Question 1

How does a firm's demand for labor change if the price of the firm's product increases? Relate your answer to the value of marginal product.

Accepted Answer

An increase in the price of the firm's p

Question 2

If the quantity of capital supplied exceeds the quantity of capital demanded,what takes place?

Accepted Answer

If the quantity of capital supplied exce

Question 3

What is the Hotelling Principle? Have resource prices behaved as the principle predicts?

Accepted Answer

The Hotelling Principle states that the

Question 4

A firm's demand for labor curve is also

Accepted Answer

A)  its value of marginal product of labor curve. 
B)  the demand curve for the good it produces. 
C)  the supply of labor curve. 
D)  its marginal cost curve. 
E)  the supply curve for the good it produces. 
A)  its value of marginal product of labor curve. 
B)  the demand curve for the good it produces. 
C)  the supply of labor curve. 
D)  its marginal cost curve. 
E)  the supply curve for the good it produces.

Question 5

The rule for maximizing profit is to hire labor up to the point at which the value of marginal product

Accepted Answer

A)  equals the wage rate. 
B)  is greater than the wage rate. 
C)  is less than the wage rate. 
D)  is a mirror image of the wage rate. 
E)  equals the price of the product produced. 
A)  equals the wage rate. 
B)  is greater than the wage rate. 
C)  is less than the wage rate. 
D)  is a mirror image of the wage rate. 
E)  equals the price of the product produced.

Question 6

If we compare the value of marginal product of labor curve and the demand for labor curve we see that

Accepted Answer

A)  they are the same thing. 
B)  the value of marginal product curve is twice as steep. 
C)  the demand for labor curve has no relationship to the value of marginal product curve. 
D)  the demand for labor curve is twice as steep but they share the same axes. 
E)  the demand for labor curve lies above the value of marginal product curve. 
A)  they are the same thing. 
B)  the value of marginal product curve is twice as steep. 
C)  the demand for labor curve has no relationship to the value of marginal product curve. 
D)  the demand for labor curve is twice as steep but they share the same axes. 
E)  the demand for labor curve lies above the value of marginal product curve.

Question 7

The aggregate quantity of land supplied

Accepted Answer

A)  varies depending on its price. 
B)  depends on the buying and selling decisions of individuals. 
C)  is constantly increasing. 
D)  is fixed. 
E)  is perfectly elastic. 
A)  varies depending on its price. 
B)  depends on the buying and selling decisions of individuals. 
C)  is constantly increasing. 
D)  is fixed. 
E)  is perfectly elastic.

Question 8

The wage paid to labor is

Accepted Answer

A)  a factor output. 
B)  a factor price. 
C)  a factor input. 
D)  an input of the workforce. 
E)  part of the firm's normal profit. 
A)  a factor output. 
B)  a factor price. 
C)  a factor input. 
D)  an input of the workforce. 
E)  part of the firm's normal profit.

Question 9

If both the demand for labor and the supply of labor increase,then the equilibrium wage rate ________ and the equilibrium quantity of labor ________.

Accepted Answer

A)  rises; increases 
B)  might rise, fall, or not change; increases 
C)  rises; might increase, decrease, or not change 
D)  falls; increases 
E)  falls; decreases 
A)  rises; increases 
B)  might rise, fall, or not change; increases 
C)  rises; might increase, decrease, or not change 
D)  falls; increases 
E)  falls; decreases

Question 10

When the rental rate for capital falls,the ________ capital ________.

Accepted Answer

A)  demand for; increases 
B)  demand for; decreases 
C)  quantity demanded of; increases 
D)  quantity demanded of; decreases 
E)  supply of; increases 
A)  demand for; increases 
B)  demand for; decreases 
C)  quantity demanded of; increases 
D)  quantity demanded of; decreases 
E)  supply of; increases

Question 11

Suppose in Philadelphia the quantity of economists demanded is less than the quantity supplied by 2,000 economists.As a result,

Accepted Answer

A)  there is a shortage of economists in Philadelphia. 
B)  salaries for economists fall. 
C)  there is equilibrium in this market. 
D)  the labor supply curve for economists in Philadelphia is vertical. 
E)  the labor demand curve for economists in Philadelphia shifts rightward. 
A)  there is a shortage of economists in Philadelphia. 
B)  salaries for economists fall. 
C)  there is equilibrium in this market. 
D)  the labor supply curve for economists in Philadelphia is vertical. 
E)  the labor demand curve for economists in Philadelphia shifts rightward.

