Question 1

Exhibit 11-9   In Exhibit 11-9, if the wage rate is $44 and does not vary, how many workers will be hired?

Accepted Answer

A) two 
B) three 
C) five 
D) seven 
E) nine 
A) two 
B) three 
C) five 
D) seven 
E) nine

Question 2

If a firm is using a resource hired in a perfectly competitive market, and if the marginal resource cost is less than its marginal revenue product,

Accepted Answer

A) more of the resource should be used 
B) less of the resource should be used 
C) the firm should pay a lower price for the resource 
D) the firm should pay a higher price for the resource 
E) the firm is using the optimal amount of the resource 
A) more of the resource should be used 
B) less of the resource should be used 
C) the firm should pay a lower price for the resource 
D) the firm should pay a higher price for the resource 
E) the firm is using the optimal amount of the resource

Question 3

Derived demand refers to

Accepted Answer

A) demand curves derived from utility functions 
B) an individual demand curve estimated from a market demand curve 
C) a market demand curve estimated from individual demand curves 
D) demand for a resource derived from the demand for the product produced by that resource 
E) demand for a product derived from the demand for the resource used to make that product 
A) demand curves derived from utility functions 
B) an individual demand curve estimated from a market demand curve 
C) a market demand curve estimated from individual demand curves 
D) demand for a resource derived from the demand for the product produced by that resource 
E) demand for a product derived from the demand for the resource used to make that product

Question 4

Marginal revenue product is

Accepted Answer

A) the additional cost of hiring one more unit of a resource 
B) the additional units of output generated by hiring one more unit of a resource 
C) calculated by multiplying marginal revenue by the price of a resource 
D) the expected additional revenue generated by hiring one more unit of a resource 
E) calculated by multiplying marginal revenue by the marginal resource cost of a resource 
A) the additional cost of hiring one more unit of a resource 
B) the additional units of output generated by hiring one more unit of a resource 
C) calculated by multiplying marginal revenue by the price of a resource 
D) the expected additional revenue generated by hiring one more unit of a resource 
E) calculated by multiplying marginal revenue by the marginal resource cost of a resource

Question 5

For a firm hiring a resource in a perfectly competitive resource market, its demand curve for the resource is its

Accepted Answer

A) marginal product curve 
B) marginal revenue product curve 
C) marginal resource cost curve 
D) marginal revenue curve 
E) total revenue curve 
A) marginal product curve 
B) marginal revenue product curve 
C) marginal resource cost curve 
D) marginal revenue curve 
E) total revenue curve

Question 6

Exhibit 11-2   In Exhibit 11-2, the tenth unit of the resource is earning a wage of

Accepted Answer

A) $4, all of which is economic rent 
B) $4, none of which is economic rent 
C) $8, all of which is economic rent 
D) $8, none of which is economic rent 
E) $8, half of which is economic rent 
A) $4, all of which is economic rent 
B) $4, none of which is economic rent 
C) $8, all of which is economic rent 
D) $8, none of which is economic rent 
E) $8, half of which is economic rent

Question 7

As the relative price paid to a resource in a particular use rises,

Accepted Answer

A) resources will be drawn from lower-valued uses to higher-valued uses 
B) resources will be drawn from higher-valued uses to lower-valued uses 
C) resources will generally remain where they are currently employed 
D) the supply of that resource will shift to the right 
E) the supply of that resource will shift to the left 
A) resources will be drawn from lower-valued uses to higher-valued uses 
B) resources will be drawn from higher-valued uses to lower-valued uses 
C) resources will generally remain where they are currently employed 
D) the supply of that resource will shift to the right 
E) the supply of that resource will shift to the left

Question 8

Exhibit 11-7   In Exhibit 11-7, diminishing returns first becomes evident with the addition of the __________ machine.

Accepted Answer

A) first 
B) second 
C) third 
D) fourth 
E) fifth 
A) first 
B) second 
C) third 
D) fourth 
E) fifth

Question 9

If an insurance company hires a resource in a perfectly competitive resource market and it wants to maximize profit, it will hire where marginal revenue product equals

Accepted Answer

A) the price of the resource, which equals its marginal resource cost 
B) the price of the resource, which is greater than its marginal resource cost 
C) the price of the resource, which is less than its marginal resource cost 
D) marginal product 
E) the price of the product 
A) the price of the resource, which equals its marginal resource cost 
B) the price of the resource, which is greater than its marginal resource cost 
C) the price of the resource, which is less than its marginal resource cost 
D) marginal product 
E) the price of the product

Question 10

Exhibit 11-5   In Exhibit 11-5, which unit of the resource is earning the most economic rent?

Accepted Answer

A) none earns economic rent 
B) the first 
C) the sixtieth 
D) the hundredth 
E) they are all earning the same positive economic rent 
A) none earns economic rent 
B) the first 
C) the sixtieth 
D) the hundredth 
E) they are all earning the same positive economic rent

Question 11

Exhibit 11-2   In Exhibit 11-2, total earnings at equilibrium equal

Accepted Answer

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

Question 12

In a perfectly competitive labor market, a profit-maximizing firm will hire labor up to the point at which the

Accepted Answer

A) wage rate = MRC 
B) wage rate  MRP 
E) wage rate = MP 
A) wage rate = MRC 
B) wage rate  MRP 
E) wage rate = MP

Question 13

The market supply curve of a resource is

Accepted Answer

A) downward sloping 
B) upward sloping 
C) horizontal at the market price 
D) vertical 
E) determined by firms 
A) downward sloping 
B) upward sloping 
C) horizontal at the market price 
D) vertical 
E) determined by firms

Question 14

Using free public space means that sidewalk vendors earn long-run economic profits.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is an example of resources that are substitutes?

