Question 1

Firms that face downward-sloping demand curves for their output are called

Accepted Answer

A) perfectly competitive 
B) price takers 
C) price searchers 
D) resource price takers 
E) resource price searchers 
A) perfectly competitive 
B) price takers 
C) price searchers 
D) resource price takers 
E) resource price searchers

Question 2

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

Accepted Answer

A) $3 
B) 5 
C) 15 
D) 3 
E) 2 
A) $3 
B) 5 
C) 15 
D) 3 
E) 2

Question 3

Consider two resource markets in which the demand curves slope downward.In market A, the supply curve is horizontal, equilibrium price is $6, and 100 units of the resource are hired.In market B, the supply curve is vertical, equilibrium price is $20, and 30 units of the resource are hired.Which of the following is true?

Accepted Answer

A) All of the resource earnings in market A are economic rent. 
B) All of the resource earnings in both markets are economic rent. 
C) All of the resource earnings in market B are economic rent. 
D) None of the resource earnings in either market is an opportunity cost. 
E) None of the resource earnings in either market is economic rent. 
A) All of the resource earnings in market A are economic rent. 
B) All of the resource earnings in both markets are economic rent. 
C) All of the resource earnings in market B are economic rent. 
D) None of the resource earnings in either market is an opportunity cost. 
E) None of the resource earnings in either market is economic rent.

Question 4

The market supply curve of capital is

Accepted Answer

A) upward sloping 
B) perfectly inelastic 
C) upward sloping at first but then bends backward 
D) downward sloping 
E) perfectly elastic 
A) upward sloping 
B) perfectly inelastic 
C) upward sloping at first but then bends backward 
D) downward sloping 
E) perfectly elastic

Question 5

Consider two resource markets in which the demand curves slope downward.In market A, the supply curve is horizontal, equilibrium price is $6, and 100 units of the resource are hired.In market B, the supply curve is vertical, equilibrium price is $20, and 30 units of the resource are hired.Which of the following is true?

Accepted Answer

A) All of the resource earnings in market A are opportunity costs. 
B) All of the resource earnings in both markets are opportunity costs. 
C) All of the resource earnings in market B are opportunity costs. 
D) None of the resource earnings in either market is an opportunity cost. 
E) None of the resource earnings in either market is economic rent. 
A) All of the resource earnings in market A are opportunity costs. 
B) All of the resource earnings in both markets are opportunity costs. 
C) All of the resource earnings in market B are opportunity costs. 
D) None of the resource earnings in either market is an opportunity cost. 
E) None of the resource earnings in either market is economic rent.

Question 6

The change in total cost of production that results from a change in the amount of a 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 7

The minimum wage

Accepted Answer

A) is an example of a government-created barrier to entry 
B) was designed as a way to increase employment of low-skilled workers 
C) is an attempt to raise the incomes of low-income workers 
D) is an example of a price ceiling 
E) is an example of a derived demand 
A) is an example of a government-created barrier to entry 
B) was designed as a way to increase employment of low-skilled workers 
C) is an attempt to raise the incomes of low-income workers 
D) is an example of a price ceiling 
E) is an example of a derived demand

Question 8

Exhibit 11-9   In Exhibit 11-9, how low would the wage rate have to fall before firms would hire nine workers?

Accepted Answer

A) $4 
B) $14 
C) $28 
D) $198 
E) $396 
A) $4 
B) $14 
C) $28 
D) $198 
E) $396

Question 9

As the price paid to a resource increases,

Accepted Answer

A) the supply of that resource will increase in the resource market 
B) the supply of that resource will decrease in the resource market 
C) resources will shift from other resource markets to this one 
D) resources will shift from this resource market to others 
E) resource usage will be unaffected 
A) the supply of that resource will increase in the resource market 
B) the supply of that resource will decrease in the resource market 
C) resources will shift from other resource markets to this one 
D) resources will shift from this resource market to others 
E) resource usage will be unaffected

Question 10

A guarded barbed wire fence separates East and West Bovinia.Soccer players are paid twice as much in West Bovinia as in East Bovinia.This is an example of

Accepted Answer

A) inelastic supply 
B) a temporary resource price differential 
C) a permanent resource price differential 
D) diminishing marginal revenue product 
E) economic rent 
A) inelastic supply 
B) a temporary resource price differential 
C) a permanent resource price differential 
D) diminishing marginal revenue product 
E) economic rent