Question 12

A company finds that the value of marginal product for the current level of employment is $53 and the wage rate is $45.Which of the following is correct?

Accepted Answer

A)  The firm is employing the profit-maximizing quantity of labor. 
B)  Too much labor is currently employed and the firm will lay off some workers. 
C)  Too few workers are currently employed and the firm will hire more workers. 
D)  The firm should shut down and produce nothing. 
E)  More information about the price of the product is needed to determine if the firm is hiring the profit-maximizing amount of labor. 
A)  The firm is employing the profit-maximizing quantity of labor. 
B)  Too much labor is currently employed and the firm will lay off some workers. 
C)  Too few workers are currently employed and the firm will hire more workers. 
D)  The firm should shut down and produce nothing. 
E)  More information about the price of the product is needed to determine if the firm is hiring the profit-maximizing amount of labor.

Question 13

If a union is able to organize workers in a competitive labor market but the union cannot affect the demand for its members' labor,then the wage rate ________ and the quantity of labor hired ________.

Accepted Answer

A)  rises; increases 
B)  rises; decreases 
C)  rises; does not change 
D)  does not change; increases 
E)  falls; decreases 
A)  rises; increases 
B)  rises; decreases 
C)  rises; does not change 
D)  does not change; increases 
E)  falls; decreases

Question 14

The equilibrium quantity of capital is

Accepted Answer

A)  determined by only the supply of capital because the supply is perfectly inelastic. 
B)  determined by only the supply of capital because the supply is perfectly elastic. 
C)  expected to increase at the same rate as the interest rate. 
D)  determined by the supply of capital and the demand for capital. 
E)  the only factor of production whose quantity is not determined in a market. 
A)  determined by only the supply of capital because the supply is perfectly inelastic. 
B)  determined by only the supply of capital because the supply is perfectly elastic. 
C)  expected to increase at the same rate as the interest rate. 
D)  determined by the supply of capital and the demand for capital. 
E)  the only factor of production whose quantity is not determined in a market.

Question 15

The figure above shows a firm's VMP curve.
-Suppose that a new technology doubles the marginal product of the workers and the price of the product does not change.As a result,the value of marginal product of the second worker

Accepted Answer

A)  remains $12. 
B)  becomes $6. 
C)  becomes $24. 
D)  becomes $30. 
E)  More information about the supply of labor is needed to answer the question. 
A)  remains $12. 
B)  becomes $6. 
C)  becomes $24. 
D)  becomes $30. 
E)  More information about the supply of labor is needed to answer the question.

Question 16

When more people remain in school for full-time education and training,the supply of low-skilled labor ________ and the supply of high-skilled labor ________.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases 
E)  does not change; does not change 
A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases 
E)  does not change; does not change

Question 17

The demand for a nonrenewable resource is

Accepted Answer

A)  determined by the value of its marginal product. 
B)  fixed and cannot change. 
C)  perfectly inelastic. 
D)  perfectly elastic. 
E)  not defined because the resource can be used only once. 
A)  determined by the value of its marginal product. 
B)  fixed and cannot change. 
C)  perfectly inelastic. 
D)  perfectly elastic. 
E)  not defined because the resource can be used only once.

Question 18

As the price of land rises,the quantity supplied

Accepted Answer

A)  increases. 
B)  decreases. 
C)  at first increases and then decreases. 
D)  stays the same. 
E)  at first decreases and then increases. 
A)  increases. 
B)  decreases. 
C)  at first increases and then decreases. 
D)  stays the same. 
E)  at first decreases and then increases.

Question 19

What is meant by derived demand?

Accepted Answer

A)  The demand is derived from income, tastes, etc. of sellers. 
B)  The demand for a resource is derived from the demand for what it can produce. 
C)  The demand is derived from the price elasticity of demand. 
D)  The demand exists because the government mandates production of the good. 
E)  The demand for a good is derived from the supply of the good. 
A)  The demand is derived from income, tastes, etc. of sellers. 
B)  The demand for a resource is derived from the demand for what it can produce. 
C)  The demand is derived from the price elasticity of demand. 
D)  The demand exists because the government mandates production of the good. 
E)  The demand for a good is derived from the supply of the good.

Question 20

Hot Coffee Inc.hires workers and buys coffee roasting machines so it can serve fresh roasted coffee to its customers.The demand for ________ is a derived demand because ________.

