Question 1

Resource owners will supply additional units of a resource as long as
A)doing so increases their costs
B)doing so increases production
C)the quantity of the resource demanded exceeds the resource price
D)resource users demand the resource
E)doing so increases their utility

Accepted Answer

E

Question 2

Which of the following is not an example of derived demand?
A)More people want to plant gardens in the spring; therefore, demand for hoes and shovels increases then.
B)Strong ticket sales for a concert cause the producers to schedule an extra show and demand more ushers.
C)Increased use of robots leads to a decrease in demand for labor.
D)The development of alternative fuels made from corn leads to an increase in demand for corn.
E)Increasing demand for music leads to the construction of more recording studios.

Accepted Answer

C

Question 3

An increase in the price of a resource will cause a movement along thedemand curve for that resource.

Accepted Answer

An increase in the price of a resource will cause a decrease in the quantity demanded for that resource, resulting in a movement along the demand curve. This is known as the law of demand. However, if there is a change in a factor other than price, such as a change in consumer preferences or income, then it would cause a shift in the demand curve.

Question 4

Which of the following is not an example of derived demand?
A)As more high school graduates go on to college, more professors are hired.
B)As consumers buy more computers, they demand more powerful computers as they become available.
C)As people let their hair grow longer, fewer people become barbers.
D)As people buy more tennis shoes instead of sandals, they buy more shoe laces.
E)Increased demand for overnight delivery speeds up orders for new delivery trucks.

Accepted Answer

This is not an example of derived demand as it is a direct demand for a specific product. Derived demand refers to the demand for a product or service that is derived from the demand for another product or service. The other options are examples of derived demand as they involve the demand for one product or service leading to a demand for another related product or service.

Question 5

As the price of a resource (e.g., labor) decreases,
A)demand for that resource increases
B)the quantity demanded of that resource decreases
C)the supply of that resource increases
D)producers are more willing and able to hire that resource
E)producers are less willing and able to hire that resource

Accepted Answer

The answer of As the price of a resource (e.g.,...

Question 6

If the price of a resource falls, other things constant,
A)demand for the product it produces will increase
B)demand for a substitute product will increase
C)demand for a substitute resource will fall
D)supply of that resource will rise
E)supply of a substitute resource will also rise

Accepted Answer

The answer of If the price of a resource falls,...

Question 7

In the resource market, firms demand resources in order to
A)maximize profit
B)maximize total revenue
C)maximize marginal revenue
D)maximize utility
E)minimize cost

Accepted Answer

Firms in the resource market demand resources in order to maximize profit, as profits are directly influenced by the cost of resources. By maximizing the productivity of the resources they purchase, firms can increase revenue and ultimately maximize profit.

Question 8

The demand for a resource is derived from the demand for the final productit helps to produce.

Accepted Answer

This statement is true according to the theory of derived demand in economics. The demand for a resource, such as labor or raw materials, is derived from the demand for the final product they help to produce. For example, the demand for steel is derived from the demand for automobiles, construction, and other industries that use steel as a raw material.

Question 9

Because it is based on the demand for products, the demand for labor iscalled
A)a substitution demand
B)a complementary demand
C)an income demand
D)a derived demand
E)a marginal demand

Accepted Answer

The term "derived demand" means that the demand for labor is derived from the demand for the goods and services that labor produces. In other words, if there is high demand for a product, the company producing that product will need more workers to meet that demand. Therefore, the correct answer is D, derived demand.

Question 10

Resource owners supply resources in ways that
A)maximize their utility
B)maximize their income
C)minimize the amount of work
D)maximize the amount of work
E)maximize the demand for their resource

Accepted Answer

The answer of Resource owners supply resources in ways that
A)maximize...

Question 11

What is true along the demand curve for a resource?
A)Prices of other resources are assumed constant.
B)The marginal product of that resource remains constant.
C)Total cost of production is assumed constant.
D)The price of that particular resource is assumed constant.
E)The quantity of that particular resource is assumed constant.

Accepted Answer

The answer of What is true along the demand curve...

Question 12

Both sugar and fructose can be used in the production of candy.If the priceof sugar increases,
A)the demand for sugar increases
B)sugar becomes relatively more expensive than fructose only if the price of fructose falls
C)sugar becomes relatively more expensive than fructose, other things constant
D)the price of fructose immediately increases
E)the price of fructose immediately decreases

Accepted Answer

If the price of sugar increases, candy manufacturers will look for substitutes like fructose to reduce their costs. As a result, the demand for fructose will increase, driving up its price. However, since sugar has become relatively more expensive compared to fructose, the demand for sugar will decrease, leading to a lower equilibrium quantity and price. Therefore, C is the correct choice.

