Question 1

Along the supply curve of lifeguards at local public pools,

Accepted Answer

A) the wage paid to lifeguards is held constant 
B) the number of lifeguards is held constant 
C) the wage paid to lifeguards at private clubs is held constant 
D) the demand for lifeguards is assumed constant 
E) the admission price to these public pools rises as the wage rate for lifeguards increases 
A) the wage paid to lifeguards is held constant 
B) the number of lifeguards is held constant 
C) the wage paid to lifeguards at private clubs is held constant 
D) the demand for lifeguards is assumed constant 
E) the admission price to these public pools rises as the wage rate for lifeguards increases

Question 2

Exhibit 11-4   In Exhibit 11-4, the equilibrium price of the resource is

Accepted Answer

A) $16 
B) $12 
C) $10 
D) less than $10 
E) unable to tell from the information given 
A) $16 
B) $12 
C) $10 
D) less than $10 
E) unable to tell from the information given

Question 3

Marginal revenue product is obtained by multiplying the price of the product by the marginal resource cost.

Accepted Answer

A) True 
 B)False

Question 4

We see permanent price differentials in land because

Accepted Answer

A) the demand for land is high 
B) land has few uses 
C) location is the inherent quality that often determines its value 
D) real estate brokers are inefficient 
E) land is not traded in free markets 
A) the demand for land is high 
B) land has few uses 
C) location is the inherent quality that often determines its value 
D) real estate brokers are inefficient 
E) land is not traded in free markets

Question 5

If 14 workers produce a total of 25 cabinets and 15 workers produce a total of 30 cabinets,

Accepted Answer

A) the marginal product of the fifteenth worker is 2 cabinets 
B) the marginal product of the fifteenth worker is 5 cabinets 
C) the marginal product of the fifteenth worker is 30 cabinets 
D) the marginal product of the fifteenth worker is $5 
E) diminishing returns begins with the fifteenth worker 
A) the marginal product of the fifteenth worker is 2 cabinets 
B) the marginal product of the fifteenth worker is 5 cabinets 
C) the marginal product of the fifteenth worker is 30 cabinets 
D) the marginal product of the fifteenth worker is $5 
E) diminishing returns begins with the fifteenth worker

Question 6

Exhibit 11-3   In Exhibit 11-3, economic rent at equilibrium equals

Accepted Answer

A) $40 
B) $60 
C) $10 
D) $700 
E) $300 
A) $40 
B) $60 
C) $10 
D) $700 
E) $300

Question 7

Under certain conditions, the slope of the marginal revenue product curve reflects the combined effects of diminishing marginal returns and a declining price of the product the firm sells.What are these conditions?

Accepted Answer

A) The firm must be a price searcher in both the product market and the resource market. 
B) The firm must be a price searcher in the product market, regardless of whether it is a resource price searcher. 
C) The firm must be a price searcher in the product market but not necessarily in a perfectly competitive resource market. 
D) The firm must be a price searcher in a perfectly competitive product market. 
E) The firm must operate in a decreasing-cost industry. 
A) The firm must be a price searcher in both the product market and the resource market. 
B) The firm must be a price searcher in the product market, regardless of whether it is a resource price searcher. 
C) The firm must be a price searcher in the product market but not necessarily in a perfectly competitive resource market. 
D) The firm must be a price searcher in a perfectly competitive product market. 
E) The firm must operate in a decreasing-cost industry.

Question 8

Suppose a firm is a price searcher in the product market and hires labor in a perfectly competitive labor market.The firm hires four workers, the marginal product of the fourth worker is 4, and the wage rate is $40.The firm produces 100 units of the product, which sell for a price of $10 each.This firm is

Accepted Answer

A) maximizing profit when it hires four workers 
B) not maximizing profit and should hire more workers to increase profit 
C) not maximizing profit and should hire fewer workers to increase profit 
D) maximizing profit when it produces 100 units of the product 
E) not maximizing profit when it produces 100 units of the product and should increase production to increase profit 
A) maximizing profit when it hires four workers 
B) not maximizing profit and should hire more workers to increase profit 
C) not maximizing profit and should hire fewer workers to increase profit 
D) maximizing profit when it produces 100 units of the product 
E) not maximizing profit when it produces 100 units of the product and should increase production to increase profit

Question 9

Exhibit 11-5   In Exhibit 11-5, what is the equilibrium price for the resource?

Accepted Answer

A) $16 
B) $12 
C) $10 
D) less than $10 
E) unable to determine from information given 
A) $16 
B) $12 
C) $10 
D) less than $10 
E) unable to determine from information given

Question 10

Which of the following represents the resource supply curve faced by a firm that hires resources in a perfectly competitive resource market?

