Question 1

A profit-maximizing firm will employ a resource up to the point where

Accepted Answer

A)   its marginal resource cost equals its marginal revenue product
B)   its marginal resource cost equals its marginal product
C)   its marginal resource cost equals the marginal revenue of the output
D)   its marginal resource cost equals the price of the resource
E)   the price of the resource equals the marginal revenue of the output

Question 2

A resource price taker's resource demand curve is

Accepted Answer

A)   horizontal
B)   the same as its marginal resource cost curve
C)   the same as its marginal revenue product curve
D)   the same as its marginal product curve
E)   the same as its average variable cost curve

Question 3

An author who writes newspaper columns for $75 each is deciding whether to purchase a personal computer with a laser printer. She figures she'd be able to write two more columns per month than she could on her typewriter. She should

Accepted Answer

A)   buy the computer if the monthly payment is less than $300
B)   buy the computer regardless of its price
C)   not buy the computer if the monthly payment is greater than $75
D)   not buy the computer regardless of the price
E)   buy the computer if the monthly payment is less than $150

Question 4

Because it is based on the demand for products, the demand for labor is called

Accepted Answer

A)   a substitution demand
B)   a complementary demand
C)   an income demand
D)   a derived demand
E)   a marginal demand

Question 5

If an insurance company hires a resource in a perfectly competitive resource market and it wants to maximize profit, it will hire where marginal revenue product equals

Accepted Answer

A)   the price of the resource, which equals its marginal resource cost
B)   the price of the resource, which is greater than its marginal resource cost
C)   the price of the resource, which is less than its marginal resource cost
D)   marginal product
E)   the price of the product

Question 6

One determinant of the derived demand for a resource is the

Accepted Answer

A)   price of the product made using the resource
B)   extra cost of the resource
C)   marginal resource cost of the resource
D)   availability of the resource in the marketplace
E)   quantity of the resource demanded

Question 7

NARRBEGIN: Exhibit 11-3
Exhibit 11-3
 
-In Exhibit 11-3, 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

Question 8

NARRBEGIN: Exhibit 11-1
Exhibit 11-1
 
-In Exhibit 11-1, opportunity cost at equilibrium equals

Accepted Answer

A)   $40
B)   $80
C)   $160
D)   $16
E)   $8

Question 9

If a profit-maximizing firm hires an additional unit of labor, what must be true about labor's wage and marginal revenue product?

Accepted Answer

A)   Its wage always equals its marginal revenue product.
B)   Its wage is always greater than its marginal revenue product.
C)   Its wage is always total revenue minus marginal revenue product.
D)   Its wage is always greater than or equal to its marginal revenue product.
E)   Its wage is always less than or equal to its marginal revenue product.

Question 10

Using free public space means that sidewalk vendors earn long-run economic profits.

Accepted Answer

A) True 
 B)False

Question 11

If the supply of oceanfront lots is fixed and perfectly inelastic,

Accepted Answer

A)   the demand for the resource determines its price and the level of economic rent
B)   the supply of the resource determines its price and the level of economic rent
C)   the supply of the resource determines its price and the demand for the resource determines the level of economic rent
D)   the demand for the resource determines its price and the supply of the resource determines the level of economic rent
E)   the supply curve is horizontal

Question 12

NARRBEGIN: Exhibit 11-3
Exhibit 11-3
 
-In Exhibit 11-3, 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

Question 13

If a firm hires a resource in a perfectly competitive resource market,

Accepted Answer

A)   it must also be a price taker in the product market
B)   it must also be a monopolist in the product market
C)   it faces a horizontal marginal resource cost curve
D)   it faces an upward-sloping marginal resource cost curve
E)   it faces a downward-sloping marginal resource cost curve

Question 14

NARRBEGIN: Exhibit 11-1
Exhibit 11-1
 
-In Exhibit 11-1, the twentieth unit of the resource is earning a wage of

Accepted Answer

A)   $4, all of which is economic rent
B)   $4, none of which is economic rent
C)   $8, all of which is economic rent
D)   $8, none of which is economic rent
E)   $8, half of which is economic rent

