Multiple Choice Questions

Elasticity of resource demand is measured by the:
  • The increase in total resource cost associated with the hire of one more unit of the resource
  • Employ the combination of resources that will produce the profit-maximizing output at the minimum cost.
  • Percentage change in resource quantity demanded divided by the percentage change in resource price
  • Amount by which the extra production of one more worker increases a firm's total revenue.
A change in an input price will alter both production costs and the profit-maximizing output. Thus a decline in the price of capital will reduce production costs, increase the profit-maximizing output, and thereby increase the demand for labor. This describe the:
  • Output effect
  • The wage rate is less than MP
  • MRP curve to shift to the right
  • All of the above
The introduction of ATM machines allowed financial institutions to handle more transactions at less cost, thus decreasing the demand for human tellers. The best explanation for this change is that the:
  • Marginal product of ATMs divided by its price was greater than that for human tellers.
  • Consumers have a greater demand for football games than for soccer games.
  • The marginal products of successive workers must be sold at lower prices.
  • The firm will use relatively more labor and relatively less capital
The demand for airline pilots results from the demand for air travel. This fact is an example of:
  • The derived demand for labor
  • Price of A with the MRP of A
  • MRP curve to shift to the right
  • The wage rate is less than MP
The labor demand curve of a purely competitive seller:
  • Price of A with the MRP of A
  • Related to the demand for the product or service labor is producing.
  • An increase in the price of one will increase the demand for the other
  • Slopes downward because of diminishing marginal utility
A firm that is motivated by self interest should:
  • Amount by which the extra production of one more worker increases a firm's total revenue.
  • Percentage change in resource quantity demanded divided by the percentage change in resource price
  • The marginal products of successive workers must be sold at lower prices.
  • Employ the combination of resources that will produce the profit-maximizing output at the minimum cost.
In the United States, professional football players earn much higher incomes than professional soccer players. This occurs because:
  • The marginal products of successive workers must be sold at lower prices.
  • Consumers have a greater demand for football games than for soccer games.
  • The firm will use relatively more labor and relatively less capital
  • Related to the demand for the product or service labor is producing.
The profit-maximizing firm using two outputs, x and y will employ inputs so that:
  • MRPx/Px = MRPy/Py=1
  • Price of A with the MRP of A
  • The derived demand for labor
  • MRP=MRC
Critics of the marginal productivity theory of income distribution claim that the theory is flawed due to:
  • Consumers have a greater demand for football games than for soccer games.
  • The marginal products of successive workers must be sold at lower prices.
  • The firm will use relatively more labor and relatively less capital
  • The problem of comparing different kinds of resources, such as capital and labor
Marginal resource cost is:
  • An increase in the price of one will increase the demand for the other
  • The amount an additional worker adds to the firm's total output.
  • Amount by which the extra production of one more worker increases a firm's total revenue.
  • The increase in total resource cost associated with the hire of one more unit of the resource
If a firm is selling in an imperfectly competitive product market, then:
  • Related to the demand for the product or service labor is producing.
  • An increase in the price of one will increase the demand for the other
  • The firm will use relatively more labor and relatively less capital
  • The marginal products of successive workers must be sold at lower prices.
Assume labor is the only variable input and that an additional input of labor increases total output from 72 to 78 units. If the product sells for $6 per unit in a purely competitive market, the MRP of this additional worker is:
  • Output effect
  • $36
  • The firm will use relatively more labor and relatively less capital
  • Marginal product of ATMs divided by its price was greater than that for human tellers.
Suppose a technological improvement increases the productivity of a firm's capital and, simultaneously, its workers' union negotiates a wage increase. We can predict that:
  • The firm will use relatively more labor and relatively less capital
  • Consumers have a greater demand for football games than for soccer games.
  • MRP curve to shift to the right
  • The marginal products of successive workers must be sold at lower prices.
If two resources are highly substitutable for one another:
  • Consumers have a greater demand for football games than for soccer games.
  • The marginal products of successive workers must be sold at lower prices.
  • An increase in the price of one will increase the demand for the other
  • The increase in total resource cost associated with the hire of one more unit of the resource
When economists say that the demand for labor is a derived demand, they mean that it is:
  • Consumers have a greater demand for football games than for soccer games.
  • The marginal products of successive workers must be sold at lower prices.
  • Slopes downward because of diminishing marginal utility
  • Related to the demand for the product or service labor is producing.
The purely competitive employer of resource A will maximize the profits from A by equating the:
  • Price of A with the MRP of A
  • MRPx/Px = MRPy/Py=1
  • The derived demand for labor
  • MRP curve to shift to the right
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Multiple Choice Questions
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