Chapter 12 Quiz

Which of the following does the labor supply curve reflect? a. Firms' decisions about how the quantity of labor they hire in response to changes in their opportunities to earn profits. b. Workers' decisions about the labor-leisure tradeoff in response to a change in the wage. c. Workers' decisions about the opportunity cost of labor in response to a change in the quantity of labor supplied. d. Firms' decisions about the labor-leisure tradeoff in response to the quantity of labor demanded.

correct b

Which of the following is the best definition of "physical capital"? a. the ownership of stock shares issued by a corporation b. man-made resources used to produce other goods c. natural resources in their original state d. the labor utilized in the production process

correct b

The market where firms purchase factors of production is referred to as the a. resource market. b. capital market. c. foreign exchange market. d. product market.

correct a

When the price of steel rises, Ford uses more aluminum in the production of its cars. This is an example of a. a change in the marginal productivity of a resource. b. derived demand. c. substitution in production. d. substitution in consumption.

correct c

If the marginal revenue product of the fifth worker hired by a firm is $15 and the price of a unit of output is $5 regardless of how much is sold, then the marginal product of the fifth worker is a. 3 units of output. b. 45 units of output. c. 75 units of output. d. 5 units of output. e. 15 units of output.

correct a

The change in the total revenue of a firm that results from employing one additional unit of a factor of production is defined as the a. marginal revenue product of the resource. b. total revenue product of the resource. c. marginal product of the resource. d. average revenue product of the resource.

correct a

The labor supply curve is fundamentally a representation of the trade-off people face between which of the following? a. work and leisure b. technology and wage c. wage and productivity d. work and wage

correct a

Troll Corporation sells dolls for $10.00 each in a market that is perfectly competitive. Increasing the number of workers from 100 to 101 would cause output to rise from 500 to 550 dolls per day. The marginal revenue product for the 101st worker is a. $500. b. $1,010. c. $5,000. d. $10.

correct a

When does a firm's demand curve for labor shift? a. When the price of its output changes. b. When the wage rate changes. c. When the number of available workers changes. d. All of the above are correct.

correct a

Which of the following best describes the marginal revenue product of a resource? a. It equals the extra output produced by an additional unit of the resource multiplied by the marginal revenue per unit of that output. b. It is defined as the marginal product of the resource multiplied by the resource price. c. It equals the average product of the resource multiplied by the cost of hiring an additional (marginal) unit of the resource. d. It simply means that a firm should add to its capital stock as long as competition requires it.

correct a

Which of the following is the best example of an investment in human capital? a. a summer internship at a law firm for someone going to law school b. payments into a retirement pension plan by a skilled laborer c. an increase in the number of hours worked per week by a worker in an unskilled laboring job d. the purchase of company stock by a worker

correct a

Which of the following is the most accurate definition of a worker's "marginal revenue product"? a. the change in the firm's total revenue as the result of hiring an additional worker b. the change in the firm's output as the result of hiring an additional worker c. the change in the firm's cost as the result of hiring an additional worker d. the change in the firm's profits as the result of hiring an additional worker

correct a

The change in the total revenue of a firm that results from employing one additional unit of a factor of production is defined as the a. marginal product of the resource. b. marginal revenue product of the resource. c. average revenue product of the resource. d. total revenue product of the resource.

correct b

The marginal revenue product of a resource is best described as the a. increment of total cost resulting from the use of an additional unit of the resource. b. change in total revenue resulting from employing an additional unit of the resource. c. marginal product of the resource divided by the unit price of the good produced. d. selling price of the last unit of output produced.

correct b

The market where firms purchase factors of production is referred to as the a. foreign exchange market. b. resource market. c. product market. d. capital market.

correct b

What do prices in resource markets do? a. They provide suppliers with little incentive to develop more of those resources that are intensely demanded by users. b. They provide users with information concerning the relative scarcity of resources. c. They encourage the use of a resource now if its price is expected to rise in the future. d. They have little impact on productive decisions unless they are closely regulated by the government.

correct b

When the price of a resource goes up and firms seek other suitable resources, this is called the a. substitution in demand effect. b. substitution in production effect. c. inelasticity effect. d. elasticity effect.

correct b

When the supply of workers is plentiful, one would predict that market wages would be a. determined solely by factors that affect demand. b. low, other things equal. c. determined solely by factors that affect supply. d. high, other things equal.

correct b

Since the demand for a resource depends on the demand for goods that the resource helps produce, the demand for each resource is a. inversely related to the marginal productivity of the resource. b. an elastic demand. c. a derived demand. d. an independent demand.

correct c

Ten cases of spring water are sold for $6 each, and the marginal product of the last unit of labor is 5. If the price of a case increases from $6 to $8, then the marginal revenue product of the last unit of labor would a. increase by $40. b. not change. c. increase by $10. d. decrease by $10. e. decrease by $30.

correct c

Tucker Corporation sells its product for $5.00. Tucker's industrial engineers have informed management that hiring one additional worker will increase output by five units per hour. Tucker should hire the additional worker only if the wage rate is a. $5.00 or less per hour. b. $1.00 or more per hour. c. $25.00 or less per hour. d. none of the above.

correct c

Which of the following would tend to decrease the demand for coal miners? a. an increase in the price of oil b. an increase in the wages of coal miners c. a decrease in the demand for coal d. an increase in the supply of coal miners

correct c

What is marginal revenue product? a. The change in revenue resulting in one additional dollar in price. b. The change in the revenue product resulting from one additional unit of input. c. The additional revenue from one additional dollar increase in price. d. The additional revenue from one additional unit of input.

correct d

When a firm decides to hire more workers because local wage rates have decreased, this is an example of a. substitution in consumption. b. market failure. c. labor exploitation. d. substitution in production.

correct d

When the price of a resource increases, thereby causing the price of the final product to rise, consumers will purchase less of the final product. This is called the a. elasticity effect. b. substitution in production effect. c. inelasticity effect. d. substitution in consumption effect.

correct d