Ch 11, 12, 16, 17

If an electricians' union is successful in its attempts to restrict entry into that craft, it will shift

the supply curve of electricians to the left

Permanent resource price differentials are caused by

Differences in resources quality Differences in the time and training required to preform the job Differences in nonmonetary aspects of the job A lack of resource mobility

If a firm is experiencing diminishing marginal returns,

additional increments of output diminish as one variable resource is increased, other things constant

A firm hires labor in a perfectly competitive labor market. If the wage rate is $44, the firm should hire

all units of labor whose marginal revenue product is greater than or equal to $44

You buy a bond for $1,000 from the federal government, which guarantees that you will receive $70 a year forever. Thus, 7 percent was the market rate of interest when you bought the bond. Suppose that immediately after you buy the bond, the market rate of interest goes to 10 percent. The market value of your bond

will be less than $1,000

A firm's marginal resource cost curve is

horizontal only if the firm is a price taker in the resource market

A firm will purchase additional units of a resource as long as each unit's

marginal revenue product is greater than or equal to its marginal resource cost

The market labor supply curve is usually __________ over the relevant range of market wage rates.

positively sloped

If the price of a resource increases, other things constant, less of that resource will be hired because

producers will substitute away from that resource

As the relative price paid to a resource in a particular use rises,

resources will be drawn from lower-valued uses to higher-valued uses

Market interest rates are determined by

the demand for and supply of loanable funds

If a publishing company purchases faster computers to speed up word processing,

the marginal product of its editors will increase, which will shift the demand for editors to the right

If ten cases of pretzels are sold at a price of $8 each and the marginal product of the last unit of labor is 5, the firm's total revenue is

$80

Consider two resource markets in which the demand curves slope downward. In market A, the supply curve is horizontal, equilibrium price is $6, and 100 units of the resource are hired. In market B, the supply curve is vertical, equilibrium price is $20, and 30 units of the resource are hired. Which of the following is true?

All of the resource earnings in market A are opportunity costs.

An author who writes newspaper columns for $75 each is deciding whether to purchase a personal computer with a laser printer. She figures she'd be able to write two more columns per month than she could on her typewriter. She should

Buy the computer if the monthly payment is less than $150

If an industrial union is able to negotiate a wage above the market-clearing wage, employment in the industry will

Decrease

Laura Kaid owns a business and is willing to invest in capital until, at the margin, her investment yields a cash stream with a present value less than the marginal cost of the investment.

False

Marginal revenue product of labor equals marginal product times the wage only when the firm is a perfect competitor in the product market.

False

Which of the following is not an example of derived demand?

Increased use of robots leads to a decrease in demand for labor.

Which of the following is true of marginal revenue product (MRP) and marginal product (MP)?

MRP = MP ´ price only if the firm sells in a perfectly competitive market.

If a union negotiates a wage above the market equilibrium, each firm hiring union members faces

a perfectly elastic supply curve for labor

Derived demand refers to

demand for a product derived from the demand for the resource used to make that product

If the interest rate is 8 percent, a person who is offered the opportunity to buy an annuity paying $30,000 per year forever should

do so if the price is less than $375,000

The division of a resource's earnings between economic rent and opportunity cost depends on the resource owner's

elasticity of labor supply

If a firm is using a resource hired in a perfectly competitive market, and if the price of the resource exceeds the marginal revenue product of the resource

less of the resource should be used

The change in total cost of production that results from a change in the amount of a resource used is

marginal resource cost

An improvement in technology that allows workers to process twice as many insurance forms in an hour than before will cause

more workers to be employed because their marginal revenue product has increased

If people have a positive rate of time preference, they

must be rewarded for saving

Other things equal, the supply of labor will be lower to a job that

requires advanced skills or education

Resource owners will supply additional units of a resource as long as

resource users demand the resource

If 14 workers produce a total of 25 cabinets and 15 workers produce a total of 30 cabinets,

the marginal product of the fifteenth worker is 5 cabinets

The demand for labor is likely to increase when

The demand for the good it produces rises

Two workers are employed in the same job by the same firm; however, they are paid different wage rates. This could be explained by differences in

Their marginal products due to differences in ability

Consider two resource markets in which the demand curves slope downward. In market A, the supply curve is horizontal, equilibrium price is $6, and 100 units of the resource are hired. In market B, the supply curve is vertical, equilibrium price is $20, and 30 units of the resource are hired. Which of the following is true?

Total resource earnings are the same in both markets.

A resource's earnings are all economic rent when the resource has no alternative uses.

True

A self-employed editor and writer is thinking about purchasing a new computer to use for work. In making this investment decision, the person should take time into account.

True

Other things equal, the wage rate will be higher in a job that requires close monitoring by a supervisor since few individuals are eager to work in such an environment.

True

The marginal revenue product curve represents a firm's demand curve for a resource.

True

Which of the following is an example of a permanent resource price differential?

When demand for land in a city increases, its price increases above prices of land elsewhere.

An IOU reflecting the corporation's promise to pay the holder a fixed sum of money at a designated maturity date plus an annual interest payment until maturity is

a bond

A change in demand for a resource can be caused by

a change in the number of firms producing the final product

Goods and activities typically are more highly valued the sooner they can be enjoyed, other things constant,

because people have positive rates of time preference

Which of the following is the best description of the risks of corporate bonds?

both bankruptcy and higher market interest rates

The marginal revenue product of labor equals

change in total revenue/change in units of labor

Which of the following would not shift demand curve for union labor to the right?

increased supply of products that compete with union-made products

Resource owners will supply additional units of a resource as long as doing so

increases their utility

If financial intermediaries charge a higher rate of interest to lenders than they pay to borrowers, then

investing with borrowed funds involves a higher opportunity cost than investing with savings

If Jin-Ho buys a personal computer to maintain household financial records and prepare budgets, he

is less likely to hire tax preparation services on the market