Topic 12: Resources
Which of the following are the choices that firms have for dealing with higher resource costs?
Deduct more from employees' paychecks to pay the higher costs. Lower employee wages to compensate for the additional expense. Pay the additional costs, which has the effect of shifting the marginal resource cost curve upwards.
In the case of a higher wage, there will be:
a decrease in the quantity of labor demanded.
The marginal product is the:
additional output produced as a result of utilizing one more unit of a variable resource.
The optimal level of resource utilization occurs where the:
marginal revenue product equals the marginal resource cost.
Resource utilization and marginal resource costs move in _____ directions.
opposite
Capital is sometimes divided into _____ capital and _____ capital.
physical; human
For firms operating in perfectly competitive markets, if the price of a product is constant, the marginal revenue product is equal to the marginal product ties the _____.
price
The amount of a good or service produced by all workers is called _____.
total product
When economists refer to resource demand being a derived demand, they mean that the demand for the resource:
depends on the demand for the goods and services produced by those resources.
The demand for resources is _____ from the demand for the goods and services produced by those resources.
derived
Which four broad categories of resources, or inputs of production, are used to produce goods and services?
Capital Entrepreneurial ability Labor Land
The _____ for labor is derived from its marginal revenue product.
demand
The marginal revenue product curve also represents the _____ demand curve
resource
The more productive an employee is, all else held constant,
the higher that employee's marginal revenue product will be.
Which of the following would be considered a decision that is made "at the margin" by a firm?
A firm decides to hire an additional worker. A firm decides to produce additional output.
Event; Demand would:; Demand will shift: The prices of aluminum and steel, which are needed to produce aircraft, decrease.; increase; right Passengers' worries about the safety of flying result in a decrease in the demand for air travel.; decrease; left An aggressive advertising campaign convinces buyers that Boeing aircraft is superior to that made by competitors.; increase; right
Boeing hires workers to design and manufacture aircraft. Determine whether each of the events below would increase or decrease Boeing's demand for labor and how the demand would shift. Event; Demand would:; Demand will shift: The prices of aluminum and steel, which are needed to produce aircraft, decrease.; ; Passengers' worries about the safety of flying result in a decrease in the demand for air travel.; ; An aggressive advertising campaign convinces buyers that Boeing aircraft is superior to that made by competitors.; ;
Four broad categories of resources are used to produce goods and services. The payments that firms make for each of these types of resources receive a specific name in economics. Match the payment name to the resource category
Capital - Interest Entrepreneurial ability - Profits or losses Labor - Wages Land - Rent
Linda owns a hair salon and is trying to determine how many hair stylists she should hire. Suppose that the current market wage for each additional hairstylist she hires is $30 per hour. Linda's marginal resource cost (MRC) curve will be _____. Suppose that market conditions change and Linda will now have to pay $20 per hour for each additional hairstylist she hires. Linda's new marginal resource cost curve will be _____.
Labor (workers); Total Labor Cost (dollars per hour); Marginal Resource Cost (dollars per hour) 0; $0; --- 1; 30; 30 2; 60; 30 3; 90; 30 4; 120; 30 5; 150; 30 horizontal line at $30. horizontal line at $20.
If the wage rate is constant, the marginal resource cost associated with hiring one additional worker is:
a horizontal line at the wage.
A decrease in resource demand is:
a shift to the left of the quantity demanded of the resource at every price.
The marginal revenue product curve also represents the resource _____ curve.
demand
If employees pay partially for higher resource costs, the marginal resource cost curve,
does not shift.
The marginal resource cost curve for the firm will not shift if:
employees fully pay for higher resource costs.
The marginal resource cost curve for the firm will shift if:
employers pay for part of or all higher resource costs.
Suppose firms can prepare tax returns using labor or computerized programs. If the price of labor increases, the quantity of labor demand will _____, and the demand for computerized programs will _____.
fall; rise
In the circular flow model, _____ and _____ interact in the resource market and the product market.
households; producers
A firm tends to emphasize _____ revenue product when deciding how many workers to employ.
marginal
The _____ revenue product represents the additional revenue generated from using an additional unit of a resource.
marginal
The additional cost incurred as a result of utilizing one more unit of a variable resource is called the _____ resource cost.
marginal
The change in total product associated with hiring an additional worker is called _____.
marginal product
The cost of an additional unit of a resource, such as labor, is called the
marginal resource cost.
The marginal revenue _____ represents the additional revenue generated from using an additional unit of a resource.
product
The total amount of output produced with a given amount of resources is known as the total _____.
product
The circular-flow model shows how households and firms interact in two key markets: the _____ market and the _____ market
resource; product
When marginal revenue product equals marginal revenue cost,
resources have been used optimally.
A firm will purchase a resource if:
the benefit associated with the purchase is greater than or equal to its cost.
Suppose that market condition change in an area and, as a result, a firm faces a decrease in the cost of each additional worker it hires. In this case,
the marginal revenue cost curve shifts downward.
Suppose that market condition change in an area and, as a result, a firm faces an increase in the cost of each additional worker it hires. In this case,
the marginal revenue cost curve shifts upward.
When making hiring decisions, employers need to consider
the productivity of their workers and the price of their products.