Question 1

The resource market comprises of the households and firms where the firms sell their resources to the households.

Accepted Answer

A) True 
 B)False

Question 2

In a perfectly competitive labor market, a profit-maximizing firm that is also perfectly competitive in the product market will:

Accepted Answer

A) face a perfectly inelastic supply curve of labor. 
B) pay a wage that is equal to the price of the product. 
C) pay a wage that is equal to the marginal product of labor. 
D) hire more units of labor than would a firm that sells its output in a monopoly market. 
E) pay a wage equal to the marginal-factor cost. 
A) face a perfectly inelastic supply curve of labor. 
B) pay a wage that is equal to the price of the product. 
C) pay a wage that is equal to the marginal product of labor. 
D) hire more units of labor than would a firm that sells its output in a monopoly market. 
E) pay a wage equal to the marginal-factor cost.

Question 3

The negative slope of the demand curve of a resource indicates an inverse relationship between the price of the resource and the quantity demanded.

Accepted Answer

A) True 
 B)False

Question 4

Consider a perfectly competitive firm that can raise its output by 2 units by hiring an additional unit of capital.If the cost of hiring this additional unit of capital is $4 and the market price of the good is $1, the firm will certainly hire this unit of capital.[Hint: MRP = MP ´ MR]

Accepted Answer

A) True 
 B)False

Question 5

The price of a resource declines when:

Accepted Answer

A) both the demand for and the supply of the resource declines in the same proportion. 
B) demand remaining constant, supply of the resource declines. 
C) supply remaining constant, the demand for the resource declines. 
D) both the demand for and the supply of the resource increases in the same proportion. 
E) both the demand for and the supply of the resource declines, but supply falls by a greater proportion than demand. 
A) both the demand for and the supply of the resource declines in the same proportion. 
B) demand remaining constant, supply of the resource declines. 
C) supply remaining constant, the demand for the resource declines. 
D) both the demand for and the supply of the resource increases in the same proportion. 
E) both the demand for and the supply of the resource declines, but supply falls by a greater proportion than demand.

Question 6

The following figure represents the equilibrium in the labor markets. Figure 14.4   In the figure,
MFC: Marginal Factor Cost curve
D: Demand or the Marginal Revenue Product curve
S: Supply curve
Refer to Figure 14.4.A competitive labor market will pay the wage rate _____ and hire _____ units of labor.

Accepted Answer

A) W1;Q1 
B) W1;Q2 
C) W2;Q2 
D) W1;Q3 
E) W3;Q1 
A) W1;Q1 
B) W1;Q2 
C) W2;Q2 
D) W1;Q3 
E) W3;Q1

Question 7

The value of the marginal product of a resource is equal to:

Accepted Answer

A) the marginal revenue of the firm, if the product market is perfectly competitive. 
B) the market price of the product divided by the price of the resource. 
C) the market price of the product divided by the marginal product of the resource. 
D) the marginal revenue product of the resource, if the product market is perfectly competitive. 
E) the marginal product of the resource divided by the price of the resource. 
A) the marginal revenue of the firm, if the product market is perfectly competitive. 
B) the market price of the product divided by the price of the resource. 
C) the market price of the product divided by the marginal product of the resource. 
D) the marginal revenue product of the resource, if the product market is perfectly competitive. 
E) the marginal product of the resource divided by the price of the resource.

Question 8

Assume that labor is the only variable input and that an additional input of labor increases total output from 72 to 78 units.If the product sells for $6 per unit in a perfectly competitive market, then the MRPof this additional worker is:

Accepted Answer

A) $78 
B) $72 
C) $36 
D) $39 
E) $6 
A) $78 
B) $72 
C) $36 
D) $39 
E) $6

Question 9

If the resource market is perfectly competitive, the marginal factor cost is equal to the price of the resource.

Accepted Answer

A) True 
 B)False

Question 10

Firms are consumers and households are the producers in the _____.

Accepted Answer

A) stock market 
B) bond market 
C) labor market 
D) product market 
E) underground market 
A) stock market 
B) bond market 
C) labor market 
D) product market 
E) underground market

Question 11

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
Refer to Figure 14.5.What wage rate will this firm pay?

Accepted Answer

A) W1 
B) W2 
C) W3 
D) W4 
E) W5 
A) W1 
B) W2 
C) W3 
D) W4 
E) W5

Question 12

Because of their derived nature, resource markets are completely different from any other type of market studied by economists.

Accepted Answer

A) True 
 B)False

Exam 24: Resource Markets

The resource market comprises of the households and firms where the firms sell their resources to the households.

In a perfectly competitive labor market, a profit-maximizing firm that is also perfectly competitive in the product market will:

The negative slope of the demand curve of a resource indicates an inverse relationship between the price of the resource and the quantity demanded.

Consider a perfectly competitive firm that can raise its output by 2 units by hiring an additional unit of capital.If the cost of hiring this additional unit of capital is $4 and the market price of the good is $1, the firm will certainly hire this unit of capital.[Hint: MRP = MP ´ MR]

The price of a resource declines when:

The value of the marginal product of a resource is equal to:

Assume that labor is the only variable input and that an additional input of labor increases total output from 72 to 78 units.If the product sells for $6 per unit in a perfectly competitive market, then the MRPof this additional worker is:

If the resource market is perfectly competitive, the marginal factor cost is equal to the price of the resource.

Firms are consumers and households are the producers in 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 Refer to Figure 14.5.What wage rate will this firm pay?

Because of their derived nature, resource markets are completely different from any other type of market studied by economists.

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

Capital Markets

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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