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Exam 15: The Demand for Resources

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Question 71

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

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Question 72

Multiple Choice

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(Last Word) ATMs and human bank tellers:

A) are substitute resources.
B) are capital goods.
C) have both declined in number because of bank mergers.
D) are complementary resources.

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

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Question 73

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

The MRP curve is the resource demand curve for:

Assume that a restaurant is hiring labor in an amount such that the MRC of the last worker is $16 and her MRP is $12.On the basis of this information,we can say that:

(Last Word) The rapid spread of ATMs has:

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:

Suppose the productivity of labor increases and at the same time the price of capital,which is complementary to labor,increases.As a result,the demand for labor:

Marginal resource cost is:

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

Assuming a firm is selling its output in a purely competitive market,its resource demand curve can be determined by:

Answer the question on the basis of the following data: $\begin{array}{cccccc}Quantity &MP of& MRP of &\text{Quantity of}& MP of &MRP of\\of Labor& Labor& Labor& Capital &Capital &Capital\\\hline1 & 15 & \$ 45 & 1 & 8 & \$ 24 \\2 & 12 & 36 & 2 & 6 & 18 \\3 & 9 & 27 & 3 & 5 & 15 \\4 & 6 & 18 & 4 & 4 & 12 \\5 & 3 & 9 & 5 & 3 & 9 \\6 & 1 & 3 & 6 & 2 & 6\end{array}$ Refer to the given data.If the prices of labor and capital are $9 and $15 respectively,at the profit-maximizing level of output,the firm's total revenue will be:

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

(Consider This) According to the Consider This box "Superstars," the high pay of superstars reflects:

Elasticity of resource demand is measured by dividing "percentage change in resource price" by "percentage change in resource quantity."

Answer the question on the basis of the following marginal product data for resources a and b.The output of these independent resources sells in a purely competitive market at $1 per unit. $\begin{array}{ccc}\begin{array}{ccc}\text { Inputs } \\\text { of a } & & \mathrm{MP}_{\mathrm{a}} \\\hline1 & & 25 \\2 & & 20 \\3 & & 15 \\4 & & 10 \\5 & & 5 \\6 & & 2 \\7 & & 1\end{array}\begin{array}{c}\begin{array}{c}\text { Inputs } \\\text { of } b\end{array} & & M P_{b} \\\hline1 & & 40 \\2 & & 36 \\3 & & 32 \\4 & & 24 \\5 & & 20 \\6 & & 16 \\7 & & 8\end{array}\end{array}$ Refer to the given data.Assuming the prices of resources a and b are $5 and $8 respectively,when the firm hires the profit-maximizing combination of resources,its economic profit will be:

When the elasticity coefficient for resource demand is greater than one,resource demand is: