Question 1

The demand for inputs is ________ because it depends on the demand for outputs.
A) a secondary demand
B) a derived demand
C) inconsequential
D) unrelated to cost

Accepted Answer

Derived demand refers to the demand for an input that is derived from the demand for the output it helps to produce. In other words, if the demand for a product increases, the demand for the inputs required to produce that product also increases. Therefore, the demand for inputs is derived from the demand for outputs.

Question 2

Which if the following is the best example of derived demand?
A) Janice got a Samsung Galaxy Tab for her birthday, and now her best friend Tamika wants one for her birthday.
B) The demand for movie theater ushers increases when more consumers choose to go to movie theaters.
C) More peanut butter is demanded as the price of strawberry jam falls.
D) When the price of Honda Accords increased, the demand for Nissan Altimas went up.

Accepted Answer

Derived demand is when the demand for one good or service is derived from the demand for another good or service. In this example, the demand for movie theater ushers is derived from the demand for movie theater tickets, as more consumers choosing to go to movie theaters means more people needing ushers to help them find their seats. The other options do not demonstrate derived demand - A is just a case of individual preference, C is an example of a substitution effect, and D is an example of the law of demand.

Question 3

Related to the Economics in Practice on page 211: According to the Economics in Practice, firms where managers had more extensive training experienced
A) increasing wage rates.
B) a decrease in the marginal product of labor.
C) increased productivity.
D) a decrease in the marginal revenue product of labor.

Accepted Answer

The Economics in Practice states that firms where managers had more extensive training experienced increased productivity, making choice C the correct answer.

Question 4

If a product's demand decreases as its supply simultaneously increases, the marginal revenue product curve will
A) shift to the right.
B) shift to the left.
C) remain unchanged.
D) either shift to the left, shift to the right, or remain unchanged depending upon what happens to product price.

Accepted Answer

According to the law of supply and demand, as supply increases and demand decreases, the equilibrium price and quantity will both decrease. This means that the marginal revenue product curve will shift to the left, indicating a decrease in the marginal revenue product for each unit of labor or input.

Question 5

A soybean farmer sells soybeans in a perfectly competitive market and hires labor in a perfectly competitive market. The market price of soybeans is $1 a bushel, the wage rate is $12, the farmer employs six workers and the marginal product of the sixth worker is 10. What would you advise this farmer to do?
A) Do nothing because the wage rate and the marginal product of the last worker hired are equal.
B) Reduce employment because the wage paid is greater than the marginal revenue product.
C) Increase employment because the wage paid is less than the marginal revenue product.
D) Reduce the product price so that the wage and marginal revenue product will be equal.

Accepted Answer

The answer of A soybean farmer sells soybeans in a...

Question 6

Bonita's Braidworks hires workers to braid hair. The store sells the service for $25 per customer. The marginal revenue product of this storeʹs fifth worker is $50. The marginal product of the fifth worker is
A) 0.5 braided customers.
B) 2 braided customers.
C) 25 braided customers.
D) indeterminate from this information.

Accepted Answer

Since the marginal revenue product of the fifth worker is $50 and the store sells the service for $25 per customer, the marginal product of the fifth worker must be 2 braids per customer ($50/$25 = 2). Therefore, the best choice is B.

Question 7

If a nail salon hires an additional worker, that worker can service 8 additional customers per day. The average nail service fee is $30. The most the salon would be willing to pay that groomer is
A) $8 per day.
B) $30 per day.
C) $240 per day.
D) indeterminate with the given information.

Accepted Answer

If the salon hires an additional worker, they will be able to service 8 additional customers per day. If each of these customers pays $30 for their service, the salon will make an additional $240 per day. Therefore, the most the salon would be willing to pay that worker is $240 per day, since any more than that would cut into the profit gained from their additional services.

Question 8

When a small amount of output is produced per unit of the input, the input is said to exhibit
A) high productivity.
B) low productivity.
C) marginal productivity.
D) derived productivity.

Accepted Answer

When a small amount of output is produced per unit of the input, it is an indication of low productivity. This means that the input is not being utilized efficiently and is not producing the desired results.

