Question 1

If a resource is purchased and sold in a perfectly competitive market:

Accepted Answer

A) there are a large number of resource suppliers and the resources are identical. 
B) there is a single buyer of resource and the resources are identical. 
C) there is a single buyer of resource and the resources are differentiated. 
D) there is a large number of resource suppliers and the resources are differentiated. 
E) there are a large number of resource suppliers and there is no entry or exit. 
A) there are a large number of resource suppliers and the resources are identical. 
B) there is a single buyer of resource and the resources are identical. 
C) there is a single buyer of resource and the resources are differentiated. 
D) there is a large number of resource suppliers and the resources are differentiated. 
E) there are a large number of resource suppliers and there is no entry or exit.

Question 2

A monopolist hiring labor in a perfectly competitive resource market is faced with a:

Accepted Answer

A) perfectly elastic demand curve for labor. 
B) horizontal marginal factor cost curve. 
C) perfectly inelastic demand curve for labor. 
D) perfectly inelastic supply curve of labor. 
E) positively sloped marginal factor cost curve. 
A) perfectly elastic demand curve for labor. 
B) horizontal marginal factor cost curve. 
C) perfectly inelastic demand curve for labor. 
D) perfectly inelastic supply curve of labor. 
E) positively sloped marginal factor cost curve.

Question 3

Goods which are demanded to produce something else are said to have a(n):

Accepted Answer

A) direct demand. 
B) composite demand. 
C) derived demand. 
D) joint demand. 
E) inelastic demand. 
A) direct demand. 
B) composite demand. 
C) derived demand. 
D) joint demand. 
E) inelastic demand.

Question 4

The following table shows the marginal productivity of different units of labor for producing a product. Table 14.4
  In the table,
MR: Marginal Revenue
MPP: Marginal Physical Product
In Table 14.4, if marginal revenue product is equal to the product of MPP and MR, what wage rate would be consistent with a profit-maximizing firm hiring six laborers?

Accepted Answer

A) $6 
B) $10 
C) $12 
D) $18 
E) $24 
A) $6 
B) $10 
C) $12 
D) $18 
E) $24

Question 5

The following table shows the marginal productivity of different units of labor for producing a product. Table 14.4
  In the table,
MR: Marginal Revenue
MPP: Marginal Physical Product
According to Table 14.4, how many laborers should be hired if the wage rate is $18? (Marginal revenue product = MPP ´ MR)

Accepted Answer

A) 2 
B) 3 
C) 4 
D) 5 
E) 6 
A) 2 
B) 3 
C) 4 
D) 5 
E) 6

Question 6

The following table shows output per hour produced by the different units of labor. Table 14.1
  The marginal revenue product of a resource is equal to the product of the marginal product of an input and marginal revenue.
According to Table 14.1, the marginal-revenue product of the:

Accepted Answer

A) fourth worker is $8. 
B) fifth worker is $3. 
C) first worker is $3. 
D) third worker is $5. 
E) second worker is $12. 
A) fourth worker is $8. 
B) fifth worker is $3. 
C) first worker is $3. 
D) third worker is $5. 
E) second worker is $12.

Question 7

The figure given below represents equilibrium in the labor market. Figure 14.5   In the figure,
VMP: Value of marginal product curve
MRP: Marginal revenue product curve
MFC: Marginal factor cost
S: Supply curve of labor
In Figure 14.5, the firm is:

Accepted Answer

A) a monopsonist in the labor market and a perfect competitor in the output market. 
B) a monopsonist in the labor market and a monopolist in the output market. 
C) a perfect competitor in all markets. 
D) a perfect competitor in the labor market and a monopolist in the output market. 
E) either a monopolist or a monopsonist, but not both. 
A) a monopsonist in the labor market and a perfect competitor in the output market. 
B) a monopsonist in the labor market and a monopolist in the output market. 
C) a perfect competitor in all markets. 
D) a perfect competitor in the labor market and a monopolist in the output market. 
E) either a monopolist or a monopsonist, but not both.

Question 8

A general study of resource markets shows that the roles of firms and households are:

Accepted Answer

A) reversed from what they are in the product markets. 
B) the same as what they are in the product markets. 
C) different from what they are in the product markets because households are residual claimants. 
D) different from what they are in the product markets because firms are residual claimants. 
E) different from what they are in the product markets because the laws of demand and supply do not work for the resource markets. 
A) reversed from what they are in the product markets. 
B) the same as what they are in the product markets. 
C) different from what they are in the product markets because households are residual claimants. 
D) different from what they are in the product markets because firms are residual claimants. 
E) different from what they are in the product markets because the laws of demand and supply do not work for the resource markets.

