Question 1

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 many 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, all of the choices given (A, B, and C) are correct.

Question 2

The marginal product of labor is the

Accepted Answer

The marginal product of labor is the additional output resulting from employing one additional unit of labor. It is not multiplied by the price of the good produced (option A), not the total output of labor divided by the quantity of labor used (option B), and not necessarily equal to marginal revenue product of labor in price-taker markets (option D).

Question 3

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 4

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

The firm can lower its costs while producing the same level of output by using more labor and less capital. This is because the marginal product of labor is greater than the marginal product of capital, indicating that the firm is not using labor efficiently. By hiring more labor, the firm can increase output without increasing capital costs, leading to lower costs per unit of output.

Question 5

If a college education did not increase worker productivity,

Accepted Answer

If college education did not increase worker productivity, there would be no reason for employers to pay higher wages for college-educated workers. Therefore, wages would tend to be the same for workers with and without a college education. Choice A is incorrect as people may still go to college for reasons other than increasing productivity, such as personal enrichment or social status. Choice C is also incorrect as the cost of going to college has no impact on worker productivity. Choice D is incorrect as even if college education did not increase productivity, workers with college degrees may still earn higher lifetime earnings due to a variety of factors, such as networking opportunities and higher paying job positions.

Question 6

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

Accepted Answer

In the short run, producers are constrained by existing production facilities and cannot easily expand production to increase supply. This makes the supply of the resource less elastic than in the long run, when producers have more flexibility to adjust their production capacity and inputs.

Question 7

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 8

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

To find the marginal revenue product (MRP) of the fifth worker, we need to use the formula:

MRP = ΔTotal Revenue / ΔLabor input

First, let's calculate the total revenue (TR) with 4 workers:

TR = 17 sets per week x $200 per set = $3,400

Next, let's calculate the total revenue with 5 workers:

TR = 20 sets per week x $200 per set = $4,000

Now we can calculate the change in total revenue when we add the fifth worker:

ΔTR = $4,000 - $3,400 = $600

Finally, we can calculate the MRP of the fifth worker:

MRP = ΔTR / ΔLabor input
MRP = $600 / 1 worker
MRP = $600

Therefore, the weekly marginal revenue product of the fifth worker is $600.

Question 9

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

Accepted Answer

The optimal hiring decision for a firm is based on the marginal revenue product (MRP) of the resource, which is the additional revenue generated by hiring an additional unit of the resource. As long as the MRP exceeds the cost of employing an additional unit, the firm should continue to hire more resources. Therefore, choice D is the correct answer. Choices A and B are incorrect because they only consider the marginal product of the resource and the price of the resource, respectively, without taking into account the revenue generated by hiring the resource. Choice C is also incorrect because the price of the output produced does not take into account the cost of hiring additional resources.

Question 10

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

Accepted Answer

The term economists use to refer to expenditures on training, education, and skill development designed to increase the productivity of an individual is investments in human capital. This is because it is viewed as an investment in the individual's future productivity and earning potential, similar to how companies invest in physical capital like machines to improve productivity.

Question 11

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. This refers to the notion that individuals can improve their productivity and earning potential through investments in their own abilities, skills, and knowledge. It is similar to the idea of investing in physical capital (such as buildings and machinery) to increase productivity. Overhead expenditures refer to ongoing business expenses, sunk expenditures are costs that cannot be recovered, and social capital refers to the networks, relationships, and trust that facilitate social and economic interactions.

Question 12

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 Table 12-7
 
-Refer to Table 12-7. If...

Question 13

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 Table 12-7
 
-Refer to Table 12-7. If...

Question 14

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 15

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 until the point where the Marginal Revenue Product (MRP) of the resource is just equal to the price of the resource. At this point, the firm has found the optimal amount of that resource to employ in order to maximize its profits. If the MRP of the resource is above its cost, then the firm will continue to increase its employment of that resource, as doing so will increase its profits. If the MRP of the resource is below its cost, then the firm will not want to use that resource at all, as doing so will lead to losses.

Question 16

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 curve for steel is highly elastic, then a wage increase for steel workers will lead to a significant increase in the price of steel, causing consumers to switch to substitutes or reduce their overall consumption of steel. As a result, employment in the steel industry is likely to fall the most.

Question 17

An increase in the demand for a resource

Accepted Answer

An increase in demand for a resource will increase the price of the resource as the suppliers will try to take advantage of the opportunity to earn higher profits. This will increase the incentive of potential suppliers to provide the resource in the future.

Question 18

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 Table 12-7
 
-Refer to Table 12-7. What...

Question 19

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

Accepted Answer

MRP and VMP are related, but they are not the same thing. VMP is the value of the additional output produced by one additional unit of labor, while MRP is the additional revenue earned by the firm from hiring one additional unit of labor. VMP is calculated by multiplying the additional output produced by the price of the product, while MRP is calculated by multiplying the additional revenue earned by the marginal product. Therefore, the correct answer is B, VMP equals MP times product price (P), while MRP equals MP times marginal revenue (MR).

Question 20

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

Accepted Answer

The marginal revenue product measures the change in total revenue resulting from employing an additional unit of a resource. This can be calculated by multiplying the marginal product of the resource by the marginal revenue of the good produced.

Quiz 12: The Supply of and Demand for Productive Resources

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

The marginal product of labor is the

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?

If a college education did not increase worker productivity,

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

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

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?

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

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

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

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?

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?

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

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

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

An increase in the demand for a resource

Table 12-7 -Refer to Table 12-7. What is the marginal revenue product of the fifth unit of labor?

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

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