Question 9

Assuming that labor is the only variable input if society values a good ________ it costs firms to hire the workers to produce that good, the good ________ be produced.
A) more than; will
B) less than; will
C) more than; will not
D) equal to what; will not

Accepted Answer

If society values a good more than it costs firms to hire the workers to produce that good, it indicates that the production of the good is economically viable and profitable, leading to its production.

Question 10

The Pet Emporium hires workers to bathe cats. The Emporium sells this service for $20. The marginal revenue product of this storeʹs fifth worker is $100. The marginal product of the fifth worker is
A) 0.2 bathed cats.
B) 1 bathed cat.
C) 5 bathed cats.
D) indeterminate from this information.

Accepted Answer

The marginal revenue product (MRP) is calculated as the marginal product (MP) of the worker multiplied by the price of the service. Given that the MRP of the fifth worker is $100 and the service is sold for $20, we divide $100 by $20 to find the MP, which is 5 bathed cats.

Question 11

The marginal revenue product of labor curve will always shift to the right if
A) the wage rate rises.
B) product demand decreases and product price decreases.
C) product demand increases and product price increases.
D) the price of capital rises.

Accepted Answer

The marginal revenue product of labor is dependent on the demand for the product, so an increase in product demand and price will increase the marginal revenue product of labor curve and shift it to the right. A rise in the wage rate or the price of capital may affect the amount of labor demanded, but it will not necessarily shift the marginal revenue product of labor curve. A decrease in product demand and price would shift the curve to the left.

Question 12

Assume that automobiles are a normal good. An increase in income will
A) shift the marginal revenue product curve of auto workers to the left.
B) move a firm down the marginal revenue product curve of auto workers.
C) shift the marginal revenue product curve of auto workers to the right.
D) have no effect on the marginal revenue product curve of auto workers.

Accepted Answer

An increase in income will cause consumers to have more purchasing power, and since automobiles are a normal good, they will demand more cars. This increase in demand will shift the marginal revenue product curve of auto workers to the right, as firms will need to hire more workers to meet the increased demand for cars.

Question 13

Which of the following is related to the additional revenues business owners expect to enjoy as a result of hiring the employee?
A) the salary of Dallas Mavericks' player Dirk Nowitski
B) the wages for Wendy Peffercorn, a cashier at the Piggly Wiggly
C) the signing bonus for Saul Goodman, a new attorney at the Hamlin, Hamlin, and McGill law firm
D) All of the above are correct.

Accepted Answer

All the options are examples of additional revenues that business owners expect to enjoy as a result of hiring these employees, whether it's a sports team expecting better performance and ticket sales, a retail store expecting better service and sales, or a law firm expecting more clients and cases.

Question 14

Demand for the services of Texas Rangers' pitcher Yu Darvish is
A) horizontal.
B) unrelated to his true productivity.
C) an output demand.
D) derived from the demand for Texas Ranger's tickets when Darvish plays.

Accepted Answer

The demand for Yu Darvish's services is derived from the demand for Texas Rangers' tickets when he plays, as fans are more likely to attend games when he is pitching. This means that Darvish's demand is indirectly related to his productivity on the field, and is therefore not unrelated or horizontal. Additionally, it is not an output demand, as that would refer to the demand for the output produced by Darvish's services, such as the number of strikeouts he achieves.

Question 15

The demand for ________ is a ʺderived demand.ʺ
A) hot chocolate on a cold day
B) U.S. Treasury bonds
C) a dog groomer by a grooming shop
D) hot dogs on the 4th of July

Accepted Answer

A derived demand is when the demand for a good or service is based on the demand for another good or service. In this case, the demand for a dog groomer by a grooming shop is derived from the demand for pet grooming services. The demand for hot chocolate on a cold day, U.S. Treasury bonds, and hot dogs on the 4th of July are not necessarily derived from other goods or services.