Accepted Answer

A) steel and glass used in auto manufacturing 
B) glue and wood used in furniture manufacturing 
C) buttons and cotton used in shirt manufacturing 
D) leather and rubber used in basketball manufacturing 
E) eggs and flour used in baking 
A) steel and glass used in auto manufacturing 
B) glue and wood used in furniture manufacturing 
C) buttons and cotton used in shirt manufacturing 
D) leather and rubber used in basketball manufacturing 
E) eggs and flour used in baking

Question 16

Exhibit 11-4   In Exhibit 11-4, total resource earnings in equilibrium equal

Accepted Answer

A) $12 
B) $10 
C) $720 
D) $1, 000 
E) $1, 200 
A) $12 
B) $10 
C) $720 
D) $1, 000 
E) $1, 200

Question 17

If the marginal product of the second worker hired by a firm is 14 units and the price of the tenth unit of output is $7, then the marginal revenue product

Accepted Answer

A) of the second worker is $98, regardless of the structure of the product market 
B) of the second worker is $98 if the firm is a price searcher in the product market 
C) of the second worker is $98 if the product market is perfectly competitive 
D) of the tenth worker is $98 if the product market is perfectly competitive 
E) of the tenth worker is $98 if the firm is a price searcher in the product market 
A) of the second worker is $98, regardless of the structure of the product market 
B) of the second worker is $98 if the firm is a price searcher in the product market 
C) of the second worker is $98 if the product market is perfectly competitive 
D) of the tenth worker is $98 if the product market is perfectly competitive 
E) of the tenth worker is $98 if the firm is a price searcher in the product market

Question 18

A relaxation of U.S.immigration laws and regulations would

Accepted Answer

A) further reduce wages in poorer countries 
B) turn some permanent resource differentials into temporary ones 
C) increase the demand for labor in the United States 
D) turn some temporary resource differentials into permanent ones 
E) increase the supply of labor in poorer countries 
A) further reduce wages in poorer countries 
B) turn some permanent resource differentials into temporary ones 
C) increase the demand for labor in the United States 
D) turn some temporary resource differentials into permanent ones 
E) increase the supply of labor in poorer countries

Question 19

An increase in the price of electronic cash registers will

Accepted Answer

A) increase the demand for cashiers if electronic cash registers are a complementary resource 
B) reduce the demand for cashiers if electronic cash registers are a complementary resource 
C) reduce the quantity of electronic cash registers supplied 
D) reduce the demand for manual cash registers 
E) reduce the average cost of retail stores 
A) increase the demand for cashiers if electronic cash registers are a complementary resource 
B) reduce the demand for cashiers if electronic cash registers are a complementary resource 
C) reduce the quantity of electronic cash registers supplied 
D) reduce the demand for manual cash registers 
E) reduce the average cost of retail stores

Question 20

Which of the following is an example of a permanent resource price differential?

Accepted Answer

A) When the price of oil increases, oil exploration increases. 
B) When the price of CDs falls, CD production decreases. 
C) When demand for land in a city increases, its price increases above prices of land elsewhere. 
D) When demand for computer programmers increased, more people went into that field. 
E) When the price of oil rose, demand for solar panels increased. 
A) When the price of oil increases, oil exploration increases. 
B) When the price of CDs falls, CD production decreases. 
C) When demand for land in a city increases, its price increases above prices of land elsewhere. 
D) When demand for computer programmers increased, more people went into that field. 
E) When the price of oil rose, demand for solar panels increased.

Exam 11: Resource Markets

Exhibit 11-9 In Exhibit 11-9, if the wage rate is $44 and does not vary, how many workers will be hired?

If a firm is using a resource hired in a perfectly competitive market, and if the marginal resource cost is less than its marginal revenue product,

Derived demand refers to

Marginal revenue product is

For a firm hiring a resource in a perfectly competitive resource market, its demand curve for the resource is its

Exhibit 11-2 In Exhibit 11-2, the tenth unit of the resource is earning a wage of

As the relative price paid to a resource in a particular use rises,

Exhibit 11-7 In Exhibit 11-7, diminishing returns first becomes evident with the addition of the __________ machine.

If an insurance company hires a resource in a perfectly competitive resource market and it wants to maximize profit, it will hire where marginal revenue product equals

Exhibit 11-5 In Exhibit 11-5, which unit of the resource is earning the most economic rent?

Exhibit 11-2 In Exhibit 11-2, total earnings at equilibrium equal

In a perfectly competitive labor market, a profit-maximizing firm will hire labor up to the point at which the

The market supply curve of a resource is

Using free public space means that sidewalk vendors earn long-run economic profits.

Which of the following is an example of resources that are substitutes?

Exhibit 11-4 In Exhibit 11-4, total resource earnings in equilibrium equal

If the marginal product of the second worker hired by a firm is 14 units and the price of the tenth unit of output is $7, then the marginal revenue product

A relaxation of U.S.immigration laws and regulations would

An increase in the price of electronic cash registers will

Which of the following is an example of a permanent resource price differential?

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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