Question 1

Use the information given in the table below to answer the following question(s).Assume the firm hires labor competitively and sells its product in a competitive price-taker market at a price of $2 per unit.
Table 12-7
 
-Refer to Table 12-7.If the market wage rate rose to $7 per day,how many workers should the firm employ if it wants to maximize profits?

Accepted Answer

The answer of Use the information given in the table...

Question 2

The marginal product of labor is the

Accepted Answer

The marginal product of labor is the additional output that results from employing one additional unit of labor.

Question 3

Jim Smith runs a company that sells encyclopedia sets for $200 each.When he employs 5 workers,they can sell 20 sets per week,whereas only 17 sets are sold when 4 workers are employed.What is the weekly marginal revenue product of the fifth worker?

Accepted Answer

First, we need to find the total revenue generated by the company in both scenarios.

When 5 workers are employed:
Number of sets sold = 20
Price per set = $200
Total revenue = 20 x $200 = $4,000

When 4 workers are employed:
Number of sets sold = 17
Price per set = $200
Total revenue = 17 x $200 = $3,400

The difference in revenue between the two scenarios is $4,000 - $3,400 = $600.

Now, we need to find the marginal revenue product (MRP) of the fifth worker. MRP is defined as the change in revenue resulting from the addition of an extra unit of input (in this case, an extra worker).

To find MRP, we can take the difference in total revenue between the two scenarios (with 5 workers and with 4 workers) and divide it by the change in the number of workers (1).

MRP = ($4,000 - $3,400) ÷ (5 - 4) 
MRP = $600

Therefore, the weekly marginal revenue product of the fifth worker is $600. This means that by adding the fifth worker, the company's weekly revenue will increase by $600. The best choice is option C.

Question 4

An increase in the demand for a resource

Accepted Answer

An increase in demand for a resource will increase the price of the resource, according to the law of demand. This increase in price creates an incentive for potential suppliers to provide more of the resource in the future, leading to an increase in supply that will eventually bring the price back down. Therefore, choice D is the correct answer.

Question 5

Which of the following would be the most likely result from a new government program that provided significant financial aid for children of low- and middle-income families to attend college?

Accepted Answer

The answer of Which of the following would be the...

Question 6

Profit-maximizing firms will expand their employment of each variable resource until

Accepted Answer

A profit-maximizing firm will expand its employment of a variable resource as long as the Marginal Revenue Product (MRP) of the resource is greater than or equal to the price of the resource. This is because the firm wants to maximize its profit, and hiring more of the resource will increase its output and revenue. However, if the MRP of the resource is less than its price, then hiring more of the resource would reduce the firm's profit. Therefore, the firm would stop hiring the resource at the point where the MRP is just equal to the price of the resource.

Question 7

Use the information given in the table below to answer the following question(s).Assume the firm hires labor competitively and sells its product in a competitive price-taker market at a price of $2 per unit.
Table 12-7
 
-Refer to Table 12-7.What is the marginal revenue product of the fifth unit of labor?

Accepted Answer

The answer of Use the information given in the table...

Question 8

A convenience store is considering renting a surveillance camera from a security company that would prevent $100 in shoplifting per year.The yearly rental rate for the camera is $150.To maximize profits,the firm should

Accepted Answer

The answer of A convenience store is considering renting a...

Question 9

The marginal revenue product of a resource is best described as the

Accepted Answer

The marginal revenue product (MRP) of a resource is the additional revenue generated by hiring one more unit of that resource. Therefore, the correct answer is D, the change in total revenue resulting from employing an additional unit of the resource. Option A is incorrect because it only refers to the selling price of the last unit of output, not the revenue generated by an additional unit of the resource. Option B refers to the marginal cost of production, not the marginal revenue product of the resource. Option C refers to the marginal revenue generated by the product, not the marginal revenue product of the resource.

Question 10

If steel workers obtain a substantial wage increase,employment in the steel industry will be likely to fall the most if

Accepted Answer

If the demand for steel is highly elastic, a wage increase for steel workers would lead to an increase in the cost of producing steel, causing firms to decrease their demand for labor in the steel industry in order to maintain their profit margins. In other words, there are many substitutes for steel and consumers can easily switch to other materials if the price of steel increases too much, so firms cannot pass on the increased labor costs to consumers. As a result, employment in the steel industry is likely to decrease the most in this scenario.

Question 11

A firm currently employs 80 units of labor and 50 units of capital equipment to produce 3,000 hamster cages.Given the current input levels utilized,the marginal product of labor is 40 and the marginal product of capital is 10.If we assume that labor costs $20 per unit and capital costs $10 per unit,

Accepted Answer

Since the marginal product of labor (MPL) is higher than the marginal product of capital (MPK), the firm could lower its costs by using more labor and less capital. The cost of one unit of labor ($20) is also lower than the cost of one unit of capital equipment ($10). Therefore, the firm could substitute more labor for capital and still produce the same amount of output while lowering its costs.

