Question 1

Exhibit 11-7   In Exhibit 11-7, if the rental price of each machine is $6, this firm should employ __________ machine(s).

Accepted Answer

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

Question 2

Exhibit 11-8   Exhibit 11-8 shows data on the production of chocolate candy.If the firm sells chocolate for $3 a pound regardless of the quantity sold, the marginal revenue product of the third worker is

Accepted Answer

A) $0.60 
B) $6 
C) $0.30 
D) $3 
E) $90 
A) $0.60 
B) $6 
C) $0.30 
D) $3 
E) $90

Question 3

Suppose that the wage for drive-thru clerks is $7 an hour at Burger King and $6.50 at McDonald's.The jobs are alike in all other respects.We would expect

Accepted Answer

A) an increase in the supply of and demand for drive-thru clerks at Burger King 
B) an increase in the supply and a decrease in the demand for drive-thru clerks at Burger King 
C) a decrease in the supply of drive-thru clerks at Burger King but no change in demand 
D) an increase in the supply of drive-thru clerks at Burger King but no change in demand 
E) a decrease in the supply of and demand for drive-thru clerks at Burger King 
A) an increase in the supply of and demand for drive-thru clerks at Burger King 
B) an increase in the supply and a decrease in the demand for drive-thru clerks at Burger King 
C) a decrease in the supply of drive-thru clerks at Burger King but no change in demand 
D) an increase in the supply of drive-thru clerks at Burger King but no change in demand 
E) a decrease in the supply of and demand for drive-thru clerks at Burger King

Question 4

The Pat Summerall School of Diction is employing teachers such that the marginal revenue product of teachers exceeds the wage rate.The school will

Accepted Answer

A) reduce its demand for teachers 
B) lay off teachers 
C) be losing money from those teachers employed 
D) hire more teachers 
E) increase the price of diction classes 
A) reduce its demand for teachers 
B) lay off teachers 
C) be losing money from those teachers employed 
D) hire more teachers 
E) increase the price of diction classes

Question 5

Suppose that with two fro-yo machines, 12 workers produce eight quarts of fro-yo.If the marginal product of the thirteenth worker is two quarts, then

Accepted Answer

A) thirteen workers produce ten quarts 
B) thirteen workers produce two quarts 
C) the thirteenth worker alone produces ten quarts 
D) the law of diminishing returns cannot be operating in this example 
E) diminishing returns must begin with the thirteenth worker 
A) thirteen workers produce ten quarts 
B) thirteen workers produce two quarts 
C) the thirteenth worker alone produces ten quarts 
D) the law of diminishing returns cannot be operating in this example 
E) diminishing returns must begin with the thirteenth worker

Question 6

If the price of a resource increases, other things constant, less of that resource will be hired because

Accepted Answer

A) producers will substitute away from that resource 
B) producers fear starting a trend toward higher resource prices 
C) the demand curve for the product will shift to the left 
D) highly paid resources don't produce as much 
E) it makes other resources look expensive as well 
A) producers will substitute away from that resource 
B) producers fear starting a trend toward higher resource prices 
C) the demand curve for the product will shift to the left 
D) highly paid resources don't produce as much 
E) it makes other resources look expensive as well

Question 7

One determinant of the derived demand for a resource is the

Accepted Answer

A) price of the product made using the resource 
B) extra cost of the resource 
C) marginal resource cost of the resource 
D) availability of the resource in the marketplace 
E) quantity of the resource demanded 
A) price of the product made using the resource 
B) extra cost of the resource 
C) marginal resource cost of the resource 
D) availability of the resource in the marketplace 
E) quantity of the resource demanded

Question 8

A resource owner will supply resources up to the point where marginal resource cost is equal to marginal revenue product.

Accepted Answer

A) True 
 B)False

Question 9

In a perfectly competitive resource market, the marginal resource cost of a resource equals the price of the resource.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following represents a perfectly competitive farmer's demand curve for hired hands?

Accepted Answer

A) her ATC curve 
B) her AVC curve 
C) her MRP curve 
D) her MRC curve 
E) her AFC curve 
A) her ATC curve 
B) her AVC curve 
C) her MRP curve 
D) her MRC curve 
E) her AFC curve

Question 11

The fewer alternative uses a resource has,

Accepted Answer

A) the greater the proportion of its earnings that is economic rent 
B) the smaller the proportion of its earnings that is economic rent 
C) the more elastic its supply 
D) the more elastic its demand 
E) the less elastic its supply 
A) the greater the proportion of its earnings that is economic rent 
B) the smaller the proportion of its earnings that is economic rent 
C) the more elastic its supply 
D) the more elastic its demand 
E) the less elastic its supply

Question 12

Exhibit 11-5   In Exhibit 11-5, opportunity cost in equilibrium equals

Accepted Answer

A) $0 
B) $120 
C) $1, 000 
D) $300 
E) $1, 300 
A) $0 
B) $120 
C) $1, 000 
D) $300 
E) $1, 300

Question 13

Which resource earns the highest economic rent as a proportion of total earnings?