Question 16

The ________ is the product of the marginal product of labor and the price of the output.
A) marginal factor cost
B) total revenue
C) average revenue
D) marginal revenue product

Accepted Answer

The marginal revenue product (MRP) is the additional revenue generated by hiring an additional unit of labor, and is calculated by multiplying the marginal product of labor (MPL) by the price of the output. Therefore, the answer is D - marginal revenue product.

Question 17

If product demand increases and product price increases
A) the marginal revenue product curve will shift to the right.
B) the marginal revenue product curve will shift to the left.
C) the firm will move up the marginal revenue product curve and hire fewer units of the input.
D) the firm will move down the marginal revenue product curve and hire more units of the input.

Accepted Answer

When product demand increases and product price increases, the value of the additional output produced by an additional unit of input (marginal revenue product) increases. This leads to a rightward shift in the marginal revenue product curve, indicating that each unit of input is now more valuable to the firm.

Question 18

An increase in the wage rate will change
A) only the amount of labor hired.
B) the amount of labor employed, and it may also change the amount of other inputs employed.
C) the price the firm charges for the product, but it will not affect the demand for any of the inputs.
D) the firmʹs profit-maximizing level output, but not its usage of inputs.

Accepted Answer

An increase in the wage rate will affect the amount of labor employed as firms will seek to optimize their production by adjusting how much labor they hire to minimize costs. However, it may also affect the employment of other inputs if firms decide to substitute labor with capital or other inputs. The price of the product may also change depending on how much the cost of production increases, but it is not certain. Finally, the firm's profit-maximizing output level will also be affected as the cost structure of the firm changes.

Question 19

The ________ is the additional revenue a firm earns by employing one additional unit of labor.
A) marginal revenue product of labor
B) marginal labor cost
C) average labor revenue
D) per-worker net profit

Accepted Answer

The definition provided in the question matches the concept of marginal revenue product of labor (MRPL). MRPL is the change in a firm's revenue when they employ one more unit of labor.

Question 20

If the marginal product of a worker for a hearing aid manufacturer is 6 hearing aids, and the price of a hearing aid is $300, the firmʹs marginal revenue product is
A) $50.
B) $300.
C) $1,800.
D) $18,000.

Accepted Answer

The marginal revenue product (MRP) is calculated as the marginal product (MP) multiplied by the price of the product, MRP = MP x price. In this case, MRP = 6 hearing aids x $300 = $1,800. Therefore, the correct answer is choice C.

Quiz 10: Input Demand: The Labor and Land Markets

The demand for inputs is ________ because it depends on the demand for outputs.

Which if the following is the best example of derived demand?

Related to the Economics in Practice on page 211: According to the Economics in Practice, firms where managers had more extensive training experienced

If a product's demand decreases as its supply simultaneously increases, the marginal revenue product curve will

Bonita's Braidworks hires workers to braid hair. The store sells the service for $25 per customer. The marginal revenue product of this storeʹs fifth worker is $50. The marginal product of the fifth worker is

If a nail salon hires an additional worker, that worker can service 8 additional customers per day. The average nail service fee is $30. The most the salon would be willing to pay that groomer is

When a small amount of output is produced per unit of the input, the input is said to exhibit

Assuming that labor is the only variable input if society values a good it costs firms to hire the workers to produce that good, the good be produced.

The Pet Emporium hires workers to bathe cats. The Emporium sells this service for $20. The marginal revenue product of this storeʹs fifth worker is $100. The marginal product of the fifth worker is

The marginal revenue product of labor curve will always shift to the right if

Assume that automobiles are a normal good. An increase in income will

Which of the following is related to the additional revenues business owners expect to enjoy as a result of hiring the employee?

Demand for the services of Texas Rangers' pitcher Yu Darvish is

The demand for ________ is a ʺderived demand.ʺ

The ________ is the product of the marginal product of labor and the price of the output.

If product demand increases and product price increases

An increase in the wage rate will change

The ________ is the additional revenue a firm earns by employing one additional unit of labor.

If the marginal product of a worker for a hearing aid manufacturer is 6 hearing aids, and the price of a hearing aid is $300, the firmʹs marginal revenue product is