Question 9

A monopsonist firm pays a price to a factor that is:

Accepted Answer

A) equal to the marginal revenue product of the factor. 
B) greater than the marginal revenue product of the factor. 
C) equal to the marginal factor cost. 
D) greater than the marginal factor cost. 
E) less than the marginal revenue product of the factor. 
A) equal to the marginal revenue product of the factor. 
B) greater than the marginal revenue product of the factor. 
C) equal to the marginal factor cost. 
D) greater than the marginal factor cost. 
E) less than the marginal revenue product of the factor.

Question 10

If a resource can be put to a single use and has no alternative uses then:

Accepted Answer

A) economic rents are zero. 
B) transfer earnings are maximized. 
C) total earnings are zero. 
D) all earnings are economic rents. 
E) all earnings are transfer earnings. 
A) economic rents are zero. 
B) transfer earnings are maximized. 
C) total earnings are zero. 
D) all earnings are economic rents. 
E) all earnings are transfer earnings.

Question 11

The following table shows total output produced by different units of capital. Table 14.3
  The marginal revenue product of a resource is the product of the marginal product of the resource and the marginal revenue.
In Table 14.3, how many units of capital will the firm hire if the price per unit of capital is $60?

Accepted Answer

A) 1 unit of capital. 
B) 2 units of capital. 
C) 3 units of capital. 
D) 4 units of capital. 
E) 5 units of capital. 
A) 1 unit of capital. 
B) 2 units of capital. 
C) 3 units of capital. 
D) 4 units of capital. 
E) 5 units of capital.

Question 12

The following table shows the total output produced by different units of a resource.Assume that the resource and output markets are both perfectly competitive.The equilibrium price of the resource is $15.00, and the equilibrium price of the product is $0.50. Table 14.2
  Marginal revenue product (MRP)of a resource is the product of the marginal product of the resource and the marginal revenue.
Refer to Table 14.2.How many units of the resource will a profit-maximizing firm hire?

Accepted Answer

A) Two labor hours 
B) Between two and three labor hours 
C) Between three and four labor hours 
D) More than four labor hours 
E) Three labor hours 
A) Two labor hours 
B) Between two and three labor hours 
C) Between three and four labor hours 
D) More than four labor hours 
E) Three labor hours

Question 13

The demand curve for labor indicates that:

Accepted Answer

A) as the real wage rate increases, employers will hire more workers. 
B) as the nominal wage rate increases, employers will hire more workers. 
C) as the nominal wage rate decreases, the real wage rate increases. 
D) as the real wage rate increases, employers will hire fewer workers. 
E) the real wage rate does not affect firms' hiring decisions. 
A) as the real wage rate increases, employers will hire more workers. 
B) as the nominal wage rate increases, employers will hire more workers. 
C) as the nominal wage rate decreases, the real wage rate increases. 
D) as the real wage rate increases, employers will hire fewer workers. 
E) the real wage rate does not affect firms' hiring decisions.

Question 14

Burger King has a direct demand for the cheese which it uses in its burgers.

Accepted Answer

A) True 
 B)False

Question 15

The following table shows the total output produced by different units of a resource.Assume that the resource and output markets are both perfectly competitive.The equilibrium price of the resource is $15.00, and the equilibrium price of the product is $0.50. Table 14.2
  Marginal revenue product (MRP)of a resource is the product of the marginal product of the resource and the marginal revenue.
Refer to Table 14.2.What is the marginal-revenue product of the third unit of the resource?

Accepted Answer

A) $6.50 
B) $13.00 
C) $17.50 
D) $70.00 
E) $20.00 
A) $6.50 
B) $13.00 
C) $17.50 
D) $70.00 
E) $20.00

Question 16

If there is imperfect competition in the product market, the marginal revenue product of a factor will be greater than the value of its marginal product.

