Question 1

The following figure indicates the reductions in total losses due to theft if a jewelry store hires additional security guards. 
If the security guards can be hired for $45 per day, how many guards should the shop hire?

Accepted Answer

A)  2
B)  3
C)  4
D)  5
E)  6F) A) and C)
G) A) and E)

Question 2

The change in the total revenue of a firm that results from employing one additional unit of a factor of production is defined as the

Accepted Answer

A)  total revenue product of the resource.
B)  marginal product of the resource.
C)  marginal revenue product of the resource.
D)  average revenue product of the resource.E) C) and D)
F) None of the above

Question 3

If a firm used only two factors of production, labor (L)  and capital (K) , which of the following conditions would be present if the firm was minimizing its cost of production?

Accepted Answer

A)  MPL ¸ PL = MPK ¸ PK
B)  MPL ´ PL = MPK ´ PK
C)  MRPL = MRPK
D)  MPL = MPKE) None of the above
F) B) and C)

Question 4

The marginal revenue product of a resource is best described as the

Accepted Answer

A)  selling price of the last unit of output produced.
B)  increment of total cost resulting from the use of an additional unit of the resource.
C)  marginal product of the resource divided by the unit price of the good produced.
D)  change in total revenue resulting from employing an additional unit of the resource.E) All of the above
F) A) and C)

Question 5

Ceteris paribus, a decrease in the demand for automobiles will

Accepted Answer

A)  increase the price of automobiles.
B)  increase the quantity supplied of automobiles.
C)  decrease the demand for automobile workers.
D)  increase the demand for automobile workers.E) A) and D)
F) B) and D)

Question 6

Farmer Ted owned a worn-out piece of farmland for growing cotton, which he had been unable to rent for years. Suddenly he was getting offers from cotton farmers to lease his land. What is the most likely explanation of this?

Accepted Answer

A)  The price of cotton went down.
B)  The physical productivity of the land went up.
C)  Taxes on the land went up.
D)  The price of cotton went up.E) B) and D)
F) All of the above

Question 7

Which of the following best illustrates the concept of "derived demand"?

Accepted Answer

A)  A decrease in the price of glass causes the demand for plastic to decrease.
B)  An increase in the demand for bread leads to an increase in the demand for flour.
C)  A decrease in the price of air travel leads to an increase in the quantity demanded of air travel.
D)  An increase in the demand for peanut butter leads to an increase in the demand for jelly.E) B) and C)
F) A) and B)

Question 8

The labor supply curve reflects how

Accepted Answer

A)  workers' decisions about the labor-leisure tradeoff respond to a change in the wage.
B)  workers' decisions about the opportunity cost of labor respond to a change in the quantity of labor supplied.
C)  firms' decisions about the labor-leisure tradeoff respond to the quantity of labor demanded.
D)  firms' decisions about how the quantity of labor they hire respond to changes in their opportunities to earn profits.E) B) and D)
F) A) and D)

Question 9

Physical and human capital investments are

Accepted Answer

A)  different in that the opportunity for economic profit is present for physical capital but not for human capital investments.
B)  different in that human capital decisions do not involve future income considerations, while physical capital investments do.
C)  similar in that nonmonetary considerations play an equally important role in both.
D)  similar in that both involve forgoing current income (and consumption)  in an effort to achieve higher future income (and consumption) .E) None of the above
F) B) and D)

Question 10

Which of the following most clearly illustrates the concept of "derived demand"?

Accepted Answer

A)  An increase in the price of steak causes the demand for poultry to increase.
B)  As the price of coffee increases, the quantity demanded for coffee declines.
C)  A boom in the housing market leads to an increase in the demand for lumber and electricians.
D)  An increase in beer advertising on television leads to an increase in per capita beer consumption.E) B) and C)
F) B) and D)

Question 11

The marginal revenue product of a resource is best described as the

Accepted Answer

A)  selling price of the last unit of output produced.
B)  increment of total cost resulting from the use of an additional unit of the resource.
C)  marginal product of the resource divided by the unit price of the good produced.
D)  change in total revenue resulting from employing an additional unit of the resource.E) None of the above
F) A) and C)

Question 12

What happens to labor supply in the pear-picking market when the wage paid to apple pickers increases?