Question 12

Economists refer to expenditures on training,education,and skill development designed to increase the productivity of an individual as

Accepted Answer

Expenditures on training, education, and skill development are considered investments in human capital since they are aimed at improving the knowledge, skills, and abilities of individuals to enhance their productivity and increase their potential earning capacity.

Question 13

A change in the demand for a resource can be caused by which of the following?

Accepted Answer

A change in the demand for a resource can be caused by multiple factors, including changes in the demand for the final product that uses the resource as a factor of production, changes in the productivity of the resource, and changes in the price of other resources that could be used as substitutes for the resource in question. Therefore, the best choice is D, all of the above.

Question 14

If a college education did not increase worker productivity,

Accepted Answer

The main reason for employers to pay a higher wage to workers with college degrees is the expectation that these workers are more productive. If college education did not increase worker productivity, then there would be no reason for employers to pay a higher wage to workers with college degrees. Therefore, wages would tend to be the same for workers with and without a college education. The other options are not likely as people still go to college and there is a significant difference in average lifetime earnings between workers with and without a college degree.

Question 15

Firms should hire additional units of a resource as long as the

Accepted Answer

The best choice is D as it represents the condition known as profit maximization rule. Firms hire additional units of a resource as long as the marginal revenue product of the resource exceeds the cost of employing an additional unit of the resource. In other words, the firm will only hire more workers if the additional revenue generated by that worker is higher than the wage paid to that worker.

Question 16

Use the information given in the table below to answer the following question(s).Assume the firm hires labor competitively and sells its product in a competitive price-taker market at a price of $2 per unit.
Table 12-7
 
-Refer to Table 12-7.If the market wage rate is $5 per day,how many workers should the firm employ if it wants to maximize profits?

Accepted Answer

The answer of Use the information given in the table...

Question 17

Which of the following is an example of an investment in human capital?

Accepted Answer

The answer of Which of the following is an example...

Question 18

Economists refer to expenditures on training,education,and skill development designed to increase the productivity of an individual as

Accepted Answer

Investments in human capital refers to expenditures on training, education, and skill development aimed at improving an individual's productivity. This term is commonly used by economists to describe the importance of education and skills as a form of investment that can yield economic benefits over time. Overhead expenditures refer to the ongoing costs of running a business such as rent, utilities, and salaries. Sunk expenditures are costs that cannot be recovered, such as money spent on a failed project. Social capital refers to the networks, relationships, and trust between individuals and groups that can lead to economic benefits.

Question 19

Generally,the supply of a resource in the short run will be

Accepted Answer

In the short run, it is difficult for producers to change the quantity of resources they use, making the supply of a resource less elastic. In the long-run, producers have more flexibility to adjust their resource use, making the supply more elastic.

Question 20

For a price searcher,marginal revenue product (MRP)differs from the value of marginal product (VMP)because

Accepted Answer

VMP measures the additional revenue generated by each additional unit of input, while MRP measures the additional revenue generated by each additional unit of the final product. Therefore, VMP equals the product price times MP, while MRP equals the marginal revenue times MP. So, option B is correct.

Quiz 25: The Supply of and Demand for Productive Resources

The marginal product of labor is the

Jim Smith runs a company that sells encyclopedia sets for $200 each.When he employs 5 workers,they can sell 20 sets per week,whereas only 17 sets are sold when 4 workers are employed.What is the weekly marginal revenue product of the fifth worker?

An increase in the demand for a resource

Which of the following would be the most likely result from a new government program that provided significant financial aid for children of low- and middle-income families to attend college?

Profit-maximizing firms will expand their employment of each variable resource until

A convenience store is considering renting a surveillance camera from a security company that would prevent $100 in shoplifting per year.The yearly rental rate for the camera is $150.To maximize profits,the firm should

The marginal revenue product of a resource is best described as the

If steel workers obtain a substantial wage increase,employment in the steel industry will be likely to fall the most if

A firm currently employs 80 units of labor and 50 units of capital equipment to produce 3,000 hamster cages.Given the current input levels utilized,the marginal product of labor is 40 and the marginal product of capital is 10.If we assume that labor costs $20 per unit and capital costs $10 per unit,

Economists refer to expenditures on training,education,and skill development designed to increase the productivity of an individual as

A change in the demand for a resource can be caused by which of the following?

If a college education did not increase worker productivity,

Firms should hire additional units of a resource as long as the

Which of the following is an example of an investment in human capital?

Economists refer to expenditures on training,education,and skill development designed to increase the productivity of an individual as

Generally,the supply of a resource in the short run will be

For a price searcher,marginal revenue product (MRP) differs from the value of marginal product (VMP) because