Question 11

If all of the returns to a resource are in the form of economic rent,

Accepted Answer

A) the demand curve for that resource must be horizontal 
B) the demand curve for that resource must be vertical 
C) the supply curve of that resource must be horizontal 
D) the supply curve of that resource must be vertical 
E) the demand curve for that resource must be perfectly elastic 
A) the demand curve for that resource must be horizontal 
B) the demand curve for that resource must be vertical 
C) the supply curve of that resource must be horizontal 
D) the supply curve of that resource must be vertical 
E) the demand curve for that resource must be perfectly elastic

Question 12

Exhibit 11-4   In Exhibit 11-4, the equilibrium quantity of the resource exchanged is

Accepted Answer

A) more than 100 units 
B) 100 units 
C) 60 units 
D) less than 60 units 
E) unable to tell from the information given 
A) more than 100 units 
B) 100 units 
C) 60 units 
D) less than 60 units 
E) unable to tell from the information given

Question 13

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

Accepted Answer

A) $98 
B) $14 
C) $7 
D) $2 
E) $21 
A) $98 
B) $14 
C) $7 
D) $2 
E) $21

Question 14

Exhibit 11-5   In Exhibit 11-5, economic rent 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 15

Marginal revenue product is defined as the

Accepted Answer

A) change in total output that results from the employment of an additional unit of a resource 
B) change in total product that results from the employment of an additional unit of a resource 
C) change in total revenue that results from the employment of an additional unit of a resource 
D) change in resource employment that results from a change in total output 
E) change in marginal revenue that results from a change in the employment of an additional unit of a resource 
A) change in total output that results from the employment of an additional unit of a resource 
B) change in total product that results from the employment of an additional unit of a resource 
C) change in total revenue that results from the employment of an additional unit of a resource 
D) change in resource employment that results from a change in total output 
E) change in marginal revenue that results from a change in the employment of an additional unit of a resource

Question 16

Resource price differentials that trigger the reallocation of resources so as to equalize payments for similar resources are known as

Accepted Answer

A) permanent differentials 
B) trigger price differentials 
C) reallocation differentials 
D) equal differentials 
E) temporary differentials 
A) permanent differentials 
B) trigger price differentials 
C) reallocation differentials 
D) equal differentials 
E) temporary differentials

Question 17

Exhibit 11-1   Condider Exibit 11-1.Each of the panels depict the supply and demand conditions in a resource market.In panel (a)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 18

The price paid to a resource in totally fixed supply is called

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 19

Exhibit 11-5   In Exhibit 11-5, 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 20

The more elastic the supply of a resource,

Accepted Answer

A) the greater is economic rent as a proportion of total earnings 
B) the greater is opportunity cost as a proportion of total earnings 
C) the fewer alternative uses the resource has 
D) the greater the derived demand for the resource 
E) the lower the derived demand for the resource 
A) the greater is economic rent as a proportion of total earnings 
B) the greater is opportunity cost as a proportion of total earnings 
C) the fewer alternative uses the resource has 
D) the greater the derived demand for the resource 
E) the lower the derived demand for the resource

Exam 11: Resource Markets

Firms that face downward-sloping demand curves for their output are called

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

The market supply curve of capital is

The change in total cost of production that results from a change in the amount of a resource used is

The minimum wage

Exhibit 11-9 In Exhibit 11-9, how low would the wage rate have to fall before firms would hire nine workers?

As the price paid to a resource increases,

A guarded barbed wire fence separates East and West Bovinia.Soccer players are paid twice as much in West Bovinia as in East Bovinia.This is an example of

If all of the returns to a resource are in the form of economic rent,

Exhibit 11-4 In Exhibit 11-4, the equilibrium quantity of the resource exchanged is

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

Exhibit 11-5 In Exhibit 11-5, economic rent in equilibrium equals

Marginal revenue product is defined as the

Resource price differentials that trigger the reallocation of resources so as to equalize payments for similar resources are known as

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

The price paid to a resource in totally fixed supply is called

Exhibit 11-5 In Exhibit 11-5, total resource earnings in equilibrium equal

The more elastic the supply of a resource,

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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