Economics Test

Derived demand is

demand for an input used to produce a product

Marginal resource cost refers to the

increase in total revenue resulting from the sale of the extra output of one or more worker

Pure economic rent refers to the

payment to any resource over and above what is required to keep the resource in supply at its current level in the long run

If the price of a product produced in a competitive market increases

the demand for labor and the number of workers hired will increase

A characteristic of a purely competitive labor market would be

wage taker behavior by workers

We say that the demand for any resource is a derived demand because

we demand the product which resource helps produce

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

MRC is equal to their MRP

Marginal revenue product measures the

amount by which the extra production of one or more worker increases a firms total revenue

A profit maximizing firm should hire an input as long as the

marginal revenue product of the input is at least as much as the cost of hiring the input

The demand for labor will decrease in response to which of the following?

Decreased demand for goods and services produced by labor

Why does the marginal revenue product of an input in a perfectly competitive market decreases as a firm increases the quantity of an input used?

The law of diminishing marginal returns

In a purely competitive industry, a decrease in a firms MRP could result from

a decrease in the demand for the product the resource produces

A firm hiring inputs in a perfectly competitive market will hire up to the point where

the price of the input equals the marginal revenue product of the input

The profit maximizing and the least cost combination of inputs are

the result of unrelated decisions