Econ 101

Which of the following has not been a major factor contributing to the high productivity of labor in the United States?

high levels of capital investment HIGH WAGE RATES technological advancement education and training of workers

If the world price for good A is below the domestic price for good A without trade, then consumer surplus will ________ and producer surplus will ________ with trade.

decrease, increase increase, increase decrease, decrease INCREASE, DECREASE

If the price level rises by 4% in a year and nominal wages increase by 2%, then real wages will

increase by 2%. DECREASE BY 2%. decrease by 4%. decrease by 6%.

Nations specialize in production and engage in international trade in order to

increase employment. improve transportation. protect domestic consumers and producers. INCREASE OUTPUT AND INCOME.

In country A the opportunity cost of 1 paper clip is

1/4 rubber band. 1 rubber band. 1/2 RUBBER BAND. 2 rubber bands.

If the product the firm produces sells for a constant $2 per unit, the marginal revenue product of the third unit of the resource is (see graph)

$12. $18. $6. $24- CORRECT

Harry owns a barber shop and charges $6 per haircut. By hiring one barber at $10 per hour, the shop can provide 24 haircuts per 8-hour day. By hiring a second barber at the same wage rate, the shop can now provide a total of 42 haircuts per day. The MRP of the second barber is

$126. 42 haircuts. $108- CORRECT 18 haircuts.

The world price of the product is $6. If the market is open to international trade but there is a tariff of $2 per unit imposed, the total government revenue generated by the tariff would be (see graph)

$60. $100. $80.-CORRECT $40.

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

$36- CORRECT $12. $6. $72.

If the world price of the product were $6 and a tariff of $1 per unit were applied to imports of the product, then the total revenue (after tariff) going to domestic producers would be

$8,400, and the total revenue (after tariff) going to foreign producers would be $2,800. $13,200, and the total revenue (after tariff) going to foreign producers would be $2,400. $11,200, and the total revenue (after tariff) going to foreign producers would be $2,800. $11,200, AND THE TOTAL REVENUE (AFTER TARIFF) GOING TO FOREIGN PRODUCERS WOULD BE $2,400.

Suppose a single firm has the marginal revenue product schedule for a particular type of labor given in the left table. Assume there are 150 firms with the same marginal-revenue-product schedules for this particular type of labor. What will be the equilibrium wage rate? (see table)

$8- CORRECT $9 $7 $10

What is the marginal revenue product of the fifth worker? (see table)

-$800- CORRECT $400 $160 $2

A farmer who has fixed amounts of land and capital finds that total product is 24 for the first worker hired; 32 when two workers are hired; 37 when three are hired; and 40 when four are hired. The farmer's product sells for $3 per unit and the wage rate is $13 per worker. How many workers should the farmer hire?

1 2 4 3- CORRECT

Answer the next question on the basis of the following information about the cost ratios for two products-fish (F) and chicken (C)-in countries Singsong and Harmony. Assume that production occurs under conditions of constant costs and these are the only two nations in the world. Singsong: 1F = 2C Harmony: 1F = 4C Which one of the following would not be feasible terms for trade between Singsong and Harmony?

1 chicken for 1/3 of a fish 1 fish for 3 chickens 1 CHICKEN FOR 1/5 OF A FISH 1 fish for 2½ chickens

If the world price of the product is $6 and a tariff of $1 per unit imported is imposed, then the quantity of output that would be supplied domestically would be

1,600 UNITS, AND THE QUANTITY OF OUTPUT THAT WOULD BE IMPORTED WOULD BE 400 UNITS. 1,600 units, and the quantity of output that would be imported would be 800 units. 1,400 units, and the quantity of output that would be imported would be 800 units. 1,400 units, and the quantity of output that would be imported would be 400 units.

If the world price of the product is $6 and a tariff of $1 per unit imported is imposed, then the quantity of output that would be supplied domestically would be (see table)

1,600 units, and the quantity of output that would be imported would be 800 units. 1,400 units, and the quantity of output that would be imported would be 400 units. 1,600 UNITS, AND THE QUANTITY OF OUTPUT THAT WOULD BE IMPORTED WOULD BE 400 UNITS. 1,400 units, and the quantity of output that would be imported would be 800 units.

