Question 1

Exhibit 11-1   Condider Exibit 11-1.Each of the panels depict the supply and demand conditions in a resource market.In panel (e)how much economic rent do the resources earn?

Accepted Answer

A) $0 
B) $250 
C) $500 
D) $750 
E) $1000 
A) $0 
B) $250 
C) $500 
D) $750 
E) $1000

Question 2

The change in total revenue that results from a one-unit change in the amount of a variable resource used is

Accepted Answer

A) average resource cost 
B) marginal resource cost 
C) marginal product 
D) marginal revenue product 
E) average revenue product 
A) average resource cost 
B) marginal resource cost 
C) marginal product 
D) marginal revenue product 
E) average revenue product

Question 3

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

Accepted Answer

A) As income rises, the demand for TVs rises. 
B) A fall in the price of cameras will increase the demand for film. 
C) A fall in the demand for tires will reduce the demand for rubber. 
D) When the price of gasoline rises, the demand for automobile repair falls. 
E) If consumers expect the price of coffee to rise, demand for coffee rises. 
A) As income rises, the demand for TVs rises. 
B) A fall in the price of cameras will increase the demand for film. 
C) A fall in the demand for tires will reduce the demand for rubber. 
D) When the price of gasoline rises, the demand for automobile repair falls. 
E) If consumers expect the price of coffee to rise, demand for coffee rises.

Question 4

Exhibit 11-2   In Exhibit 11-2, economic rent at equilibrium equals

Accepted Answer

A) $40 
B) $80 
C) $160 
D) $16 
E) $8 
A) $40 
B) $80 
C) $160 
D) $16 
E) $8

Question 5

Exhibit 11-10   In Exhibit 11-10, how low would the wage rate have to fall in order for the firm to hire five workers?

Accepted Answer

A) $100 
B) $74 
C) $54 
D) $34 
E) $24 
A) $100 
B) $74 
C) $54 
D) $34 
E) $24

Question 6

Permanent differentials in resource prices will cause

Accepted Answer

A) all of the following 
B) the allocation of fewer resources to lower-paid uses 
C) the equalization of payments for the same resource in different uses 
D) no change in the allocation of resources 
E) the allocation of more resources to higher-paid uses 
A) all of the following 
B) the allocation of fewer resources to lower-paid uses 
C) the equalization of payments for the same resource in different uses 
D) no change in the allocation of resources 
E) the allocation of more resources to higher-paid uses

Question 7

A profit-maximizing firm will employ a resource up to the point where

Accepted Answer

A) its marginal resource cost equals its marginal revenue product 
B) its marginal resource cost equals its marginal product 
C) its marginal resource cost equals the marginal revenue of the output 
D) its marginal resource cost equals the price of the resource 
E) the price of the resource equals the marginal revenue of the output 
A) its marginal resource cost equals its marginal revenue product 
B) its marginal resource cost equals its marginal product 
C) its marginal resource cost equals the marginal revenue of the output 
D) its marginal resource cost equals the price of the resource 
E) the price of the resource equals the marginal revenue of the output

Question 8

An increase in the demand for shoemakers will increase the demand for shoes.

Accepted Answer

A) True 
 B)False

Question 9

The division of a resource's earnings between economic rent and opportunity cost depends on the resource owner's

Accepted Answer

A) elasticity of labor supply 
B) price elasticity of labor demand 
C) income elasticity of labor demand 
D) cross-price elasticity of demand 
E) marginal revenue product 
A) elasticity of labor supply 
B) price elasticity of labor demand 
C) income elasticity of labor demand 
D) cross-price elasticity of demand 
E) marginal revenue product

Question 10

The empirical evidence on the minimum wage

Accepted Answer

A) is mixed; some studies show employment increasing, but most do not 
B) shows that employment always falls when the minimum wage is increased 
C) shows that employment always rises when the minimum wage is reduced 
D) suggests that most labor markets are not competitive markets 
E) indicates that wages are highest in industries that are subject to the minimum wage 
A) is mixed; some studies show employment increasing, but most do not 
B) shows that employment always falls when the minimum wage is increased 
C) shows that employment always rises when the minimum wage is reduced 
D) suggests that most labor markets are not competitive markets 
E) indicates that wages are highest in industries that are subject to the minimum wage

Question 11

A profit-maximizing firm will hire units of an input to the point at which

Accepted Answer

A) MRP > price of the input B) MRP < MRC C) MRP = the supply of the input D) MRP = MRC E) MRP < the supply of the input A) MRP > price of the input B) MRP < MRC C) MRP = the supply of the input D) MRP = MRC E) MRP < the supply of the input

Question 12

A profit-maximizing firm will hire extra units of a resource when

Accepted Answer

A) marginal resource cost exceeds marginal revenue product 
B) marginal resource cost is equal to marginal revenue product 
C) marginal resource cost is less than marginal revenue product 
D) temporary resource price differentials exceed the marginal resource cost 
E) the average resource cost and marginal resource cost curves are equal 
A) marginal resource cost exceeds marginal revenue product 
B) marginal resource cost is equal to marginal revenue product 
C) marginal resource cost is less than marginal revenue product 
D) temporary resource price differentials exceed the marginal resource cost 
E) the average resource cost and marginal resource cost curves are equal

Question 13

Economic rent is defined as

Accepted Answer

A) the opportunity cost of a resource 
B) the payment to a resource in excess of its opportunity cost 
C) opportunity cost 
D) total earnings 
E) the part of a homeowner's housing that is included in GDP accounts 
A) the opportunity cost of a resource 
B) the payment to a resource in excess of its opportunity cost 
C) opportunity cost 
D) total earnings 
E) the part of a homeowner's housing that is included in GDP accounts

