Question 1

If coal and oil are substitute inputs in the production of electricity, an increase in the price of oil

Accepted Answer

A) will increase the demand for coal 
B) will reduce the demand for coal 
C) will increase the supply of coal 
D) will reduce the supply of coal 
E) will not affect the demand for coal 
A) will increase the demand for coal 
B) will reduce the demand for coal 
C) will increase the supply of coal 
D) will reduce the supply of coal 
E) will not affect the demand for coal

Question 2

Suppose a firm is a price searcher in the product market and hires labor in a perfectly competitive labor market.If the wage rate is $20, the marginal product of the last worker hired is 5, and the firm is hiring the profit-maximizing amount of labor, then the marginal revenue product of the last worker hired must be

Accepted Answer

A) $1 
B) $1.50 
C) $4 
D) $5 
E) $20 
A) $1 
B) $1.50 
C) $4 
D) $5 
E) $20

Question 3

Exhibit 11-7   In Exhibit 11-7, the marginal revenue product of the third machine is

Accepted Answer

A) 3 
B) 15 
C) $3 
D) $9 
E) $45 
A) 3 
B) 15 
C) $3 
D) $9 
E) $45

Question 4

The payment made to an owner of a resource in excess of the opportunity cost of the resource is

Accepted Answer

A) economic rent 
B) economic profit 
C) wages 
D) interest 
E) opportunity cost 
A) economic rent 
B) economic profit 
C) wages 
D) interest 
E) opportunity cost

Question 5

If a profit-maximizing firm hires an additional unit of labor, what must be true about labor's wage and marginal revenue product?

Accepted Answer

A) Its wage always equals its marginal revenue product. 
B) Its wage is always greater than its marginal revenue product. 
C) Its wage is always total revenue minus marginal revenue product. 
D) Its wage is always greater than or equal to its marginal revenue product. 
E) Its wage is always less than or equal to its marginal revenue product. 
A) Its wage always equals its marginal revenue product. 
B) Its wage is always greater than its marginal revenue product. 
C) Its wage is always total revenue minus marginal revenue product. 
D) Its wage is always greater than or equal to its marginal revenue product. 
E) Its wage is always less than or equal to its marginal revenue product.

Question 6

The market demand curve for a resource is the

Accepted Answer

A) horizontal sum of the demand curves for that resource in all its various uses 
B) difference among the demand curves for that resource in all its various uses 
C) demand for that resource in its best use 
D) sum of the demand curves for that resource in its best two uses 
E) vertical sum of the demand curve for that resource in all its various uses 
A) horizontal sum of the demand curves for that resource in all its various uses 
B) difference among the demand curves for that resource in all its various uses 
C) demand for that resource in its best use 
D) sum of the demand curves for that resource in its best two uses 
E) vertical sum of the demand curve for that resource in all its various uses

Question 7

Exhibit 11-2   In Exhibit 11-2, which unit of the resource is earning the least economic rent?

Accepted Answer

A) the fifth 
B) the tenth 
C) the fifteenth 
D) the twentieth 
E) they are all earning the same economic rent 
A) the fifth 
B) the tenth 
C) the fifteenth 
D) the twentieth 
E) they are all earning the same economic rent

Question 8

If ten cases of spring water are sold at a price of $6 each in a perfectly competitive output market and the marginal product of the last unit of labor is 5, then the marginal revenue product of that last unit of labor is

Accepted Answer

A) $60 
B) $30 
C) $50 
D) $2 
E) 60 cents 
A) $60 
B) $30 
C) $50 
D) $2 
E) 60 cents

Question 9

If the price of a resource falls, other things constant,

Accepted Answer

A) demand for the product it produces will increase 
B) demand for a substitute product will increase 
C) demand for a substitute resource will fall 
D) supply of that resource will rise 
E) supply of a substitute resource will also rise 
A) demand for the product it produces will increase 
B) demand for a substitute product will increase 
C) demand for a substitute resource will fall 
D) supply of that resource will rise 
E) supply of a substitute resource will also rise

Question 10

Because it is based on the demand for products, the demand for labor is called

Accepted Answer

A) a substitution demand 
B) a complementary demand 
C) an income demand 
D) a derived demand 
E) a marginal demand 
A) a substitution demand 
B) a complementary demand 
C) an income demand 
D) a derived demand 
E) a marginal demand

Question 11

Resource owners will supply additional units of a resource as long as doing so

Accepted Answer

A) decreases their opportunity cost 
B) increases their income 
C) increases their utility 
D) decreases their income taxes 
E) improves their working conditions 
A) decreases their opportunity cost 
B) increases their income 
C) increases their utility 
D) decreases their income taxes 
E) improves their working conditions

Question 12

If the marginal revenue product of the fifth worker is $15, the price of the last unit of output produced is $5, and the firm sells as a price searcher, then the marginal product of the fifth worker is

Accepted Answer

A) 3 units of output 
B) 45 units of output 
C) fewer than 3 units of output 
D) greater than 3 units of output 
E) greater than 75 units of output 
A) 3 units of output 
B) 45 units of output 
C) fewer than 3 units of output 
D) greater than 3 units of output 
E) greater than 75 units of output

Question 13

For a firm in a perfectly competitive product market, the marginal resource cost curve is horizontal if the resource market is also competitive.

