Micro Chapter 12

The demand for a resource depends largely on the A. demand for the products that it produces. B. price of the resource. C. supply of the resource. D. cost of producing the resource.

A. demand for the products that it produces.

One way to invest in human capital is by A. increasing your education. B. avoiding on-the-job training programs. C. doing nothing; it is impossible to improve your human capital. Human capital is solely determined by the abilities that you are born with. D. investing in physical capital.

A. increasing your education.

Which of the following is the best example of an investment in human capital? A. on-the-job training received by an apprentice electrician B. an increase in the number of hours worked per week by a worker in an unskilled laboring job C. the purchase of company stock by a worker D. payments into a retirement pension plan by a skilled laborer

A. on-the-job training received by an apprentice electrician

Prices in resource markets A. provide users with information concerning the relative scarcity of resources. B. encourage the use of a resource now if its price is expected to rise in the future. C. provide suppliers with little incentive to develop more of those resources that are intensely demanded by users. D. have little impact on productive decisions unless they are closely regulated by the government.

A. provide users with information concerning the relative scarcity of resources.

Other things equal, when the supply of workers is scarce, one would predict that market wages would be A. relatively high. B. relatively low. C. determined solely by factors that affect demand. D. determined outside the domain of economic theory.

A. relatively high.

When the price of a resource goes up and firms seek other suitable resources, this is called the A. substitution in production effect. B. substitution in demand effect. C. elasticity effect. D. inelasticity effect.

A. substitution in production effect.

If there is a shortage of nurses, it is expected that A. wages for nurses will go up as hospitals try to fill these positions. B. wages for nurses will go down because of the increased competition between hospitals. C. the return on the human capital investment of current nursing majors will decline. D. wages for nurses currently practicing will increase, but new nurses will experience lower wages in the future.

A. wages for nurses will go up as hospitals try to fill these positions.

The labor supply curve reflects how A. workers' decisions about the labor-leisure tradeoff respond to a change in the wage. B. workers' decisions about the opportunity cost of labor respond to a change in the quantity of labor supplied. C. firms' decisions about the labor-leisure tradeoff respond to the quantity of labor demanded. D. firms' decisions about how the quantity of labor they hire respond to changes in their opportunities to earn profits

A. workers' decisions about the labor-leisure tradeoff respond to a change in the wage.

Which of the following best illustrates the concept of "derived demand"? A. A decrease in the price of glass causes the demand for plastic to decrease. B. An increase in the demand for bread leads to an increase in the demand for flour. C. A decrease in the price of air travel leads to an increase in the quantity demanded of air travel. D. An increase in the demand for peanut butter leads to an increase in the demand for jelly.

B. An increase in the demand for bread leads to an increase in the demand for flour.

Suppose a change in technology increases the marginal product of labor. The result is A. a downward movement along the demand for labor curve. B. a rightward shift in the demand for labor curve. C. a leftward shift in the demand for labor curve. D. an upward movement along the demand for labor curve.

B. a rightward shift in the demand for labor curve.

Economists refer to expenditures on training, education, and skill development designed to increase the productivity of an individual as A. overhead expenditures. B. investments in human capital. C. non-exhaustive expenditures. D. social capital.

B. investments in human capital.

Which of the following is the best definition of "physical capital"? A. the labor utilized in the production process B. man-made resources used to produce other goods C. natural resources in their original state D. the ownership of stock shares issued by a corporation

B. man-made resources used to produce other goods

The market where firms purchase factors of production is referred to as the A. product market. B. resource market. C. capital market. D. foreign exchange market.

B. resource market.

If unskilled labor is relatively plentiful and cheap in many foreign countries, then as the United States expands its trade with these foreign countries, the domestic demand for A. unskilled labor will rise and skilled labor will fall. B. skilled labor will rise and unskilled labor will fall. C. both skilled and unskilled labor will rise proportionately. D. both skilled and unskilled labor will be unaffected, assuming no barriers to free trade.

B. skilled labor will rise and unskilled labor will fall.

Suppose a company sells its product for $5.00. It's industrial engineers have informed management that hiring one additional worker will increase output by five units per hour. The company should hire the additional worker only if the wage rate is A. $5.00 or less per hour. B. $1.00 or more per hour. C. $25.00 or less per hour. D. none of the above.

C. $25.00 or less per hour.

Marginal revenue product is the A. additional revenue from one additional dollar increase in price. B. change in the revenue product resulting from one additional unit of input. C. additional revenue from one additional unit of input. D. change in revenue resulting in one additional dollar in price.

C. additional revenue from one additional unit of input.

Which of the following events could increase the demand for labor? A. a decrease in output price. B. a decrease in the amount of capital available for workers to use. C. an increase in the marginal productivity of workers. D. All of the above are correct.

C. an increase in the marginal productivity of workers.

The marginal revenue product of a resource A. is defined as the marginal product of the resource multiplied by the resource price. B. simply means that a firm should add to its capital stock as long as competition requires it. C. equals the extra output produced by an additional unit of the resource multiplied by the marginal revenue per unit of that output. D. equals the average product of the resource multiplied by the cost of hiring an additional (marginal) unit of the resource.

C. equals the extra output produced by an additional unit of the resource multiplied by the marginal revenue per unit of that output.

Which of the following scenarios would serve to decrease the demand for unskilled labor in our country? A. increased productivity gains among the unskilled laborers. B. increased demand for goods produced by unskilled labor. C. increased international trade with countries where unskilled labor is more plentiful. D. increased supply of migrant workers.

C. increased international trade with countries where unskilled labor is more plentiful.

The change in the total revenue of a firm that results from employing one additional unit of a factor of production is defined as the A. total revenue product of the resource. B. marginal product of the resource. C. marginal revenue product of the resource. D. average revenue product of the resource.

C. marginal revenue product of the resource.

The marginal revenue product of a resource is best described as the A. selling price of the last unit of output produced. B. increment of total cost resulting from the use of an additional unit of the resource. C. marginal product of the resource divided by the unit price of the good produced. D. change in total revenue resulting from employing an additional unit of the resource.

D. change in total revenue resulting from employing an additional unit of the resource.

A technological advance that increases labor productivity will A. lower wages. B. decrease the demand for labor as fewer workers are needed. C. decrease the supply of labor as fewer workers are needed. D. increase the demand for labor as MP rises. E. decrease the demand for labor as MP falls.

D. increase the demand for labor as MP rises.

Firms should hire additional units of a resource as long as the A. marginal product of the resource exceeds the price of the resource multiplied by the quantity of output produced. B. marginal product of the resource is less than the price of the resource. C. price of the output produced is positive. D. marginal revenue product of the resource exceeds the cost of employing an additional unit of the resource.

D. marginal revenue product of the resource exceeds the cost of employing an additional unit of the resource.

An unanticipated decline in the demand for legal services will A. increase both the wages of lawyers and the rate of return they can expect to derive from their legal education. B. lead to a shortage in the market for legal services. C. reduce the wages of lawyers but not the quantity of legal services supplied. D. reduce the wages of lawyers and the rate of return on a legal education..

D. reduce the wages of lawyers and the rate of return on a legal education..