Question 1

A firm is both hiring labor and selling output in purely competitive markets and is maximizing profits.It is currently operating in the elastic range of its MRP curve.If the wage rate increases,its total spending on wages at the new equilibrium will:

Accepted Answer

In the elastic range of the MRP curve, an increase in wage rate will lead to a proportionally larger decrease in the quantity of labor hired, thus reducing total spending on wages.

Question 2

From 2008 to 2018,it is estimated that there will be a fall in demand for:

Accepted Answer

The answer of From 2008 to 2018,it is estimated that...

Question 3

Suppose capital is readily substitutable for labor and that the price of capital falls.We can conclude that the:

Accepted Answer

If capital is readily substitutable for labor and the price of capital falls, firms will tend to substitute capital for labor in their production process, reducing the demand for labor. This is the substitution effect. Therefore, the best choice is A, which states that the substitution effect will tend to reduce the demand for labor. The output effect, on the other hand, refers to the change in demand for labor resulting from changes in the firm's output level, and it is not clear whether it will increase or decrease the demand for labor in this case. Therefore, B is not the correct choice. Similarly, we cannot conclude that the demand for labor will necessarily decline (C) or increase (D).

Question 4

The more inelastic the demand for a resource,the:

Accepted Answer

If the demand for a resource is inelastic, then changes in the price of the resource will have little effect on the quantity demanded. Therefore, the marginal revenue product curve for the resource will be less elastic, because changes in the resource's price will have little impact on the revenue received from using the resource.

Question 5

Gambling increases in popularity,thus increasing the demand for card dealers at casinos.This would be caused by which change in a determinant of labor demand?

Accepted Answer

An increase in product demand, in this case the popularity of gambling, would increase the demand for card dealers at casinos. As more people want to gamble, casinos need to hire more staff to keep up with the demand.

Question 6

If the price of labor falls relative to the price of capital,and as a result the quantity of capital employed decreases,it can be concluded that:

Accepted Answer

The substitution effect is the tendency for producers to substitute a cheaper input for a more expensive input. The output effect is the tendency for producers to increase output when the price of an input falls. In this case, the price of labor has fallen relative to the price of capital, so the substitution effect is greater than the output effect.

Question 7

In a purely competitive industry,a decrease in a firm's marginal revenue product for an economic resource could result from a(n):

Accepted Answer

In a purely competitive industry, a decrease in a firm's marginal revenue product for an economic resource is a result of a decrease in demand for the firm's final product. This decrease in demand leads to a decrease in the quantity of the good or service that the firm is able to sell, which lowers the marginal revenue product of the resource used to produce the good or service. Factors like a decrease in the price of the economic resource, decrease in the supply of the economic resource, or increase in the marginal productivity of the resource may affect the resource's price or availability but do not directly impact the firm's marginal revenue product for the resource.

Question 8

An increase in the price of aluminum increases the cost of producing aluminum products and reduces the demand for aluminum workers.This decrease in labor demand would be caused by which change in a determinant of labor demand?

Accepted Answer

An increase in the price of another resource, such as the price of aluminum, is a change in a determinant of labor demand. This leads to a decrease in labor demand, as firms would try to reduce their costs by using fewer workers to produce the same amount of output. Other determinants of labor demand include changes in technology, changes in the price of the product, and changes in the number of firms in the industry.

Question 9

If the price of a good increases,then in the market for labor that is used to make this product:

Accepted Answer

The marginal revenue product (MRP) of labor is the additional revenue generated from employing one more unit of labor. If the price of the good increases, the revenue from selling the product increases, thus increasing the MRP of labor.

Question 10

A technological improvement that causes an increase in the marginal product of a resource will:

Accepted Answer

An increase in the marginal product of a resource means that the resource can produce more output per unit of input. This makes the resource more valuable, and businesses will demand more of it to produce more output. Therefore, the technological improvement will increase the demand for the resource.

Question 11

In a purely competitive industry,which of the following could cause a firm's marginal revenue product for an economic resource to increase?

Accepted Answer

An increase in demand for the firm's product would cause the equilibrium price of the product to increase. This would increase the marginal revenue product of the economic resource used in production, as the firm can now sell more units of the product at a higher price, leading to higher revenues and a higher demand for the economic resource.

Question 12

The demand for a resource will increase if the:

Accepted Answer

If the price of the output that a firm is producing increases, the firm will have an incentive to increase production in order to earn more profit. This increased production will require more resources, thereby increasing the demand for those resources.

Question 13

The demand for labor will most likely increase when the price of a:

Accepted Answer

The answer of The demand for labor will most likely...

Question 14

In percentage terms,which occupation is expected to be the fastest growing from 2008 to 2018?

Accepted Answer

The answer of In percentage terms,which occupation is expected to...

Question 15

Of the 10 fastest-growing occupations in percentage terms,it is estimated for 2008-2018 that the top seven will be related to:

Accepted Answer

According to the statement, the top seven fastest-growing occupations in percentage terms will be related to health and computers.

Question 16

Other things being equal,how would the market for personal computers be affected by a large increase in productivity in the computer industry?

Accepted Answer

The answer of Other things being equal,how would the market...

Question 17

The demand for labor will decrease in response to:

Accepted Answer

When there is decreased demand in markets for consumer goods and services, it typically leads to a decrease in production and sales, which results in companies needing less labor to produce their products or services. This ultimately leads to a decrease in demand for labor.

Question 18

Which would decrease a firm's demand for a particular resource?

Accepted Answer

A decrease in the productivity of a resource would make it less effective and efficient to use, thus reducing the firm's demand for the resource. The other choices would either have no effect on the firm's demand or increase it. B, because the decrease in price would make the resource more affordable, C, and D, because both an increase in demand for the firm's product and an increase in the price of the product would lead to higher demand for the resource that produces it.

Question 19

Which is an example of a change in the price of another resource that decreases labor demand?

Accepted Answer

An increase in the price of chemical equipment increases the cost of producing fertilizer,thus decreasing the demand for workers who make fertilizer. This is an example of a change in the price of another resource, in this case, chemical equipment, that decreases the demand for labor in the fertilizer industry.

Question 20

In a purely competitive market for economic resources,a firm's marginal revenue product for a factor could decrease as a result of a(n):

Accepted Answer

In a purely competitive market for economic resources, the price of a factor of production is determined by the intersection of the demand and supply curve for that factor. A firm's marginal revenue product (MRP) is the extra revenue that a firm earns by hiring an additional unit of a factor, ceteris paribus. If there is a decrease in the demand for the firm's product, the firm's MRP curve for the factor will shift downward, indicating that the firm can now afford to pay less for that factor. This will lead to a decrease in the price of the factor, and thus a decrease in its marginal revenue product. Therefore, the correct answer is B).

Quiz 10: Wage Determination