ECON 202 TESTBANK
Test Bank: II Topic: Marginal Productivity Theory of Resource Demand
190. According to the marginal productivity theory of resource demand, the labor-demand schedule for a producer selling in a purely competitive market is
the same as the marginal resource cost schedule.
the same as the marginal productivity schedule.
C. the same as the marginal revenue product schedule.
D. independent of the value of the product being produced.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 16-02 Convey how the marginal revenue productivity of a resource relates to a firms demand for that resource.
Test Bank: II Topic: Marginal Productivity Theory of Resource Demand
191.
The table is for a purely competitive market for resources. At a wage rate of $23 per worker, the firm will choose to employ
A. 2 workers
B. 3 workers
4 workers
5 workers
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 16-02 Convey how the marginal revenue productivity of a resource relates to a firms demand for that resource.
Test Bank: II Topic: Marginal Productivity Theory of Resource Demand
192.
The table is for a purely competitive market for resources. How many more workers will the firm hire when the wage rate is $15 instead of $30?
A. 1 worker
B. 2 workers
3 workers
4 workers
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 16-02 Convey how the marginal revenue productivity of a resource relates to a firms demand for that resource.
Test Bank: II Topic: Marginal Productivity Theory of Resource Demand
193.
The table is for a purely competitive market for resources. If the product price increases from $3 to $4, then at the wage rate of $15, the firm will hire
2 workers.
3 workers.
4 workers.
D. 5 workers.
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 16-02 Convey how the marginal revenue productivity of a resource relates to a firms demand for that resource.
Test Bank: II Topic: Marginal Productivity Theory of Resource Demand
The labor demand curve of a firm that sells its product in an imperfectly competitive market
is downsloping, solely because of the law of diminishing returns.
is downsloping and flatter than the labor demand curve of a firm that sells its product in a purely competitive market.
is upsloping.
D. is downsloping because of both declining marginal productivity and declining product prices as quantity increases.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 16-02 Convey how the marginal revenue productivity of a resource relates to a firms demand for that resource.
Test Bank: II Topic: Marginal Productivity Theory of Resource Demand
The labor demand curve of a firm that sells its product in a purely competitive market
A. is horizontal or perfectly elastic.
B. is downsloping and flatter than the labor demand curve of a firm that sells its product in an imperfectly competitive (or monopolistic) market.
is upsloping.
is downsloping and steeper than the labor demand curve of a firm that sells its product in an imperfectly competitive (or monopolistic) market.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 16-02 Convey how the marginal revenue productivity of a resource relates to a firms demand for that resource.
Test Bank: II Topic: Marginal Productivity Theory of Resource Demand
Assume that the resource market is purely competitive. If the price of the resource falls, other factors constant, then a firm that sells its product in a purely competitive market will
A. increase production by a larger amount than a firm with some monopoly power in its product market.
increase production by a smaller amount than a firm with some monopoly power in its product market.
decrease production by a larger amount than a firm with some monopoly power in its product market.
decrease production by a smaller amount than a firm with some monopoly power in its product market.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 16-02 Convey how the marginal revenue productivity of a resource relates to a firms demand for that resource.
Test Bank: II Topic: Marginal Productivity Theory of Resource Demand
197.
Refer to the table. Assume that the quantities of other resources employed by the firm remain constant. How many units of resource Y would the firm employ at a price of
$50 per unit of Y?
A. 2
B. 3
4
5
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 16-02 Convey how the marginal revenue productivity of a resource relates to a firms demand for that resource.
Test Bank: II Topic: Marginal Productivity Theory of Resource Demand
198.
Refer to the table. The marginal revenue product of the fourth unit of input is approximately
A. $27.
B. $21.
C. $16.
D. $13.
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 16-02 Convey how the marginal revenue productivity of a resource relates to a firms demand for that resource.
Test Bank: II Topic: Marginal Productivity Theory of Resource Demand
199.
The table contains data for a profit-maximizing firm. The price of the firm's product is $10 per unit, and the wage rate is a constant $110 a day. How many workers will the firm hire, assuming purely competitive product and resource markets?
4
5
C. 6
D. 7
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 16-02 Convey how the marginal revenue productivity of a resource relates to a firms demand for that resource.
