micro final chapter 12

A decrease in the demand for a final product will causea. a decrease in demand for the resources used to produce the good. b. an increase in demand for the resources used to produce the good. c. firms to expand production of the good. d. an increase in the supply of resources used to produce the good.

a

Because the demand for a resource is highly dependent upon the demand for the final goods that the resource helps produce, the demand for a resource is called a. a derived demand. b. an independent demand. c. a declining proportions demand. d. an elastic demand.

a

The three primary reasons why the demand for resources changes

a change in product demand, a change in productivity of the resource, and a change in price related inputs

Provide an example of derived demand

a repair shop - hires mechanics because of their customer's demand for maintenance and repair services

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. sunk expenditures. d. social capital.

b

If a college education did not increase worker productivity, a. no one would go to college. b. wages would tend to be the same for workers with and without a college education. c. wages would still be higher for workers with college degrees because of the cost of going to college. d. the total lifetime earnings of workers who go to college and those who do not would tend to be the same.

b

Which of the following expresses the correct decision-making rule for a profit-maximizing firm hiring units of labor? a. If the MRP was rising, less labor would be employed as time passed. b. The firm should continue to hire workers as long as their MRP is greater than the wage rate. c. The firm should continue to hire workers until the total costs of all workers equals the total revenue from the output of the workers. d. The firm should continue to hire workers until the wage rate equals the price of the product.

b

Derived demand

business demand that ultimately comes from the demand for consumer goods

Marginal revenue product

change in total revenue from the employment of an additional unit of a resource; MRP = marginal product x marginal revenue

Human resources

composed of the skills, knowledge, and experience of workers

A change in the demand for a resource can be caused by which of the following? a. a change in the demand for the final product that uses the resource as a factor of production b. a change in the productivity of the resource c. a change in the price of other resources that could be used as substitutes for the resource in question d. all of the above

d

An increase in the demand for a resource a. will cause the price of that resource to fall. b. may be the result of a decrease in the demand for products utilizing this resource. c. will cause the price of the resource to fall by a smaller amount in the short run than in the long run. d. will increase the price of the resource and thereby increase the incentive of potential suppliers to provide the resource in the future.

d

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

If the cost of using skilled labor was twice the cost of using unskilled labor, and both were used by a profit- maximizing firm, the firm would adjust the quantity of each type of labor until a. the marginal product of each was the same. b. twice as much unskilled labor was used. c. half as much unskilled labor was used. d. the marginal product of skilled labor was twice that of unskilled labor.

d

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

Which of the following would be the most likely result from a new government program that provided significant financial aid for children of low- and middle-income families to attend college? a. Starting salaries for new college graduates would rise because of an increase in the number of high-quality graduates. b. Starting salaries for college graduates would be unaffected. c. The productivity of the labor force would be permanently lower because more young people would choose to be students instead of workers. d. Starting salaries of new college graduates would fall as the supply of graduates increased.

d

Nonhuman resources

physical capital, land, natural resources

Investment in human capital

refers to activities that increase the human capital and productivity of individuals; ex: education, training, experience

Why is the resource supply curve usually upward sloping?

the amount of resources supplied in a market is positively related to its price

What is the decision rule when a firm is considering hiring another worker (or resource)?

they will hire up to the point where the marginal revenue product of the resource equals its price