Nominal monthly wages increase from $1,500 to $1,800 while the price level increases by 4%. The percentage change in real monthly wages is about

10% 14% 12% 16%- CORRECT

Assume that Wat originally produced rice and corn at combination C and that Xat originally produced combination B. If the nations now fully specialized based on comparative advantage, the total gains from specialization and trade are (see tables)

100 units of rice and 150 units of corn. 100 units of rice and 100 units of corn. 50 UNITS OF RICE AND 50 UNITS OF CORN. 25 units of rice and 25 units of corn.

In maximizing its profit, this firm will employ (see table)

2 units of labor. 3 UNITS OF LABOR. 5 units of labor. 4 units of labor.

For OMICS, the opportunity cost of producing an additional unit of B is (see graph)

2/3 unit of A. 1 unit of A. 1/2 unit of A. 1/3 UNIT OF A.

If the firm's product sells for a constant $2 and the price of the resource is a constant $16, the firm will employ how many units of the resource? (see graph)

3 4 2 5- CORRECT

How many more workers will the firm hire when the wage rate is $15 instead of $30? (see table)

3 workers 2 WORKERS 1 worker 4 workers

The nominal annual wage increases from $20,000 to $21,000 while the price level increases by 7%. In this case, the percentage change in the real annual wage is about

3%. -1%. 5%. -2%.- CORRECT

Suppose that each nation specialized in producing the product for which it has a comparative advantage, and the terms of trade were set at 3 units of chemicals for 1 unit of autos. In this case, Germany could obtain and consume a maximum combination of 8 million units of autos and (see table)

36 MILLION UNITS OF CHEMICALS. 12 million units of chemicals. 48 million units of chemicals. 24 million units of chemicals.

Assume that the firm is hiring labor in a purely competitive market. If the wage rate is $20, how many workers will the firm choose to employ? (Look at table)

5 3 4 2- CORRECT

At a wage rate of $23 per worker, the firm will choose to employ (look at table)

5 workers. 4 workers. 3 WORKERS. 2 workers.

The product price is $10 per unit and the cost per worker is $540. How many workers will the firm employ? (see table)

7 4 5- CORRECT 6

An industry would be likely to lay off workers following

A SUCCESSFUL ATTEMPT BY AN INDUSTRIAL UNION TO PUSH WAGES ABOVE THE MARGINAL REVENUE PRODUCT OF LABOR. the imposition of a new minimum wage below the current equilibrium wage. an increase in the price of the firm's product. an increase in the marginal revenue product of labor.

If union workers decide to take more leisure, while the prices of the products produced by union workers increase, this situation is depicted in graph (see graphs)

C- CORRECT A. D. B.

Sd + Q is the product supply curve after an import quota is imposed. A quota of wy will result in an increase of producer surplus equal to areas. (see graph)

E + F + G + H + J. K. E + F + K. RESULT IN AN INCREASE OF PRODUCER SURPLUS EQUAL TO AREA E.

Sd + Q is the product supply curve after an import quota is imposed. A quota of wy will result in a decrease of consumer surplus equal to areas (see graph)

E. E + F + G + H + J- CORRECT E + F +K. K.

Which of the following is true?

FOR THE WEST REGION, THE COST OF 15 UNITS OF FOOD IS 5 UNITS OF CLOTHING. For the West region, the cost of 5 units of clothing is 10 units of food. For the East region, the cost of 4 units of clothing is 6 units of food. For the East region, the cost of 8 units of food is 8 units of clothing.

Inclusive unionism is practiced mostly by

INDUSTRIAL UNIONS. small unions comprised of skilled workers, such as the bricklayers. professional and semiprofessional employees. craft unions.

If these two nations specialize on the basis of comparative advantage (see tables)

LATALIA WILL PRODUCE BEANS AND TROMBONIA WILL PRODUCE PORK. Latalia will produce both beans and pork and Trombonia will produce neither. Trombonia will produce beans and Latalia will produce pork. Trombonia will produce both beans and pork.

If the marginal revenue product (MRP) of labor is less than the wage rate

LESS LABOR SHOULD BE EMPLOYED. more labor should be employed. the firm is making profits. the firm is incurring losses.

A firm will find it profitable to hire workers up to the point at which their

MARGINAL RESOURCE COST IS EQUAL TO THEIR MRP. marginal resource cost equals their wage rate. wage rate equals product price. MP is equal to their MRP.

Suppose the demand for strawberries rises sharply, resulting in an increased price for strawberries. As it relates to strawberry pickers, we could expect the

MRC curve to shift downward. MRP curve to shift to the left. MP curve to shift downward. MRP CURVE TO SHIFT TO THE RIGHT.