Accepted Answer

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

Question 11

Exhibit 11-3   In Exhibit 11-3, the 100th unit of the resource is earning a resource price of

Accepted Answer

A) $10, all of which is economic rent 
B) $10, none of which is economic rent 
C) $4, all of which is economic rent 
D) $4, none of which is economic rent 
E) $10, some of which is economic rent 
A) $10, all of which is economic rent 
B) $10, none of which is economic rent 
C) $4, all of which is economic rent 
D) $4, none of which is economic rent 
E) $10, some of which is economic rent

Question 12

If a publishing company purchases faster computers to speed up word processing,

Accepted Answer

A) the marginal product of its editors will increase, which will shift the demand for editors to the right 
B) the marginal product of its editors will increase, which will shift the demand for editors to the left 
C) the wages of its editors will increase, which will shift the demand for editors to the right 
D) the wages of its editors will decrease, which will shift the demand for editors to the right 
E) the supply of editors will decrease 
A) the marginal product of its editors will increase, which will shift the demand for editors to the right 
B) the marginal product of its editors will increase, which will shift the demand for editors to the left 
C) the wages of its editors will increase, which will shift the demand for editors to the right 
D) the wages of its editors will decrease, which will shift the demand for editors to the right 
E) the supply of editors will decrease

Question 13

Exhibit 11-1   Condider Exibit 11-1.Each of the panels depict the supply and demand conditions in a resource market.In panel (b)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 14

The formula for optimal employment of two resources, x and y, is

Accepted Answer

A) MPx - MPy 
B) MRPx = MRPy 
C) MPx ´ Px = MPy ´ Py 
D) MRCx = MRCy 
E) MRPx/MRCx = MRPy/MRCy = 1 
A) MPx - MPy 
B) MRPx = MRPy 
C) MPx ´ Px = MPy ´ Py 
D) MRCx = MRCy 
E) MRPx/MRCx = MRPy/MRCy = 1

Question 15

Exhibit 11-2   In Exhibit 11-2, total earnings at equilibrium are 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 16

Economic rent represents

Accepted Answer

A) a loss to society since resource owners do not earn it 
B) the difference between marginal revenue product and marginal resource cost 
C) a loss to resource owners who earn less than the market value of the resource 
D) any resource earnings less than that resource's opportunity cost 
E) any resource earnings greater than that resource's opportunity cost 
A) a loss to society since resource owners do not earn it 
B) the difference between marginal revenue product and marginal resource cost 
C) a loss to resource owners who earn less than the market value of the resource 
D) any resource earnings less than that resource's opportunity cost 
E) any resource earnings greater than that resource's opportunity cost

Question 17

As resources move from low-valued uses in a resource market to highly-valued uses in another resource market, the price paid to the resource in the highly-valued market will

Accepted Answer

A) not be affected, if the change is temporary 
B) increase, if the change is temporary 
C) remain the same 
D) decrease 
E) increase, if the change is permanent 
A) not be affected, if the change is temporary 
B) increase, if the change is temporary 
C) remain the same 
D) decrease 
E) increase, if the change is permanent

Question 18

As the price of a resource (e.g., labor)decreases,

Accepted Answer

A) demand for that resource increases 
B) the quantity demanded of that resource decreases 
C) the supply of that resource increases 
D) producers are more willing and able to hire that resource 
E) producers are less willing and able to hire that resource 
A) demand for that resource increases 
B) the quantity demanded of that resource decreases 
C) the supply of that resource increases 
D) producers are more willing and able to hire that resource 
E) producers are less willing and able to hire that resource

Question 19

In the resource market, firms demand resources in order to

Accepted Answer

A) maximize profit 
B) maximize total revenue 
C) maximize marginal revenue 
D) maximize utility 
E) minimize cost 
A) maximize profit 
B) maximize total revenue 
C) maximize marginal revenue 
D) maximize utility 
E) minimize cost

Question 20

Marginal resource cost is the

Accepted Answer

A) cost of hiring another unit of a resource 
B) additional revenue generated by hiring one more unit of a resource 
C) additional output generated by hiring one more unit of a resource 
D) total cost of hiring a resource 
E) average cost of hiring a resource 
A) cost of hiring another unit of a resource 
B) additional revenue generated by hiring one more unit of a resource 
C) additional output generated by hiring one more unit of a resource 
D) total cost of hiring a resource 
E) average cost of hiring a resource

Exam 11: Resource Markets

Along the supply curve of lifeguards at local public pools,

Exhibit 11-4 In Exhibit 11-4, the equilibrium price of the resource is

Marginal revenue product is obtained by multiplying the price of the product by the marginal resource cost.

We see permanent price differentials in land because

If 14 workers produce a total of 25 cabinets and 15 workers produce a total of 30 cabinets,

Exhibit 11-3 In Exhibit 11-3, economic rent at equilibrium equals

Under certain conditions, the slope of the marginal revenue product curve reflects the combined effects of diminishing marginal returns and a declining price of the product the firm sells.What are these conditions?

Exhibit 11-5 In Exhibit 11-5, what is the equilibrium price for the resource?

Which of the following represents the resource supply curve faced by a firm that hires resources in a perfectly competitive resource market?

Exhibit 11-3 In Exhibit 11-3, the 100th unit of the resource is earning a resource price of

If a publishing company purchases faster computers to speed up word processing,

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

The formula for optimal employment of two resources, x and y, is

Exhibit 11-2 In Exhibit 11-2, total earnings at equilibrium are represented by area

Economic rent represents

As resources move from low-valued uses in a resource market to highly-valued uses in another resource market, the price paid to the resource in the highly-valued market will

As the price of a resource (e.g., labor)decreases,

In the resource market, firms demand resources in order to

Marginal resource cost is the

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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