ECON 2023 Resource Prices & Utilization (learnsmart)
The graph depicts the market for ovens. The equilibrium price is
$10,000 and the equilibrium quantity is 250 ovens.
The total labor cost for a firm employing 2 workers is $40 and $75 if 3 workers are employed. What is the marginal resource cost for the firm?
$35
Snow Removal, Inc. has purchased their 5th snowplow, as a result they are able to increase the number of parking lots they are able to plow from 20 parking lots to 25 parking lots. If the price of plowing a parking lot is $100, what is the marginal revenue product of capital?
$500
Blain's Bakery has purchased 3 additional ovens that allows them to produce an additional 36 loaves of bread a day. If the price of a loaf of bread is $8, what is the marginal revenue product of the 3 additional ovens?
$96
Blain's Bakery has purchased 3 additional ovens that help produce 36 additional loaves of bread a day. The marginal product of the 3 additional ovens is:
12 loaves of bread.
The graph depicts the demand for snowplows for Snow Removal, Inc. If the price of the snowplow is $1,000, how many snowplows will be demanded?
2 snowplows
You recently graduated from college and accepted a job in San Francisco that pays $55,000. The average price of a gallon of gasoline in San Francisco is $2.53. What is your real wage in terms of gallons of gasoline?
21,739.13
The graph depicts the demand for ovens by Blain's Bakery. If the price of the oven is $10,000, how many ovens will be demanded?
3 ovens
Snow Removal, Inc. has purchased their 5th snowplow, as a result they are able to increase the number of parking lots they are able to plow from 20 parking lots to 25 parking lots. What is the marginal product of the 5th snowplow?
5 parking lots
Alan employs labor and capital to restore vintage cars. He has a marginal product of labor per dollar of 125 and a marginal product of capital per dollar of 125. The marginal cost of labor is $15 and the marginal cost of capital is $20.
Alan is following the least-cost rule.
What will happen to equilibrium wage rate and the employment level in the labor market for nurses if there is an increase in the productivity of nurses?
Equilibrium wage rate and equilibrium employment level both rise.
Suppose that you are trying to decide whether to stay in your current job in your hometown or to move and take a new job in Denver, CO. Your current job pays $60,000 per year, and the new job in Denver pays $75,000. The average apartment rent in your hometown is $1235, and the average apartment rent in Denver is $2261. In which city is the real wage in terms of apartment rent higher?
Hometown
A(n) ___ union aims to increase the wages and benefits of its members.
Inclusive
What will happen to the marginal revenue product (MRP), equilibrium wage rate, and employment level in the labor market for fishermen if there is a decrease in the price of fish?
MRP decreases, equilibrium wage rate decreases, and equilibrium employment level decreases.
A ___ is a market structure characterized by a single buyer of a good, service, or resource.
Monopsony
Bill has been evaluating whether to add an additional sewing machine to his business. He expects the additional revenue generated by the sewing machine will be $2,500. If the price of the sewing machine is $3,000, should Bill purchase the sewing machine?
No, the price is greater than the marginal revenue product of capital.
___ power is the value of a monetary amount expressed in terms of the goods and services it can buy.
Purchasing
Which of the following accounts for purchasing power of wages?
Real wage
Which of the following is true concerning the market structure and the relationship between the marginal resource cost curve and labor supply curve?
The marginal resource cost curve and labor supply curve are equal for a firm operating in a perfectly competitive market, but not if the market is a monopsony.
Sean owns a gardening store that utilizes labor and capital to produce plants. The table depicts the productivity of labor and capital for Sean's gardening store. The price of labor is $10.00 per worker, and the price of capital is $5.00. What is the least-cost method to produce at least 220 plants?
Utilizing 1 worker and 2 units of capital
Bobby makes bird houses. He utilizes both labor and capital to make the houses. The table below depicts the productivity of labor and capital. The price of labor is $15.00 per worker, and the price of capital is $10.00. Bobby wants to produce at least 625 bird houses. Which of the following combinations of labor and capital follows the least-cost rule?
Utilizing 3 workers and 2 units of capital
Inclusive Union
a group formed by merging all workers in a specific industry into a single bargaining group, which aims to increase the wages and benefits of its members. Inclusive unions can be small, local organizations or large, national organizations
Compared to a perfectly competitive labor market, workers hired by a monopsony will earn
a lower wage.
Monopsony
a market structure characterized by a single buyer of a good, service, or resource. In labor markets, a monopsonist is a wage maker
Least-Cost Rule
a rule that states that the cost of producing any given level of output is minimized when the marginal product per dollar spend of a resource is equal for all resources used in production
Price floors create a surplus in the market, because price floors are set ___ the equilibrium price.
above
The equation for the marginal resource cost of labor is
change in total labor cost divided by change in labor.