Assuming a firm is selling its output in a purely competitive market, its resource demand curve can be determined by

MULTIPLYING MARGINAL PRODUCT BY PRODUCT PRICE. multiplying total product by product price. dividing total revenue by marginal product. comparing marginal product with various possible input prices.

Which of the following is an explanation for the high labor-productivity in the United States?

PLENTIFUL CAPITAL RESOURCES high total output in industries high price of labor plentiful labor resources

The purely competitive employer of resource A will maximize the profits from A by equating the

PRICE OF A WITH THE MRP OF A. marginal productivity of A with the price of A. price of A with the MRC of A. marginal productivity of A with the MRC of A.

Assume that a restaurant is hiring labor in an amount such that the MRC of the last worker is $16 and her MRP is $12. On the basis of this information, we can say that

PROFITS WILL BE INCREASED BY HIRING FEWER WORKERS. profits will be increased by hiring additional workers. marginal revenue product must exceed average revenue product. the restaurant is maximizing profits.

If the economy is opened to free trade, the price and quantity sold of this product would be (see graph)

Pc and v. PC AND Z. Pt and y. Pa and z.

If this economy was entirely closed to international trade, equilibrium price and quantity would be (see graph)

Pc and v. Pc and z. PA AND X. Pa and z.

When economists say that the demand for labor is a derived demand, they mean that it is

RELATED TO THE DEMAND FOR THE PRODUCT OR SERVICE LABOR IS PRODUCING. based on the desire of businesses to exploit labor by paying below equilibrium wage rates. dependent on government expenditures for public goods and services. based on the assumption that workers are trying to maximize their money incomes.

What other economic process needs to accompany international trade, for nations to benefit from such trade?

Regulation of production and trade. SPECIALIZATION IN PRODUCTION. Nationalization of industries. Spreading out of resources in more industries.

A competitive employer is using labor in such an amount that labor's MRP is $10 and its wage rate is $8. This firm

SHOULD HIRE MORE LABOR BECAUSE THIS WILL INCREASE PROFITS. is selling its product in an imperfectly competitive market. should hire more labor, although this may either increase or decrease profits. is currently hiring the profit-maximizing amount of labor.

Which statement is correct?

THE PERCENTAGE CHANGE IN THE NOMINAL WAGE MINUS THE PERCENTAGE CHANGE IN THE PRICE LEVEL EQUALS THE PERCENTAGE CHANGE IN REAL WAGE. The percentage change in the price level minus the percentage change in the nominal wage equals the percentage change in the real wage The percentage change in the real wage minus the percentage change in the price level equals the percentage change in the nominal wage The percentage change in the nominal wage plus the percentage change in the price level equals the percentage change in the real wage

Graphical analysis of tariffs reveals that

THEY INCREASE DOMESTIC PRODUCTION OF THE GOOD FOR WHICH IMPORTS FACE TARIFFS. although the benefits are not shared equally, everyone in the domestic economy benefits from tariffs. revenue gains outweigh the costs to domestic consumers. they benefit domestic consumers at the expense of domestic producers.

Which of the following will not cause a shift in the demand for resource X?

a decrease in the price of substitute resource Y an increase in the productivity of resource X A DECLINE IN THE PRICE OF RESOURCE X an increase in the price of the product resource X is producing

Real wages would rise if the prices of goods and services

and wage rates both rose. ROSE LESS RAPIDLY THAN NOMINAL-WAGE RATES. and wage rates both fell. rose more rapidly than nominal-wage rates.

The change in a firm's total revenue that results from hiring an additional worker is measured by the

average revenue product. marginal product. MARGINAL REVENUE PRODUCT. marginal revenue.

If one worker can pick $30 worth of grapes and two workers together can pick $50 worth of grapes, the

data given does not permit the determination of the marginal revenue product of either worker. marginal revenue product of each worker is $25. MARGINAL REVENUE PRODUCT OF THE SECOND WORKER IS $20. marginal revenue product of the first worker is $20.

Marginal revenue product measures the

decline in product price that a firm must accept to sell the extra output of one more worker. increase in total resource cost resulting from the hire of one extra unit of a resource. increase in total revenue resulting from the production of one more unit of a product. AMOUNT BY WHICH THE EXTRA PRODUCTION OF ONE MORE WORKER INCREASES A FIRM'S TOTAL REVENUE.

