Question 1

Figure 12-3
 
-Refer to Figure 12-3. This figure depicts labor demand and supply in a nonunionized labor market. The original equilibrium is at point A. If a labor union subsequently establishes a union shop and negotiates an hourly wage of $20, then the employment level

Accepted Answer

When a labor union establishes a union shop and negotiates an hourly wage of $20, it creates a wage floor above the equilibrium wage level (point A). As a result, the quantity of labor demanded decreases from 6,000 to 3,000, while the quantity of labor supplied increases from 6,000 to 10,000. This leads to a surplus of labor (unemployment) equal to the difference between labor supplied and labor demanded, which is 7,000 (10,000 - 3,000). Therefore, the correct answer is D.

Question 2

Figure 12-3
 
-Refer to Figure 12-3. This figure depicts labor demand and supply in a nonunionized labor market. The original equilibrium is at point A. If a labor union subsequently establishes a union shop and negotiates an hourly wage of $20, then there will be an excess

Accepted Answer

The answer of Figure 12-3
 
-Refer to Figure 12-3. This...

Question 3

Figure 12-4
 
-Refer to Figure 12-4. As the number of workers increases,

Accepted Answer

The graph shows the production function with a fixed amount of capital and increasing amounts of labor. Initially, as more workers are added, total output increases at an increasing rate, indicating increasing marginal productivity of labor. However, after a certain point, total output continues to increase, but at a decreasing rate, indicating decreasing marginal productivity of labor. Therefore, choice A is the correct answer.

Question 4

A decrease in the price of a resource would cause

Accepted Answer

A decrease in the price of a resource would result in lower costs for producers who would then use more of the resource to lower production costs. This would, in turn, result in a reduction in the cost of products made from the resource. Hence, both b and c above are the correct choices.

Question 5

Figure 12-1
 
-If Figure 12-1 indicated the short-run and long-run supply curves for a resource, which of the following would probably be the long-run supply curve of the resource?

Accepted Answer

The answer of Figure 12-1
 
-If Figure 12-1 indicated the...

Question 6

The more elastic the demand for a final product,

Accepted Answer

If the demand for a final product is more elastic, consumers will be more likely to change their consumption patterns in response to changes in the product's price. This means that firms will also be more likely to reduce their prices, and thus their demand for the productive resources used to make the product. As a result, the demand for productive resources will be more elastic as well.

Question 7

Which of the following expresses the correct decision-making rule for a profit-maximizing firm hiring units of labor?

Accepted Answer

A profit-maximizing firm should continue to hire workers as long as the marginal revenue product (MRP) of each additional worker is greater than the wage rate. This is because each additional worker adds to the firm's revenue by producing output, and as long as that additional revenue is greater than the cost of the worker's wage, the firm will benefit from hiring more workers. Therefore, choice B is the correct decision-making rule for a profit-maximizing firm hiring units of labor.

Question 8

If an advance in computer technology reduces the need for businesses to hire accountants, students majoring in accounting should expect

Accepted Answer

If there is a reduction in the need for accountants due to technological advancements, it is likely that there will be an oversupply of accounting graduates in the job market. This will result in a lower rate of return on their human capital investment as there will be more competition for fewer job opportunities.

Question 9

Figure 12-2
 
-If an unanticipated increase in demand in Figure 12-2 shifts the demand for accountants from D₁ to D₂, how will the higher level of demand influence the wages of accountants in the short run and the long run?

Accepted Answer

In the short run, the increase in demand will lead to a temporary shortage of accountants, resulting in higher wages (W2). However, in the long run, the supply of accountants will increase as new people enter the field and existing accountants may work longer hours or take on additional clients. This increased supply will result in a lower wage increase than in the short run, but wages will still be higher than before the increase in demand (above W1 but below W2). Therefore, option A is the best choice.

Question 10

Figure 12-2
 
-The demand D₁ and short-run supply SSR of accountants is indicated in Figure 12-2. Which of the following would most likely shift the demand for accountants from D₁ to D₂?

Accepted Answer

Enacting legislation that increases the complexity of personal and business tax returns will increase the demand for accountants, as individuals and businesses will require more assistance to comply with the new regulations. This will shift the demand curve for accountants to the right, from D₁ to D₂. The other options are less likely to have a significant impact on the demand for accountants in the short run.

Question 11

If a firm used only two factors of production, labor (L) and capital (K), which of the following conditions would be present if the firm was minimizing its cost of production?

Accepted Answer

The answer of If a firm used only two factors...

Question 12

Because the demand for a resource is highly dependent upon the demand for the final goods that the resource helps produce, the demand for a resource is called a(n)

Accepted Answer

The demand for a resource is derived from the demand for the final goods that the resource helps produce. This is because resources are used to produce final goods, and the demand for those final goods determines the demand for the resources used in their production. Therefore, the correct term is derived demand. The other options are not applicable to the concept of resource demand.