Accepted Answer

A) True 
 B)False

Question 17

If an individual thinks about how he purchase goods and services, he will realize that he allocates his expenditures so that the pleasure he gets out of spending one more dollar is the same no matter what he spends that dollar on.For a firm purchasing resources, this is the same as ensuring that:

Accepted Answer

A) the ratio between marginal revenue product and the marginal factor cost is equal for all the resources used. 
B) the marginal revenue product of the resources are equal. 
C) the marginal factor cost of the resources are equal. 
D) the ratio between marginal revenue product and the marginal factor cost is greater than one for all resources. 
E) the marginal revenue product is greater than the marginal factor cost of all resources. 
A) the ratio between marginal revenue product and the marginal factor cost is equal for all the resources used. 
B) the marginal revenue product of the resources are equal. 
C) the marginal factor cost of the resources are equal. 
D) the ratio between marginal revenue product and the marginal factor cost is greater than one for all resources. 
E) the marginal revenue product is greater than the marginal factor cost of all resources.

Question 18

The buyers and sellers in a resource market are:

Accepted Answer

A) household and firms respectively. 
B) banks and farmers respectively. 
C) households and land owners respectively. 
D) firms and household respectively. 
E) exporters and importers respectively. 
A) household and firms respectively. 
B) banks and farmers respectively. 
C) households and land owners respectively. 
D) firms and household respectively. 
E) exporters and importers respectively.

Question 19

The resource market is the same as the product market except that, in the resource market:

Accepted Answer

A) the demand curve slopes upward. 
B) the households are the sellers and the firms are the buyers. 
C) there is no substitution effect. 
D) the supply curve is perfectly inelastic. 
E) there is no income effect. 
A) the demand curve slopes upward. 
B) the households are the sellers and the firms are the buyers. 
C) there is no substitution effect. 
D) the supply curve is perfectly inelastic. 
E) there is no income effect.

Question 20

Consider a perfectly competitive firm that produces computers.Each additional worker at this firm can produce four computers.Calculate the marginal factor cost if the computers are sold for $1, 000 each, and the firm is maximizing profit.(Assume that marginal revenue product is the product of marginal product of the input and the marginal revenue of the firm. )

Accepted Answer

A) $4, 000. 
B) $500 
C) $1, 000 
D) $1, 500 
E) $400 
A) $4, 000. 
B) $500 
C) $1, 000 
D) $1, 500 
E) $400

Exam 24: Resource Markets

If a resource is purchased and sold in a perfectly competitive market:

A monopolist hiring labor in a perfectly competitive resource market is faced with a:

Goods which are demanded to produce something else are said to have a(n):

The following table shows output per hour produced by the different units of labor. Table 14.1 The marginal revenue product of a resource is equal to the product of the marginal product of an input and marginal revenue. According to Table 14.1, the marginal-revenue product of the:

The figure given below represents equilibrium in the labor market. Figure 14.5 In the figure, VMP: Value of marginal product curve MRP: Marginal revenue product curve MFC: Marginal factor cost S: Supply curve of labor In Figure 14.5, the firm is:

A general study of resource markets shows that the roles of firms and households are:

A monopsonist firm pays a price to a factor that is:

If a resource can be put to a single use and has no alternative uses then:

The demand curve for labor indicates that:

Burger King has a direct demand for the cheese which it uses in its burgers.

If there is imperfect competition in the product market, the marginal revenue product of a factor will be greater than the value of its marginal product.

If an individual thinks about how he purchase goods and services, he will realize that he allocates his expenditures so that the pleasure he gets out of spending one more dollar is the same no matter what he spends that dollar on.For a firm purchasing resources, this is the same as ensuring that:

The buyers and sellers in a resource market are:

The resource market is the same as the product market except that, in the resource market:

Economics: The World Around You

Choice, Opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

National Income Accounting

an Introduction to the Foreign Exchange Market and the Balance of Payments

Consumer Choice

Supply: The Costs of Doing Business

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Profit Maximization

Aggregate Expenditures

Perfect Competition

Income and Expenditures Equilibrium

Monopoly

Fiscal Policy

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Money and Banking

Market Failures, Government Failures, and Rent Seeking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

The Labor Market

Capital Markets

Economic Growth

Development Economics

the Land Market and Natural Resources

Aging, Social Security and Health Care

Globalization

Elasticity: Demand and Supply

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

Consumer Choice

International Trade Restrictions

World Trade Equilibrium

Exchange Rates and Financial Links Between Countries

International Trade Restrictions

Supply: the Costs of Doing Business

Exchange Rates and Financial Links Between Countries

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

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The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

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