Question 13

Derived demand refers to
A)demand curves derived from utility functions
B)an individual demand curve estimated from a market demand curve
C)a market demand curve estimated from individual demand curves
D)demand for a resource derived from the demand for the product produced by that resource
E)demand for a product derived from the demand for the resource used to make that product

Accepted Answer

Derived demand refers to the demand for a resource (such as labor or raw materials) that arises from the demand for the products produced by that resource. Therefore, option D, which refers to "demand for a resource derived from the demand for the product produced by that resource," is the correct answer.

Question 14

The market demand curve for a resource is the
A)horizontal sum of the demand curves for that resource in all its various uses
B)difference among the demand curves for that resource in all its various uses
C)demand for that resource in its best use
D)sum of the demand curves for that resource in its best two uses
E)vertical sum of the demand curve for that resource in all its various uses

Accepted Answer

The market demand curve for a resource is the horizontal sum of the demand curves for that resource in all its various uses. This means that the demand at each price level from all users of the resource is added together to form the market demand curve.

Question 15

Which of the following best illustrates the concept of derived demand?
A)As income rises, the demand for TVs rises.
B)A fall in the price of cameras will increase the demand for film.
C)A fall in the demand for tires will reduce the demand for rubber.
D)When the price of gasoline rises, the demand for automobile repair falls.
E)If consumers expect the price of coffee to rise, demand for coffee rises.

Accepted Answer

Derived demand refers to the demand for one good or service being dependent on the demand for another good or service. In this case, the demand for rubber is dependent on the demand for tires, as rubber is a necessary input for tire production. The decrease in demand for tires consequently reduces the demand for rubber.

Question 16

An increase in the demand for shoemakers will increase the demand forshoes.

Accepted Answer

The answer of An increase in the demand for shoemakers...

Question 17

If the price of a resource increases, other things constant, less of thatresource will be hired because
A)producers will substitute away from that resource
B)producers fear starting a trend toward higher resource prices
C)the demand curve for the product will shift to the left
D)highly paid resources don't produce as much
E)it makes other resources look expensive as well

Accepted Answer

When the price of a resource increases, producers will look for substitutes that are less expensive to hire, resulting in less of that resource being hired. This is because producers will try to minimize their costs and maximize their profits.

Question 18

An author who writes newspaper columns for $75 each is deciding whetherto purchase a personal computer with a laser printer.She figures she'd beable to write two more columns per month than she could on her typewriter.She should
A)buy the computer if the monthly payment is less than $300
B)buy the computer regardless of its price
C)not buy the computer if the monthly payment is greater than $75
D)not buy the computer regardless of the price
E)buy the computer if the monthly payment is less than $150

Accepted Answer

Let's calculate the additional revenue she would earn by writing two more columns per month:
2 (additional columns) x $75 (earnings per column) = $150

So, if the monthly payment for the computer is less than $150, it would be worth it for her to buy it and increase her earnings. Therefore, the best choice is E.

Question 19

Resource owners will supply additional units of a resource as long as doingso
A)decreases their opportunity cost
B)increases their income
C)increases their utility
D)decreases their income taxes
E)improves their working conditions

Accepted Answer

The answer of Resource owners will supply additional units of...

Question 20

As the price of land decreases along its demand curve, the relative price ofland
A)increases because the prices of other resources have also decreased
B)decreases because the prices of other resources have also decreased
C)increases because the prices of other resources have increased
D)decreases because the prices of other resources are held constant
E)remains constant because the prices of other resources also increase

Accepted Answer

The answer of As the price of land decreases along...

Quiz 11: Resource Markets

Resource owners will supply additional units of a resource as long as

Which of the following is not an example of derived demand?

An increase in the price of a resource will cause a movement along thedemand curve for that resource.

Which of the following is not an example of derived demand?

As the price of a resource (e.g., labor) decreases,

If the price of a resource falls, other things constant,

In the resource market, firms demand resources in order to

The demand for a resource is derived from the demand for the final productit helps to produce.

Because it is based on the demand for products, the demand for labor iscalled

Resource owners supply resources in ways that

What is true along the demand curve for a resource?

Both sugar and fructose can be used in the production of candy.If the priceof sugar increases,

Derived demand refers to

The market demand curve for a resource is the

Which of the following best illustrates the concept of derived demand?

An increase in the demand for shoemakers will increase the demand forshoes.

If the price of a resource increases, other things constant, less of thatresource will be hired because

An author who writes newspaper columns for $75 each is deciding whetherto purchase a personal computer with a laser printer.She figures she'd beable to write two more columns per month than she could on her typewriter.She should

Resource owners will supply additional units of a resource as long as doingso

As the price of land decreases along its demand curve, the relative price ofland