Question 13

Figure 12-4
 
-Refer to Figure 12-4. With regard to cookie production, the figure implies

Accepted Answer

The figure shows that as more workers are added, there is an initial increase in cookie production (marginal product of labor) but eventually that increase begins to diminish. This is characteristic of diminishing marginal product of labor, which is represented by the downward sloping portion of the curve after the point of maximum production. The figure does not provide information on cost, so options B and C are not supported. The figure also does not show evidence of increasing marginal product of labor, so option D is not supported.

Question 14

If businesses found that changing economic conditions made it attractive for them to hire a larger number of economics majors, we would expect

Accepted Answer

If businesses find it attractive to hire a larger number of economics majors, it indicates a higher demand for individuals with such qualifications, leading to increased job opportunities and potentially higher salaries, resulting in a greater return on investment for economics majors.

Question 15

In a price-taker industry, the marginal revenue derived from the sale of an additional unit of the product is equal to the market price of the product. In these circumstances,

Accepted Answer

In a price-taker industry, a firm cannot influence the market price and has to accept the price determined by the market. As a result, the market price becomes the marginal revenue for each additional unit sold. The value of marginal product refers to the additional revenue generated by the last unit of input (such as labor or capital) used in the production process. In a perfectly competitive market with many firms, the value of marginal product is equal to the market wage or rental rate. Therefore, in a price-taker industry, where the market price is equal to the marginal revenue, the value of marginal product is also equal to the marginal revenue product. Thus, the correct answer is C.

Question 16

A decrease in the demand for a final product will cause

Accepted Answer

If the demand for a final product decreases, it means that fewer units of the product will be sold. As a result, firms will reduce their production levels, which leads to a decrease in the demand for the resources used to produce the good. This is because the firms will need fewer resources to produce fewer units of the product. Therefore, the best choice is A. The other choices are not applicable in this scenario.

Question 17

The short-run supply of a human resource will be more elastic the

Accepted Answer

If the skill level necessary to perform the job is lower, it is easier to find individuals with the necessary skills to provide the resource, which makes the short-run supply more elastic. On the other hand, options A, B, and D are related to the demand and acquisition of the resource, not to the supply. Therefore, they are not relevant to determining the elasticity of the short-run supply.

Question 18

If the cost of using skilled labor was twice the cost of using unskilled labor, and both were used by a profit-maximizing firm, the firm would adjust the quantity of each type of labor until

Accepted Answer

The answer of If the cost of using skilled labor...

Question 19

Compared to the short-run demand, the long-run demand for a resource is

Accepted Answer

In the long-run, firms have more flexibility to adjust their production processes, and can substitute other inputs for the resource in question. This increased flexibility makes the long-run demand for a resource more elastic than its short-run demand.

Question 20

Figure 12-1
 
-If one short-run supply curve in Figure 12-1 was for truck drivers and the other was for nuclear physicists (also short-run), which one would probably be the supply curve for physicists?

Accepted Answer

The answer of Figure 12-1
 
-If one short-run supply curve...

Quiz 12: The Supply of and Demand for Productive Resources

Figure 12-3 -Refer to Figure 12-3. This figure depicts labor demand and supply in a nonunionized labor market. The original equilibrium is at point A. If a labor union subsequently establishes a union shop and negotiates an hourly wage of $20, then the employment level

Figure 12-3 -Refer to Figure 12-3. This figure depicts labor demand and supply in a nonunionized labor market. The original equilibrium is at point A. If a labor union subsequently establishes a union shop and negotiates an hourly wage of $20, then there will be an excess

Figure 12-4 -Refer to Figure 12-4. As the number of workers increases,

A decrease in the price of a resource would cause

Figure 12-1 -If Figure 12-1 indicated the short-run and long-run supply curves for a resource, which of the following would probably be the long-run supply curve of the resource?

The more elastic the demand for a final product,

Which of the following expresses the correct decision-making rule for a profit-maximizing firm hiring units of labor?

If an advance in computer technology reduces the need for businesses to hire accountants, students majoring in accounting should expect

Figure 12-2 -If an unanticipated increase in demand in Figure 12-2 shifts the demand for accountants from D₁ to D₂, how will the higher level of demand influence the wages of accountants in the short run and the long run?

Figure 12-2 -The demand D₁ and short-run supply SSR of accountants is indicated in Figure 12-2. Which of the following would most likely shift the demand for accountants from D₁ to D₂?

If a firm used only two factors of production, labor (L) and capital (K) , which of the following conditions would be present if the firm was minimizing its cost of production?