Accepted Answer

A)  The labor supply will stay unchanged until the wages paid to pear pickers change.
B)  The labor supply will decrease.
C)  The labor supply will increase.
D)  The labor supply may fall or rise, depending on the price of pears.E) B) and C)
F) A) and B)

Question 13

A firm's demand curve for labor shifts when the

Accepted Answer

A)  price of its output changes.
B)  wage rate changes.
C)  number of available workers changes.
D)  All of the above are correct.E) B) and D)
F) A) and B)

Question 14

An unanticipated decline in the demand for legal services will

Accepted Answer

A)  increase both the wages of lawyers and the rate of return they can expect to derive from their legal education.
B)  lead to a shortage in the market for legal services.
C)  reduce the wages of lawyers but not the quantity of legal services supplied.
D)  reduce the wages of lawyers and the rate of return on a legal education..E) A) and C)
F) A) and B)

Question 15

An increase in the demand for a resource

Accepted Answer

A)  will cause the price of that resource to fall.
B)  may be the result of a decrease in the demand for products utilizing this resource.
C)  will cause the price of the resource to fall by a smaller amount in the short run than in the long run.
D)  will increase the price of the resource and, thereby, increase the incentive of potential suppliers to provide the resource in the future.E) B) and C)
F) None of the above

Question 16

If the demand for computer scientists increases relative to their supply,

Accepted Answer

A)  the wages of computer scientists will decline.
B)  a computer science major will be more attractive to college students.
C)  the employment of computer scientists will fall.
D)  there will be a surplus of computer scientists.E) A) and B)
F) A) and C)

Question 17

Which of the following is the best example of an investment in human capital?

Accepted Answer

A)  an increase in the number of hours worked per week by a worker in an unskilled laboring job
B)  the purchase of company stock by a worker
C)  a summer internship at a law firm for someone going to law school
D)  payments into a retirement pension plan by a skilled laborerE) None of the above
F) All of the above

Question 18

Table 12-3
 
-Refer to Table 12-3. What is the marginal product of the third worker?

Accepted Answer

A)  7
B)  8
C)  25
D)  75E) A) and D)
F) A) and B)

Question 19

In recent years, the ratio of earnings of the typical U.S. college graduate to the earnings of the typical high school graduate without additional education has

Accepted Answer

A)  risen as the demand for skilled labor has increased relative to the demand for unskilled labor.
B)  risen as the demand for skilled labor has decreased relative to the demand for unskilled labor.
C)  fallen as the demand for skilled labor has increased relative to the demand for unskilled labor.
D)  fallen as the demand for skilled labor has decreased relative to the demand for unskilled labor.E) A) and C)
F) A) and B)

Question 20

Other things equal, when the supply of workers is scarce, one would predict that market wages would be

Accepted Answer

A)  relatively high.
B)  relatively low.
C)  determined solely by factors that affect demand.
D)  determined outside the domain of economic theory.E) A) and B)
F) A) and C)

Exam 12: The Supply of and Demand for Productive Resources

A firm's demand curve for labor shifts when the

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Ceteris paribus, a decrease in the demand for automobiles will

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Other things equal, when the supply of workers is scarce, one would predict that market wages would be

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Farmer Ted owned a worn-out piece of farmland for growing cotton, which he had been unable to rent for years. Suddenly he was getting offers from cotton farmers to lease his land. What is the most likely explanation of this?

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If the demand for computer scientists increases relative to their supply,

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The change in the total revenue of a firm that results from employing one additional unit of a factor of production is defined as the

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Which of the following is the best example of an investment in human capital?

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If a firm used only two factors of production, labor (L) and capital (K) , which of the following conditions would be present if the firm was minimizing its cost of production?

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An increase in the demand for a resource

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Physical and human capital investments are

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Which of the following most clearly illustrates the concept of "derived demand"?

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An unanticipated decline in the demand for legal services will

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Which of the following best illustrates the concept of "derived demand"?

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What happens to labor supply in the pear-picking market when the wage paid to apple pickers increases?

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In recent years, the ratio of earnings of the typical U.S. college graduate to the earnings of the typical high school graduate without additional education has

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Table 12-3 -Refer to Table 12-3. What is the marginal product of the third worker?

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The following figure indicates the reductions in total losses due to theft if a jewelry store hires additional security guards. If the security guards can be hired for $45 per day, how many guards should the shop hire?

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The marginal revenue product of a resource is best described as the

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The labor supply curve reflects how

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The marginal revenue product of a resource is best described as the

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