If the world price for good A is above the domestic price for good A without trade, then producer surplus will ________ and total economic surplus will ________ with trade.

decrease, decrease decrease, increase increase, decrease INCREASE, INCREASE

If the world price for good A is above the domestic price for good A without trade, then consumer surplus will ________ and producer surplus will ________ with trade.

decrease, decrease increase, decrease DECREASE, INCREASE increase, increase

A profit-maximizing firm will

expand employment if marginal revenue product is less than marginal resource cost. expand employment if marginal revenue product equals marginal resource cost. reduce employment if marginal revenue product equals marginal resource cost. REDUCE EMPLOYMENT IF MARGINAL REVENUE PRODUCT IS LESS THAN MARGINAL RESOURCE COST.

Suppose the domestic price (no-international-trade price) of copper is $1.20 a pound in the United States while the world price is $1.00 a pound. Assuming no transportation costs, the United States will

export copper. have a domestic surplus of copper. neither export nor import copper. IMPORT COPPER.

The real wage will rise if the nominal wage

falls at the same rate as the general price level. increases at the same rate as labor productivity. INCREASES MORE RAPIDLY THAN THE GENERAL PRICE LEVEL. falls more rapidly than the general price level.

The higher price of imported products due to trade barriers causes some consumers to shift their purchases to a domestically produced product that is now

higher in price because import competition has risen. lower in price because import competition has declined. lower in price because import competition has risen. HIGHER IN PRICE BECAUSE IMPORT COMPETITION HAS DECLINED.

If the world price for good A is below the domestic price for good A without trade, then producer surplus will ________ and total economic surplus will ________ with trade.

increase, decrease DECREASE, INCREASE increase, increase decrease, decrease

If the world price for good A is below the domestic price for good A without trade, then consumer surplus will ________ and total economic surplus will ________ with trade.

increase, decrease INCREASE, INCREASE decrease, decrease decrease, increase

If the nominal wages of carpenters rose by 5% in 2013 and the price level increased by 3%, then the real wages of carpenters

increased by 3%. INCREASED BY 2%. decreased by 2%. increased by 8%.

Labor unions may attempt to raise wage rates by

increasing the supply of labor. FORCING EMPLOYERS, UNDER THE THREAT OF A STRIKE, TO PAY ABOVE-EQUILIBRIUM WAGE RATES. decreasing the demand for labor. increasing the price of complementary resources.

The labor demand curve of a purely competitive seller

is perfectly elastic at the going wage rate. slopes downward because the elasticity of demand is always less than unity. SLOPES DOWNWARD BECAUSE OF DIMINISHING MARGINAL PRODUCTIVITY. slopes downward because of diminishing marginal utility.

When restrictions on imported products are removed by a nation, it will result in

lower prices and lower quantities consumed in that nation. higher prices and higher quantities consumed in that nation. LOWER PRICES AND HIGHER QUANTITIES CONSUMED IN THAT NATION. higher prices and lower quantities consumed in that nation.

In a purely competitive labor market, a profit-maximizing firm will hire labor up to the point where the marginal revenue product of labor equals the

marginal cost of one extra unit of output. average cost of each unit of output. price of the product. WAGE RATE OR PRICE OF LABOR.

The purely competitive employer of resource A will maximize the profits from A by equating the

marginal productivity of A with the MRC of A. price of A with the MRC of A. PRICE OF A WITH THE MRP OF A. marginal productivity of A with the price of A.

Suppose two workers can harvest $46 and three workers can harvest $60 worth of apples per day. On the basis of this information we can say that the

marginal revenue product of each of the first two workers is $23. MARGINAL REVENUE PRODUCT OF THE THIRD WORKER IS $14. third worker should not be hired. marginal product of each of the first two workers is 23.

Other things equal, a decrease in the price of a substitute resource would cause a (see graph)

move from a to b on D1. SHIFT FROM D2 TO D3 ASSUMING THE OUTPUT EFFECT EXCEEDS THE SUBSTITUTION EFFECT. move from b to a on D1. shift from D3 to D2 assuming the output effect exceeds the substitution effect.

Other things equal, an increase in the price of substitute resource would cause a

move from a to b on D1. SHIFT FROM D2 TO D3 ASSUMING THE SUBSTITUTION EFFECT EXCEEDS THE OUTPUT EFFECT. shift from D3 to D2 assuming the substitution effect exceeds the output effect. move from b to a on D1.

Other things equal, an increase in labor productivity would cause a

move from b to a on D1. SHIFT FROM D2 TO D3. shift from D3 to D2. move from a to b on D1.

