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