demand for Resources

A change in a factor's price will have a greater effect on the quantity of the factor demanded the

Correct AnswerverifiedShow Answer

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,

Correct AnswerverifiedShow Answer

Before ATMs, the average bank branch employed 20 employees; after ATMs, the average branch employed 13 employees, but banks have opened more branches. These developments suggest that

Correct AnswerverifiedShow Answer

The U.S. Bureau of Labor Statistics expects demand for labor in the textile and apparel sector to decline, largely because of

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Other things equal, the resource demand curve of an imperfectly competitive seller will

Correct AnswerverifiedShow Answer

Suppose a firm is hiring resources l and m under purely competitive conditions to produce product Y, which sells for $2 in a purely competitive market. The prices of l and m are $10 and $4, respectively. In equilibrium, the MPs of l and m, respectively, are

Correct AnswerverifiedShow Answer

A competitive employer is using labor in such an amount that labor's MRP is $10 and its wage rate is $8. This firm

Correct AnswerverifiedShow Answer

If MPx > MPy, a firm should hire more x and less y.

Correct AnswerverifiedShow 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

The elasticity of resource demand will be greater the

Correct AnswerverifiedShow Answer

Suppose the demand for strawberries rises sharply, resulting in an increased price for strawberries. As it relates to strawberry pickers, we could expect the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The demand for a resource is a derived demand based on the demand for the product it helps to produce.

Correct AnswerverifiedShow Answer

A technological improvement that causes an increase in the marginal product of a resource will

Correct AnswerverifiedShow Answer

If a firm is hiring variable resources D and F in perfectly competitive input markets, it will minimize the cost of producing any level of output by employing D and F in such amounts that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Harry owns a barbershop and charges $6 per haircut. By hiring one barber at $10 per hour, the shop can provide 24 haircuts per eight-hour day. By hiring a second barber at the same wage rate, the shop can now provide a total of 42 haircuts per day. Harry should

Correct AnswerverifiedShow Answer

The demand for sewing machine operators is expected by the U.S. Bureau of Labor Statistics to decline sharply from 2014 to 2024, largely due to

Correct AnswerverifiedShow Answer

An increase in the demand for HDTV sets leads to an increase in demand for LCD and LED TV screens. This situation arises because

Correct AnswerverifiedShow Answer

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If MP_x> MP_y, a firm should hire more x and less y.

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