In competitive labor markets, the wage depends on the ___ for and the ___ of labor.
demand; supply
Labor unions:
fight for better and safer working conditions and for increased wages and benefits.
Price ___ create a surplus in the market, because the price is above equilibrium.
floors
The optimal resource utilization rule guides firm's decision on
how much of a resource to utilize.
A group formed by merging all workers in a specific industry into a single bargaining group is a(n) ___ union.
inclusive
An increase in product price ___ the demand for labor, resulting in ___ wages and employment.
increases; more
If a firm in a noncompetitive market wants to sell more units,:
it must lower the price for every unit it sells.
The ___ - ___ rule of production states that the cost of producing any given level of output is minimized when the marginal product per dollar spent on a resource is equal for all resources used in production.
least; cost
Recent data show that total average compensation for non-union employees was ___ than the total average compensation for union employees.
less
For a firm operating as a monopsony, the marginal resource cost curve
lies above the supply curve.
If a firm in a noncompetitive market wants to sell more units, it must ___ the price for every unit it sells.
lower
Workers hired by a monopsony will earn a ______ wage than workers in a perfectly competitive labor market.
lower
The ___ revenue product represents the additional revenue generated from using an additional unit of a resource.
marginal
The additional output produced as a result of utilizing one more unit of a variable resource is the ___ product.
marginal
The additional output produced as a result of utilizing one more unit of capital is known as
marginal product of capital.
The additional output produced as a result of utilizing one more unit of a variable resource is the:
marginal product.
The additional cost incurred as a result of utilizing one more unit of a variable resource is known as
marginal resource cost.
The optimal quantity of labor to hire for a firm operating as a monopsony occurs where
marginal revenue product equals marginal resource cost of labor.
In determining whether a firm should utilize an additional unit of capital, the
marginal revenue product of capital must be greater than the unit price of the capital.
A market structure characterized by a single buyer of a good, service or resource is known as a(n):
monopsony.
The actual number of dollars received in exchange for one's labor is the ___ wage.
nominal
The actual number of dollars received for one's labor is called:
nominal wage.
Purchasing ___ is the value of a monetary amount expressed in terms of the goods and services it can buy.
power
The real wage is the wage adjusted for
prices
The marginal ___ of ___ is the additional output produced as a result of utilizing one more unit of capital.
product; capital
The wage rate that a person earns is a function of two variables:
productivity and price.
The wage rate that a person earns is a function of two variables: ___ and ___
productivity; price
The ___ wage is the wage adjusted for prices.
real
The ___ wage, not the ___ wage, should be considered when determining where to work or which job to take.
real; nominal
A firm operating as a monopsony will decide to hire labor up to the quantity where the marginal resource cost of labor equals the marginal ___ ___
revenue; product
In the market for labor, households are on the ___ side and firms are on the ___ side.
supple; demand
Nominal Wage
the actual number of dollars received in exchange for one's labor
Marginal Resource Cost (MRC)
the additional cost incurred as a result of utilizing one more unit of a variable resource
The marginal resource cost of capital is
the additional cost incurred as a result of utilizing one more unit of capital.
Marginal Product of Labor (MPL)
the additional output produced with another unit of labor
Marginal Revenue Product (MRP)
the additional revenue generated as a result of utilizing one more unit of a variable resource MRP= Marginal product X Price
The marginal revenue product of capital is
the additional revenue generated as a result of utilizing one more unit of capital.
The least-cost rule of production states that costs are minimized for a given level of production when
the marginal product per dollar spent is equal for all resources.
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 times the price.
The optimal resource utilization rule states that a firm should utilize a resource up to the point where the marginal revenue product equals
the marginal resource cost.
The additional revenue generated as a result of utilizing one more unit of capital is known as
the marginal revenue product of capital.
Real Wage
the quantity of goods and services that can be bought with (the purchasing power of) one's nominal wage Real Wage= Nominal Wage/ Price of output
Purchasing Power
the value of a monetary amount expressed in terms of the goods and services it can buy
Anthony is utilizing 5 workers and 2 ovens in his restaurant. He determines the marginal product per dollar spent on labor is $5.00 and the marginal product per dollar spent on ovens is $6.00. In order to minimize costs of production, Anthony should
utilize more ovens, up to the level where the marginal product of ovens equals the marginal product per dollar of labor.
The objective of each union is to increase the ___ earned by its members.
wages
A decrease in product price lowers the demand for labor, resulting in lower ___ and ___
wages; employment
The equilibrium price and quantity of capital occurs
where the quantity of capital demanded equals the quantity supplied.