Question 1

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

A

Question 2

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

D

Question 3

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

Accepted Answer

This is known as derived demand, which means the demand for a resource or input is derived from the demand for the final product it helps to produce. For example, the demand for steel is derived from the demand for cars, bridges, and other products that require steel as an input.

Question 4

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 5

Both sugar and fructose can be used in the production of candy. If the price of 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, then the relative price of fructose decreases, making it relatively cheaper than sugar. Therefore, sugar becomes relatively more expensive than fructose, other things constant. This would lead to a substitution effect, with candy producers switching from using sugar to using fructose as a cheaper alternative.

Question 6

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 for the resource in one particular use is added horizontally to the demand for the resource in all other uses to derive the overall market demand for the resource.

Question 7

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

Producers will substitute away from that resource as it becomes relatively more expensive compared to other resources, leading to a decrease in the quantity of that resource hired.

Question 8

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 9

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 such as labor, land, and capital to maximize their profit. By using these resources efficiently and effectively, firms can produce goods and services that generate the highest possible profit. Maximizing total revenue or marginal revenue may not necessarily lead to maximizing profit, as it depends on the cost of resources used to generate that revenue. Similarly, minimizing cost may not lead to maximizing profit if it sacrifices the quality or quantity of the products produced. Maximizing utility is a concept that applies to consumers, not firms in the resource market.

Question 10

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 11

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

Accepted Answer

This statement is true based on the law of demand, which states that as the price of a good or resource increases, the quantity demanded decreases. Therefore, if the price of a resource increases, the quantity demanded will decrease, causing a movement along the demand curve.

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

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 (e.g., labor) decreases, producers are more willing and able to hire that resource. This is because the lower price makes the resource more affordable and attractive to producers, leading to an increase in demand for the resource. The decrease in price does not necessarily affect the quantity demanded or supply of the resource.

Question 14

If the demand for tacos increases,
A) the supply of corn increases
B) the supply of corn decreases
C) the demand for corn increases
D) the demand for corn decreases
E) the price of corn falls

Accepted Answer

If the demand for tacos increases, the demand for ingredients in making tacos, such as corn, also increases. This would lead to an increase in the demand for corn.

Question 15

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

Accepted Answer

The demand for labor is derived from the demand for the products or services that the labor will produce. Therefore, the best choice is D) a derived demand. A substitution demand refers to a change in demand for one good due to a change in the price of a substitute good; a complementary demand refers to a change in demand for one good due to a change in the price of a complementary good; an income demand refers to a change in demand for a good due to a change in consumer income; and a marginal demand refers to the additional demand for a good that results from a small increase in its price.

Question 16

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 is derived from the demand for the final product that is produced by that resource. Therefore, the correct answer is D.

Question 17

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 18

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 x be the number of columns she can write in a month on her typewriter. 
Then, with the computer, she will be able to write x + 2 columns per month.

Assuming she writes every column available, her typewriter monthly earnings are 75x.

With the computer, she will earn 75(x + 2).

The difference in earnings will be the monthly payment amount for the computer.

So, 75(x + 2) - 75x = monthly payment amount

Simplifying, we get 150 = monthly payment amount

Therefore, she should buy the computer if the monthly payment is less than $150, which means the best choice is E.

Question 19

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

The resource market differs from the product market because in the resource market, firms act as demanders while households act as suppliers of resources. In contrast, in the product market, firms act as suppliers while households act as demanders of goods and services. This fundamental difference in roles is what sets the two markets apart. Choices A, B, D, and E are incorrect because they do not accurately describe the difference between the two markets.

Question 20

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,...

Quiz 11: Resource Markets

What is true along the demand curve for a resource?

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

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

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

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

The market demand curve for a resource is the

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

Resource owners supply resources in ways that

In the resource market, firms demand resources in order to

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

An increase in the price of a resource will cause a movement along the demand 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 demand for tacos increases,

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

Derived demand refers to

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

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

The resource market is different from the product market because

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