Question 15

Both sugar and fructose can be used in the production of candy. If the price of sugar increases,

Accepted Answer

A)   the demand for sugar increases
B)   sugar becomes relatively more expensive than fructose only if the price of fructose falls
C)   sugar becomes relatively more expensive than fructose, other things constant
D)   the price of fructose immediately increases
E)   the price of fructose immediately decreases

Question 16

NARRBEGIN: Exhibit 11-9-1
Exhibit 11-9
 
-In Exhibit 11-9, how low would the wage rate have to fall in order for the firm to hire five workers?

Accepted Answer

A)   $100
B)   $74
C)   $54
D)   $34
E)   $24

Question 17

A curve that shows the cost to the firm of hiring an additional unit of a resource is known as a

Accepted Answer

A)   marginal product curve
B)   marginal revenue product curve
C)   total revenue product curve
D)   marginal revenue curve
E)   marginal resource cost curve

Question 18

If 15 workers produce 100 license plates, 16 workers produce 120 license plates, and 17 workers produce 130 license plates, then

Accepted Answer

A)   diminishing marginal returns have not set in because the marginal product is positive
B)   the marginal product of the seventeenth worker is 130
C)   diminishing marginal returns must begin with the sixteenth worker
D)   the marginal product of the sixteenth worker is greater than the marginal product of the seventeenth worker
E)   the marginal product of the fifteenth worker must be 20

Question 19

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

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

Exam 11: Resource Markets

A resource price taker's resource demand curve is

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A curve that shows the cost to the firm of hiring an additional unit of a resource is known as a

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NARRBEGIN: Exhibit 11-1 Exhibit 11-1 -In Exhibit 11-1, the twentieth unit of the resource is earning a wage of

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If a profit-maximizing firm hires an additional unit of labor, what must be true about labor's wage and marginal revenue product?

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Because it is based on the demand for products, the demand for labor is called

Correct AnswerverifiedShow Answer

The market supply curve of capital is

Correct AnswerverifiedShow Answer

NARRBEGIN: Exhibit 11-9-1 Exhibit 11-9 -In Exhibit 11-9, how low would the wage rate have to fall in order for the firm to hire five workers?

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Using free public space means that sidewalk vendors earn long-run economic profits.

Correct AnswerverifiedShow Answer

If the supply of oceanfront lots is fixed and perfectly inelastic,

Correct AnswerverifiedShow Answer

If a firm hires a resource in a perfectly competitive resource market,

Correct AnswerverifiedShow Answer

A profit-maximizing firm will employ a resource up to the point where

Correct AnswerverifiedShow Answer

NARRBEGIN: Exhibit 11-3 Exhibit 11-3 -In Exhibit 11-3, the equilibrium price of the resource is

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One determinant of the derived demand for a resource is the

Correct AnswerverifiedShow Answer

NARRBEGIN: Exhibit 11-3 Exhibit 11-3 -In Exhibit 11-3, the equilibrium quantity of the resource exchanged is

Correct AnswerverifiedShow Answer

If an insurance company hires a resource in a perfectly competitive resource market and it wants to maximize profit, it will hire where marginal revenue product equals

Correct AnswerverifiedShow Answer

NARRBEGIN: Exhibit 11-1 Exhibit 11-1 -In Exhibit 11-1, opportunity cost at equilibrium equals

Correct AnswerverifiedShow Answer

Both sugar and fructose can be used in the production of candy. If the price of sugar increases,

Correct AnswerverifiedShow Answer

If 15 workers produce 100 license plates, 16 workers produce 120 license plates, and 17 workers produce 130 license plates, then

Correct AnswerverifiedShow Answer

Marginal resource cost is the

Correct AnswerverifiedShow Answer

An author who writes newspaper columns for $75 each is deciding whether to purchase a personal computer with a laser printer. She figures she'd be able to write two more columns per month than she could on her typewriter. She should

Correct AnswerverifiedShow Answer

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