Accepted Answer

A)  both workers and roasting machines; both are used to produce and sell coffee 
B)  only workers; there is a limited number of people willing to work in coffee shops 
C)  only roasting machines; capital equipment can be resold in other markets 
D)  neither workers nor roasting machines; derived demand only applies to actual products produced for customers 
E)  only workers; workers can actually negotiate their wages 
A)  both workers and roasting machines; both are used to produce and sell coffee 
B)  only workers; there is a limited number of people willing to work in coffee shops 
C)  only roasting machines; capital equipment can be resold in other markets 
D)  neither workers nor roasting machines; derived demand only applies to actual products produced for customers 
E)  only workers; workers can actually negotiate their wages

How does a firm's demand for labor change if the price of the firm's product increases? Relate your answer to the value of marginal product.

If the quantity of capital supplied exceeds the quantity of capital demanded,what takes place?

What is the Hotelling Principle? Have resource prices behaved as the principle predicts?

A firm's demand for labor curve is also

The rule for maximizing profit is to hire labor up to the point at which the value of marginal product

If we compare the value of marginal product of labor curve and the demand for labor curve we see that

The aggregate quantity of land supplied

The wage paid to labor is

If both the demand for labor and the supply of labor increase,then the equilibrium wage rate and the equilibrium quantity of labor .

When the rental rate for capital falls,the capital .

Suppose in Philadelphia the quantity of economists demanded is less than the quantity supplied by 2,000 economists.As a result,

A company finds that the value of marginal product for the current level of employment is $53 and the wage rate is $45.Which of the following is correct?

If a union is able to organize workers in a competitive labor market but the union cannot affect the demand for its members' labor,then the wage rate and the quantity of labor hired .

The equilibrium quantity of capital is

The figure above shows a firm's VMP curve. -Suppose that a new technology doubles the marginal product of the workers and the price of the product does not change.As a result,the value of marginal product of the second worker

When more people remain in school for full-time education and training,the supply of low-skilled labor and the supply of high-skilled labor .

The demand for a nonrenewable resource is

As the price of land rises,the quantity supplied

What is meant by derived demand?

Hot Coffee Inc.hires workers and buys coffee roasting machines so it can serve fresh roasted coffee to its customers.The demand for is a derived demand because .

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Economic Inequality

Filters

Exam 19: Markets for Factors of Production

How does a firm's demand for labor change if the price of the firm's product increases? Relate your answer to the value of marginal product.

If the quantity of capital supplied exceeds the quantity of capital demanded,what takes place?

What is the Hotelling Principle? Have resource prices behaved as the principle predicts?

A firm's demand for labor curve is also

The rule for maximizing profit is to hire labor up to the point at which the value of marginal product

If we compare the value of marginal product of labor curve and the demand for labor curve we see that

The aggregate quantity of land supplied

The wage paid to labor is

If both the demand for labor and the supply of labor increase,then the equilibrium wage rate ________ and the equilibrium quantity of labor ________.

When the rental rate for capital falls,the ________ capital ________.

Suppose in Philadelphia the quantity of economists demanded is less than the quantity supplied by 2,000 economists.As a result,

A company finds that the value of marginal product for the current level of employment is $53 and the wage rate is $45.Which of the following is correct?

If a union is able to organize workers in a competitive labor market but the union cannot affect the demand for its members' labor,then the wage rate ________ and the quantity of labor hired ________.

The equilibrium quantity of capital is

The figure above shows a firm's VMP curve. -Suppose that a new technology doubles the marginal product of the workers and the price of the product does not change.As a result,the value of marginal product of the second worker

When more people remain in school for full-time education and training,the supply of low-skilled labor ________ and the supply of high-skilled labor ________.

The demand for a nonrenewable resource is

As the price of land rises,the quantity supplied

What is meant by derived demand?

Hot Coffee Inc.hires workers and buys coffee roasting machines so it can serve fresh roasted coffee to its customers.The demand for ________ is a derived demand because ________.

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Economic Inequality

Filters

If both the demand for labor and the supply of labor increase,then the equilibrium wage rate and the equilibrium quantity of labor .

When the rental rate for capital falls,the capital .

If a union is able to organize workers in a competitive labor market but the union cannot affect the demand for its members' labor,then the wage rate and the quantity of labor hired .

When more people remain in school for full-time education and training,the supply of low-skilled labor and the supply of high-skilled labor .

Hot Coffee Inc.hires workers and buys coffee roasting machines so it can serve fresh roasted coffee to its customers.The demand for is a derived demand because .