Accepted Answer

A) True 
 B)False

Question 14

Exhibit 11-4   In Exhibit 11-4, economic rent in equilibrium equals

Accepted Answer

A) $6 
B) $120 
C) $1, 000 
D) $300 
E) $1, 300 
A) $6 
B) $120 
C) $1, 000 
D) $300 
E) $1, 300

Question 15

Exhibit 11-10   In Exhibit 11-10, if the wage were $84, how many workers would the firm hire?

Accepted Answer

A) 0 
B) 1 
C) 2 
D) 3 
E) 4 
A) 0 
B) 1 
C) 2 
D) 3 
E) 4

Question 16

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 reflect partly opportunity cost and partly economic rent?

Accepted Answer

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

Question 17

Which of the following is an example of a temporary price differential in a resource market?

Accepted Answer

A) land downtown is more expensive than land in the suburbs 
B) a superstar professional basketball player is paid more than the average professional player 
C) cable television installers have a higher wage than telephone installers 
D) an airline pilot is paid more than a flight attendant 
E) a worker in a toxic waste plant earns more than a teacher 
A) land downtown is more expensive than land in the suburbs 
B) a superstar professional basketball player is paid more than the average professional player 
C) cable television installers have a higher wage than telephone installers 
D) an airline pilot is paid more than a flight attendant 
E) a worker in a toxic waste plant earns more than a teacher

Question 18

If a firm is using a resource hired in a perfectly competitive market, and if the price of the resource exceeds the marginal revenue product of the resource,

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 19

The 2007 minimum wage law covered nearly __________ percent of the workforce.

Accepted Answer

A) 9 
B) 43 
C) 67 
D) 90 
E) 99.99 
A) 9 
B) 43 
C) 67 
D) 90 
E) 99.99

Question 20

If ZipCo's marginal revenue product curves slope downward, what can we conclude about the structure of the market in which ZipCo sells its product?

Accepted Answer

A) The firm is a price searcher because price is greater than marginal revenue. 
B) The firm is a price taker because price is equal to marginal revenue. 
C) The firm is a price searcher because the price of each resource is constant. 
D) The firm is a price taker because the price of each resource is constant. 
E) Nothing. 
A) The firm is a price searcher because price is greater than marginal revenue. 
B) The firm is a price taker because price is equal to marginal revenue. 
C) The firm is a price searcher because the price of each resource is constant. 
D) The firm is a price taker because the price of each resource is constant. 
E) Nothing.

Exam 11: Resource Markets

If coal and oil are substitute inputs in the production of electricity, an increase in the price of oil

Exhibit 11-7 In Exhibit 11-7, the marginal revenue product of the third machine is

The payment made to an owner of a resource in excess of the opportunity cost of the resource is

If a profit-maximizing firm hires an additional unit of labor, what must be true about labor's wage and marginal revenue product?

The market demand curve for a resource is the

Exhibit 11-2 In Exhibit 11-2, which unit of the resource is earning the least economic rent?

If ten cases of spring water are sold at a price of $6 each in a perfectly competitive output market and the marginal product of the last unit of labor is 5, then the marginal revenue product of that last unit of labor is

If the price of a resource falls, other things constant,

Because it is based on the demand for products, the demand for labor is called

Resource owners will supply additional units of a resource as long as doing so

If the marginal revenue product of the fifth worker is $15, the price of the last unit of output produced is $5, and the firm sells as a price searcher, then the marginal product of the fifth worker is

For a firm in a perfectly competitive product market, the marginal resource cost curve is horizontal if the resource market is also competitive.

Exhibit 11-4 In Exhibit 11-4, economic rent in equilibrium equals

Exhibit 11-10 In Exhibit 11-10, if the wage were $84, how many workers would the firm hire?

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 reflect partly opportunity cost and partly economic rent?

Which of the following is an example of a temporary price differential in a resource market?

If a firm is using a resource hired in a perfectly competitive market, and if the price of the resource exceeds the marginal revenue product of the resource,

The 2007 minimum wage law covered nearly __________ percent of the workforce.

If ZipCo's marginal revenue product curves slope downward, what can we conclude about the structure of the market in which ZipCo sells its product?

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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