Question 1

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 being derived from the demand for the product produced by that resource. For example, the demand for steel used in the production of cars is derived from the demand for cars.

Question 2

The resource market is different from the product market because
A) in the resource market,firms don't maximize profit
B) in the resource market,households don't maximize utility
C) in the resource market,firms are demanders and households are suppliers
D) supply and demand do not apply in the resource market
E) supply and demand do not apply in the product market

Accepted Answer

In the resource market, firms are demanders as they demand resources (such as labor, land, and capital) to produce their products. On the other hand, households are suppliers as they supply these resources in exchange for payment. This is different from the product market where firms are suppliers and households are demanders. Therefore, choice C is the best answer. Choices A, B, D, and E are all incorrect because they do not accurately describe the differences between the resource market and the product market.

Question 3

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

Accepted Answer

This statement reflects the concept of derived demand, which is commonly observed in economics. The demand for a resource is not an independent entity but is derived from the demand for the final product it contributes to producing. For instance, the demand for lumber increases as the demand for the construction of houses rises.

Question 4

Other things constant,people supply their resources to the higher paying alternative.

Accepted Answer

This statement is a basic principle in economics known as the law of supply. People are generally motivated to earn higher pay and will switch to higher paying alternatives if they are available.

Question 5

If the price of a resource increases,other things constant,less of that resource 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

If the price of a resource increases, producers will look for substitutes as they become more expensive to hire, therefore leading to less of that resource being hired.

Question 6

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

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

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 aim to maximize their profits by using the most efficient combination of resources at the lowest possible cost. Thus, they demand resources in order to maximize their profit. The other options are not the primary goal of firms in the resource market.

Question 8

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

When the price of a resource decreases, producers will be more willing and able to hire that resource because it becomes more affordable. This will lead to an increase in the quantity demanded of the resource. Therefore, choice D is the correct answer.

Question 9

Resource owners will supply additional units of a resource as long as doing so
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 10

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

Accepted Answer

According to the law of demand, as the price of a resource increases, demand for that resource decreases. Therefore, there will be a movement along the demand curve as the quantity demanded decreases in response to the higher price.

Question 11

The dean of your college is considering hiring another economics professor.If the additional revenue that the college can earn from employing the professor exceeds the additional cost,the college should
A) do nothing
B) continue to study the issue
C) hire the professor
D) stop offering economics classes
E) not hire the professor and lay off a professor already on the faculty

Accepted Answer

The college should hire the professor if the additional revenue exceeds the additional cost. This will lead to an increase in capacity and resources for the economics department, which would benefit the students, faculty, and the department as a whole.

Question 12

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

The answer of Which of the following is not an...

Question 13

An author who writes newspaper columns for $75 each is deciding whether to purchase a personal computer with a laser printer.She figures she'd be able 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 assume that the author writes 4 columns per month on her typewriter (earning $300) and will write 6 columns per month with the computer (earning $450).

Assuming that the computer will cost $X per month, the author's net income with the computer can be calculated using the following equation:

Net Income = (Number of Columns Written x Column Payment) - Computer Cost

For the author to benefit from purchasing the computer, her net income needs to be greater than $300 (her current income with the typewriter).

Therefore, we can write the inequality:

(6 x 75) - X > 300

Simplifying this inequality, we get:

X < 225

This means that the author should buy the computer if the monthly payment is less than $225. However, we also know that the author will only benefit from purchasing the computer if she can write at least 2 more columns per month than she could on her typewriter.

Therefore, we can eliminate choices A and C, and we are left with choices B, D, and E.

Choice B (buy the computer regardless of its price) is not the best option because the computer could be too expensive and end up causing the author to lose money.

Choice D (not buy the computer regardless of the price) is not the best option because the computer could be affordable and allow the author to earn more money by writing more columns.

Therefore, the best choice is E (buy the computer if the monthly payment is less than $150) because it satisfies both the inequality and the condition of writing at least 2 more columns per month.

Question 14

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

Accepted Answer

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

Question 15

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

Question 16

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)...

Question 17

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,other...

Question 18

The demand for corn syrup is derived from:
A) The demand for corn
B) The supply of corn syrup
C) The supply of corn
D) The demand for goods made with corn syrup
E) The supply of goods made with corn syrup

Accepted Answer

The demand for corn syrup is derived from the demand for goods made with corn syrup, such as soft drinks and processed foods.

Question 19

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 20

Which of the following resources will a producer demand another unit of so long as the additional unit's marginal revenue exceeds its marginal cost?
A) labor
B) capital
C) natural resources
D) entrepreneurial ability
E) All of the answers are correct.

Accepted Answer

A producer will demand another unit of any resource (labor, capital, natural resources, entrepreneurial ability) as long as the additional unit's marginal revenue exceeds its marginal cost. Therefore, all of the answers are correct.

Quiz 11: Resource Markets

Derived demand refers to

The resource market is different from the product market because

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

Other things constant,people supply their resources to the higher paying alternative.

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

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

In the resource market,firms demand resources in order to

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

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

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

The dean of your college is considering hiring another economics professor.If the additional revenue that the college can earn from employing the professor exceeds the additional cost,the college should

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

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

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

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

Resource owners supply resources in ways that

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

The demand for corn syrup is derived from:

What is true along the demand curve for a resource?

Which of the following resources will a producer demand another unit of so long as the additional unit's marginal revenue exceeds its marginal cost?