Suppose the domestic price (no-international-trade price) of wheat is $3.50 a bushel in the United States while the world price is $4.00 a bushel. Assuming no transportation costs, the United States will

neither export nor import wheat. import wheat. have a domestic shortage of wheat. EXPORT WHEAT.

A profit-maximizing firm's daily total revenue is $155 with 3 workers, $200 with 4 workers, and $230 with 5 workers. The cost of each worker is $40 per day. The firm should

not hire a fourth worker. hire more than five workers. hire five workers. HIRE FOUR WORKERS.

A profit-maximizing firm will

reduce employment if marginal revenue product exceeds marginal resource cost. reduce employment if marginal revenue product equals marginal resource cost. EXPAND EMPLOYMENT IF MARGINAL REVENUE PRODUCT EXCEEDS MARGINAL RESOURCE COST. expand employment if marginal revenue product equals marginal resource cost.

The demand for airline pilots results from the demand for air travel. This fact is an example of

resource substitutability. THE DERIVED DEMAND FOR LABOR. elasticity of resource demand. rising marginal resource cost.

An industrial union

restricts supply of labor through licensing requirements. is most effective in a purely competitive industry. is most concerned with increasing the demand for workers in an industry. ORGANIZES A WIDE RANGE OF WORKERS IN AN INDUSTRY TO GAIN BARGAINING POWER.

Other things equal, an increase in the price of a complementary resource would cause a (see graph)

shift from D2 to D3. move from b to a on D1. SHIFT FROM D3 TO D2. move from a to b on D1.

A decline in the price of resource A will

shift the demand curve for A to the left. reduce the demand for complementary resource B. INCREASE THE DEMAND FOR COMPLEMENTARY RESOURCE B. shift the demand curve for A to the right.

If the supply of labor in a purely competitive labor market increases, then the product

supply curve for a single employer will shift to the left. SUPPLY CURVE FOR A SINGLE EMPLOYER WILL SHIFT TO THE RIGHT. demand curve for a single employer will shift to the left. demand curve for a single employer will shift to the right.

The primary gain from international trade is

tariff revenue. increased employment in the domestic import sector. MORE GOODS THAN WOULD BE ATTAINABLE THROUGH DOMESTIC PRODUCTION ALONE. increased employment in the domestic export sector.

The marginal revenue product schedule is

the firm's resource supply schedule. the same whether the firm is selling in a purely competitive or imperfectly competitive market. upsloping. THE FIRM'S RESOURCE DEMAND SCHEDULE.

Increases in the productivity of labor result partly from

the law of diminishing returns. increases in the quantity of labor. IMPROVEMENTS IN TECHNOLOGY. reductions in wage rates.

Marginal product is

the output of the least skilled worker. a worker's output multiplied by the price at which each unit can be sold. the amount any given worker contributes to the firm's total revenue. THE AMOUNT AN ADDITIONAL WORKER ADDS TO THE FIRM'S TOTAL OUTPUT.

Domestic producers might oppose free trade agreements because

there is an increase in consumer surplus. there is a decrease in consumer surplus. THERE IS A DECREASE IN PRODUCER SURPLUS. there is an increase in producer surplus.

Suppose a powerful labor union negotiates a wage for its members above the equilibrium wage rate in a nonunionized market. A likely result of this is that

this firm will make up for the higher wage rate by expanding output. the union will have difficulty recruiting new members. NOT EVERYONE WHO WANTS TO WORK AT THE NEW WAGE WILL BE ABLE TO FIND JOBS. union members will be able to work more overtime than before.

The area 0abc represents (see graph)

total revenue of the firm. TOTAL EARNINGS OF LABOR. marginal revenue product of labor. marginal labor cost.

Country A limits other nation's exports to Country A to 1,000 tons of coal annually. This is an example of a(n)

voluntary export restriction. protective tariff. IMPORT QUOTA. export subsidy.

A maximum limit set on the amount of a specific good that may be imported into a country over a given period of time is called a

voluntary export restriction. tariff. QUOTA. nontariff barrier.

Import quotas on products will reduce the quantity of the imported products and

will not affect the price to the consumers. INCREASE THE PRICE TO THE CONSUMERS. increase the total quantity of the product consumed. decrease the price to the consumers.

Suppose there is a decline in the demand for the product labor is producing. Furthermore, the price of capital, which is complementary to labor, increases. Thus, the demand for labor

will not change. will increase. WILL DECREASE. may either increase or decrease.