Accepted Answer

A) a resource specialized in one task 
B) a nonspecialized resource 
C) a resource with inelastic demand 
D) a resource in low demand 
E) a resource with elastic demand 
A) a resource specialized in one task 
B) a nonspecialized resource 
C) a resource with inelastic demand 
D) a resource in low demand 
E) a resource with elastic demand

Question 14

The great majority of labor economists believe that a minimum wage __________ unemployment among young and unskilled workers.

Accepted Answer

A) increases 
B) decreases 
C) eliminates 
D) has no effect on 
E) There is not enough information to answer the question. 
A) increases 
B) decreases 
C) eliminates 
D) has no effect on 
E) There is not enough information to answer the question.

Question 15

A firm will purchase additional units of a resource as long as each unit's

Accepted Answer

A) marginal revenue product is greater than zero 
B) marginal revenue product equals the product price 
C) marginal revenue product is greater than or equal to its marginal resource cost 
D) marginal revenue product is less than its marginal resource cost 
E) total revenue product is greater than its marginal resource cost 
A) marginal revenue product is greater than zero 
B) marginal revenue product equals the product price 
C) marginal revenue product is greater than or equal to its marginal resource cost 
D) marginal revenue product is less than its marginal resource cost 
E) total revenue product is greater than its marginal resource cost

Question 16

Exhibit 11-11   Exhibit 11-11 shows data on watch production.If the marginal resource cost is constant at $70 per unit of labor, how many workers should the firm hire to maximize its profit?

Accepted Answer

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

Question 17

The marginal resource cost of a resource is the additional cost of employing one additional unit of the resource.

Accepted Answer

A) True 
 B)False

Question 18

The difference between the average earnings of eye surgeons and those of janitors is an example of

Accepted Answer

A) a temporary differential 
B) a permanent differential 
C) a resource price difference that will cause a reallocation of resources to different uses 
D) a temporary difference that will be eliminated through the reallocation of resources to different uses 
E) a differential caused by a lack of resource mobility 
A) a temporary differential 
B) a permanent differential 
C) a resource price difference that will cause a reallocation of resources to different uses 
D) a temporary difference that will be eliminated through the reallocation of resources to different uses 
E) a differential caused by a lack of resource mobility

Question 19

If the supply of oceanfront lots is fixed and perfectly inelastic,

Accepted Answer

A) the demand for the resource determines its price and the level of economic rent 
B) the supply of the resource determines its price and the level of economic rent 
C) the supply of the resource determines its price and the demand for the resource determines the level of economic rent 
D) the demand for the resource determines its price and the supply of the resource determines the level of economic rent 
E) the supply curve is horizontal 
A) the demand for the resource determines its price and the level of economic rent 
B) the supply of the resource determines its price and the level of economic rent 
C) the supply of the resource determines its price and the demand for the resource determines the level of economic rent 
D) the demand for the resource determines its price and the supply of the resource determines the level of economic rent 
E) the supply curve is horizontal

Exam 11: Resource Markets

Exhibit 11-7 In Exhibit 11-7, if the rental price of each machine is $6, this firm should employ __________ machine(s).

Exhibit 11-8 Exhibit 11-8 shows data on the production of chocolate candy.If the firm sells chocolate for $3 a pound regardless of the quantity sold, the marginal revenue product of the third worker is

Suppose that the wage for drive-thru clerks is $7 an hour at Burger King and $6.50 at McDonald's.The jobs are alike in all other respects.We would expect

The Pat Summerall School of Diction is employing teachers such that the marginal revenue product of teachers exceeds the wage rate.The school will

Suppose that with two fro-yo machines, 12 workers produce eight quarts of fro-yo.If the marginal product of the thirteenth worker is two quarts, then

If the price of a resource increases, other things constant, less of that resource will be hired because

One determinant of the derived demand for a resource is the

A resource owner will supply resources up to the point where marginal resource cost is equal to marginal revenue product.

In a perfectly competitive resource market, the marginal resource cost of a resource equals the price of the resource.

Which of the following represents a perfectly competitive farmer's demand curve for hired hands?

The fewer alternative uses a resource has,

Exhibit 11-5 In Exhibit 11-5, opportunity cost in equilibrium equals

Which resource earns the highest economic rent as a proportion of total earnings?

The great majority of labor economists believe that a minimum wage __________ unemployment among young and unskilled workers.

A firm will purchase additional units of a resource as long as each unit's

Exhibit 11-11 Exhibit 11-11 shows data on watch production.If the marginal resource cost is constant at $70 per unit of labor, how many workers should the firm hire to maximize its profit?

The marginal resource cost of a resource is the additional cost of employing one additional unit of the resource.

The difference between the average earnings of eye surgeons and those of janitors is an example of

If the supply of oceanfront lots is fixed and perfectly inelastic,

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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