Filters
Question type
Study Flashcards

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

A) True
B) False

Correct Answer

verifed

verified

Suppose there is a decline in the demand for the product labor is producing. Furthermore, the price of capital, which is complementary to labor, increases. Thus, the demand for labor


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

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

Correct Answer

verifed

verified

The substitution effect indicates that a profit-seeking firm will use


A) more of an input whose price has fallen and less of other inputs in producing a given output.
B) more of all inputs if production costs fall.
C) more of those inputs whose marginal productivity is the greatest.
D) less of an input whose price has fallen and more of other inputs in producing a given output.

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

Correct Answer

verifed

verified

Suppose capital is readily substitutable for labor and that the price of capital falls. We can conclude that the


A) substitution effect will tend to reduce the demand for labor.
B) output effect will tend to reduce the demand for labor.
C) demand for labor will necessarily decline.
D) demand for labor will necessarily increase.

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

Correct Answer

verifed

verified

(Last Word) 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) A) and B)
F) A) and C)

Correct Answer

verifed

verified

If the demand for a product produced by an input decreases, the demand for the input will also decrease.

A) True
B) False

Correct Answer

verifed

verified

A decrease in the price of a productive resource will result in each of the following except a(n)


A) downward shift in the average-cost curves for all products that use the resource.
B) rightward shift in the supply of products which use the resource.
C) rightward shift in the demand curves for all products that use the resource.
D) increase in the quantity demanded of this productive resource.

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

Correct Answer

verifed

verified

What happens when technological advance makes available a new highly productive capital good for which MP/P is greater than that of labor for which it is a substitute resource?


A) Labor will replace the new capital because labor is now cheaper.
B) The new capital will replace labor because it reduces the firms' costs.
C) More of both the new capital and labor will be used because firms are more productive.
D) Less of both the new capital and labor will be used because the firms do not know how to use the new technology.

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

Correct Answer

verifed

verified

The labor demand curve of a firm that sells its product in an imperfectly competitive market


A) is downsloping, solely because of the law of diminishing returns.
B) is downsloping and flatter than the labor demand curve of a firm that sells its product in a purely competitive market.
C) is upsloping.
D) is downsloping because of both declining marginal productivity and declining product prices as quantity increases.

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

Correct Answer

verifed

verified

Increased resource productivity will, ceteris paribus, increase a firm's demand for an input.

A) True
B) False

Correct Answer

verifed

verified

The demand for capital by a firm is based on the demand for the product that the capital produces. This relationship is referred to as


A) product demand.
B) derived demand.
C) resource utilization.
D) cost minimization.

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

Correct Answer

verifed

verified

Other things equal, we would expect the labor demand curve of a monopolistic seller to


A) decline more rapidly than that of a purely competitive seller.
B) decline less rapidly than that of a purely competitive seller.
C) decline at the same rate as that of a purely competitive seller.
D) be more elastic than that of a purely competitive seller.

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

Correct Answer

verifed

verified

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  Labor: 20 Capital: 5  MPL: 5  MPc: 20 B  Labor: 10 Capital: 10  MPL : 10 MPc: 10 C  Labor: 5  Capital: 20  MPL: 20 MPc: 5 D  Labor: 4  Capital: 25  MPL : 25  MPP: 4\begin{array}{|c|c|c|c|c|}\hline \text { A } & \text { Labor: } 20 & \text { Capital: 5 } & \text { MPL: 5 } & \text { MPc: } 20 \\\hline \text { B } & \text { Labor: } 10 & \text { Capital: 10 } & \text { MPL : } 10 & \text { MPc: } 10 \\\hline \text { C } & \text { Labor: 5 } & \text { Capital: 20 } & \text { MPL: } 20 & \text { MPc: } 5 \\\hline \text { D } & \text { Labor: 4 } & \text { Capital: 25 } & \text { MPL : 25 } & \text { MPP: } 4 \\\hline\end{array}


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

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

Correct Answer

verifed

verified

Marginal revenue product describes the


A) output produced by the last unit of labor employed.
B) revenue received for the last unit of output produced.
C) price a consumer paid for the last unit of output produced.
D) revenue received for the additional output produced by the last unit of labor employed.

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

Correct Answer

verifed

verified

Resource X has many close substitutes, whereas resource Y has no close substitutes. Other things equal, we would expect


A) the demand for resource Y to be more elastic than the demand for resource X.
B) resources X and Y to be close substitutes.
C) resource X to be more expensive than resource Y.
D) the demand for resource X to be more elastic than the demand for resource Y.

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

Correct Answer

verifed

verified

The marginal revenue product of an economic resource for a firm operating in purely competitive product and resource markets


A) is the marginal product of the resource divided by the price of the final product.
B) is the increase in total revenue resulting from the addition of one more unit of the resource.
C) is equal to the average revenue product at the lowest point of the average revenue product curve.
D) decreases as the quantity of output decreases.

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

Correct Answer

verifed

verified

A firm is employing inputs such that the marginal product of labor is 25 and the marginal product of capital is 40. The price of labor is $5, and the price of capital is $8. If the firm wants to minimize costs, then it should


A) use more labor and less capital.
B) use less labor and less capital.
C) use less labor and more capital.
D) make no change in resource use.

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

Correct Answer

verifed

verified

What will the elasticity of resource demand be if unit wages rise by 8 percent and the number of employed workers falls by 5 percent?


A) 0.63
B) 1.61
C) 2.90
D) 4.00

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

Correct Answer

verifed

verified

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) None of the above

Correct Answer

verifed

verified

A firm will employ more of an input whose relative price has fallen and, conversely, will use less of an input whose relative price has risen. Thus, a fall in the price of capital will increase the relative price of labor and thereby reduce the demand for labor. This describes the


A) output effect.
B) substitution effect.
C) idea of derived demand.
D) law of diminishing returns.

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

Correct Answer

verifed

verified

Showing 141 - 160 of 244

Related Exams

Exam 1

Limits, Alternatives, and Choices

398 Questions

Exam 2

The Market System and the Circular Flow

252 Questions

Exam 3

Demand, Supply, and Market Equilibrium

339 Questions

Exam 4

Market Failures: Public Goods and Externalities

235 Questions

Exam 5

Governments Role and Government Failure

275 Questions

Exam 6

Elasticity

255 Questions

Exam 7

Utility Maximization

256 Questions

Exam 8

Behavioral Economics

274 Questions

Exam 9

Businesses and the Costs of Production

307 Questions

Exam 10

Pure Competition in the Short Run

167 Questions

Exam 11

Pure Competition in the Long Run

182 Questions

Exam 12

Pure Monopoly

224 Questions

Exam 13

Monopolistic Competition

194 Questions

Exam 14

Oligopoly and Strategic Behavior

265 Questions

Exam 15

Technology, Rd, and Efficiency

231 Questions

Exam 17

Wage Determination

308 Questions

Exam 18

Rent, Interest, and Profit

210 Questions

Exam 19

Natural Resource and Energy Economics

290 Questions

Exam 20

Public Finance: Expenditures and Taxes

232 Questions

Exam 21

Antitrust Policy and Regulation

237 Questions

Exam 22

Agriculture: Economics and Policy

217 Questions

Exam 23

Income Inequality, Poverty, and Discrimination

272 Questions

Exam 24

Health Care

240 Questions

Exam 25

Immigration

197 Questions

Exam 26

International Trade

241 Questions

Exam 27

The Balance of Payments, Exchange Rates, and Trade Deficits

252 Questions

Exam 28

The Economics of Developing Countries

249 Questions

Show Answer