Question 14

Exhibit 11-2   In Exhibit 11-2, economic rent at equilibrium is represented by area

Accepted Answer

A) a 
B) b 
C) c 
D) a + b 
E) b + c 
A) a 
B) b 
C) c 
D) a + b 
E) b + c

Question 15

An improvement in technology that allows workers to process twice as many insurance forms in an hour than before will cause

Accepted Answer

A) more labor to be employed because its marginal revenue product has fallen 
B) an increase in insurance premiums 
C) fewer workers to be employed because their marginal revenue product has decreased 
D) more workers to be employed because their marginal revenue product has increased 
E) fewer workers to be employed because their marginal revenue product has increased 
A) more labor to be employed because its marginal revenue product has fallen 
B) an increase in insurance premiums 
C) fewer workers to be employed because their marginal revenue product has decreased 
D) more workers to be employed because their marginal revenue product has increased 
E) fewer workers to be employed because their marginal revenue product has increased

Question 16

Which of the following is true of marginal revenue product (MRP)and marginal product (MP)?

Accepted Answer

A) MRP = MP ´ price, whether the firm is a price searcher or not. 
B) MRP = MP ´ price only if the firm is a price searcher. 
C) MRP = MP ´ price only if the firm sells in a perfectly competitive market. 
D) MRP = MP ´ marginal cost only if the firm is a price searcher. 
E) MRP = MP/price only if the firm is a price taker. 
A) MRP = MP ´ price, whether the firm is a price searcher or not. 
B) MRP = MP ´ price only if the firm is a price searcher. 
C) MRP = MP ´ price only if the firm sells in a perfectly competitive market. 
D) MRP = MP ´ marginal cost only if the firm is a price searcher. 
E) MRP = MP/price only if the firm is a price taker.

Question 17

Exhibit 11-1   Condider Exibit 11-1.Each of the panels depict the supply and demand conditions in a resource market.In which of the panels will the resource earnings be entirely economic rent?

Accepted Answer

A) panel (a) 
B) panel (b) 
C) panel (c) 
D) panel (d) 
E) panel (e) 
A) panel (a) 
B) panel (b) 
C) panel (c) 
D) panel (d) 
E) panel (e)

Question 18

Exhibit 11-11   Exhibit 11-11 shows data on watch production.If the marginal resource cost is constant at $18 per unit of labor, how many workers should the firm hire to maximize its profit?

Accepted Answer

A) one 
B) two 
C) three 
D) four 
E) five 
A) one 
B) two 
C) three 
D) four 
E) five

Question 19

Exhibit 11-3   In Exhibit 11-3, total resource earnings at equilibrium equal

Accepted Answer

A) $40 
B) $60 
C) $400 
D) $1, 000 
E) $300 
A) $40 
B) $60 
C) $400 
D) $1, 000 
E) $300

Question 20

An author who writes newspaper columns for $75 each is deciding whether to purchase a personal computer with a laser printer.She figures she'd be able to write two more columns per month than she could on her typewriter.She should

Accepted Answer

A) buy the computer if the monthly payment is less than $300 
B) buy the computer regardless of its price 
C) not buy the computer if the monthly payment is greater than $75 
D) not buy the computer regardless of the price 
E) buy the computer if the monthly payment is less than $150 
A) buy the computer if the monthly payment is less than $300 
B) buy the computer regardless of its price 
C) not buy the computer if the monthly payment is greater than $75 
D) not buy the computer regardless of the price 
E) buy the computer if the monthly payment is less than $150

Exam 11: Resource Markets

Exhibit 11-1 Condider Exibit 11-1.Each of the panels depict the supply and demand conditions in a resource market.In panel (e)how much economic rent do the resources earn?

The change in total revenue that results from a one-unit change in the amount of a variable resource used is

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

Exhibit 11-2 In Exhibit 11-2, economic rent at equilibrium equals

Exhibit 11-10 In Exhibit 11-10, how low would the wage rate have to fall in order for the firm to hire five workers?

Permanent differentials in resource prices will cause

A profit-maximizing firm will employ a resource up to the point where

An increase in the demand for shoemakers will increase the demand for shoes.

The division of a resource's earnings between economic rent and opportunity cost depends on the resource owner's

The empirical evidence on the minimum wage

A profit-maximizing firm will hire units of an input to the point at which

A profit-maximizing firm will hire extra units of a resource when

Economic rent is defined as

Exhibit 11-2 In Exhibit 11-2, economic rent at equilibrium is represented by area

An improvement in technology that allows workers to process twice as many insurance forms in an hour than before will cause

Which of the following is true of marginal revenue product (MRP)and marginal product (MP)?

Exhibit 11-1 Condider Exibit 11-1.Each of the panels depict the supply and demand conditions in a resource market.In which of the panels will the resource earnings be entirely economic rent?

Exhibit 11-11 Exhibit 11-11 shows data on watch production.If the marginal resource cost is constant at $18 per unit of labor, how many workers should the firm hire to maximize its profit?

Exhibit 11-3 In Exhibit 11-3, total resource earnings at equilibrium equal

An author who writes newspaper columns for $75 each is deciding whether to purchase a personal computer with a laser printer.She figures she'd be able to write two more columns per month than she could on her typewriter.She should

The Art and Science of Economic Analysis

Appendix--Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Elasticity of Demand and Supply

Appendix--Price Elasticity and Tax Incidence

Consumer Choice and Demand

Appendix--Indifference Curves and Utility Maximization

Production and Cost in the Firm

A--Perfect Competition

B--Perfect Competition

A--Monopoly

B--Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Labor Unions

Capital, Interest, and Corporate Finance

Transaction Costs, Imperfect Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

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