Test Bank: II Topic: Marginal Productivity Theory of Resource Demand
The marginal revenue product of an economic resource for a firm operating in purely competitive product and resource markets
A. is the marginal product of the resource divided by the price of the final product.
B. is the increase in total revenue resulting from the addition of one more unit of the resource.
is equal to the average revenue product at the lowest point of the average revenue product curve.
decreases as the quantity of output decreases.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 16-02 Convey how the marginal revenue productivity of a resource relates to a firms demand for that resource.
Test Bank: II Topic: Marginal Productivity Theory of Resource Demand
A profit-maximizing firm's daily total revenue is $155 with 3 workers, $200 with 4 workers, and $230 with 5 workers. The cost of each worker is $40 per day. The firm should
A. not hire a fourth worker.
B. hire four workers.
hire five workers.
hire more than five workers.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 16-02 Convey how the marginal revenue productivity of a resource relates to a firms demand for that resource.
Test Bank: II Topic: Marginal Productivity Theory of Resource Demand
A profit-maximizing firm will use additional units of resources for production until
total, average, and marginal cost are equal.
total, average, and marginal revenue are equal.
C. the marginal revenue product equals the marginal resource cost.
D. the marginal revenue product is greater than the marginal resource cost.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 16-02 Convey how the marginal revenue productivity of a resource relates to a firms demand for that resource.
Test Bank: II Topic: Marginal Productivity Theory of Resource Demand
203.
The table shows the total output a firm will be able to produce if it employs varying amounts of resource X while holding the amounts of the other resources constant. Assume that the product price is constant at $3.00 per unit. How many units of resource X will be employed if its price is $24 per unit?
3
4
C. 5
D. 6
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 16-02 Convey how the marginal revenue productivity of a resource relates to a firms demand for that resource.
Test Bank: II Topic: Marginal Productivity Theory of Resource Demand
204.
Refer to the table. The marginal revenue product of the third unit of resource is
A. $4.
B. $8.
C. $18.
D. $72.
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 16-02 Convey how the marginal revenue productivity of a resource relates to a firms demand for that resource.
Test Bank: II Topic: Marginal Productivity Theory of Resource Demand
205.
Refer to the table. The price of the product being produced by this resource is
A. $1.
B. $2.
C. $3.
D. $4.
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 16-02 Convey how the marginal revenue productivity of a resource relates to a firms demand for that resource.
Test Bank: II Topic: Marginal Productivity Theory of Resource Demand
206.
Refer to the table. How many units of the resource would the profit-maximizing firm use if the price of the resource was $18.00?
1
2
C. 3
D. 4
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 16-02 Convey how the marginal revenue productivity of a resource relates to a firms demand for that resource.
Test Bank: II Topic: Marginal Productivity Theory of Resource Demand
207.
Refer to the table. The resource demand data indicate that the firm is
buying its resource in an imperfectly competitive market.
buying its resource in a perfectly competitive market.
C. selling its product in a perfectly competitive market.
D. selling its product in an imperfectly competitive market.
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 16-02 Convey how the marginal revenue productivity of a resource relates to a firms demand for that resource.
Test Bank: II Topic: Marginal Productivity Theory of Resource Demand
208.
Refer to the table. The marginal product of the third unit of the resource is
A. 3.
B. 4.
5.
6.
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 16-02 Convey how the marginal revenue productivity of a resource relates to a firms demand for that resource.
Test Bank: II Topic: Marginal Productivity Theory of Resource Demand
209.
Refer to the table. The marginal revenue product of the third unit of the resource is
A. $3.
B. $5.
C. $19.
D. $36.
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 16-02 Convey how the marginal revenue productivity of a resource relates to a firms demand for that resource.
Test Bank: II Topic: Marginal Productivity Theory of Resource Demand
210.
Refer to the table. The resource demand data indicate that the firm is
buying its resource in an imperfectly competitive market.
buying its resource in a perfectly competitive market.
selling its product in a perfectly competitive market.
D. selling its product in an imperfectly competitive market.
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 16-02 Convey how the marginal revenue productivity of a resource relates to a firms demand for that resource.
Test Bank: II Topic: Marginal Productivity Theory of Resource Demand
211.
Refer to the table. The price of the product being produced by this resource
is constant at all levels of production.
cannot be discerned from the given data.
C. decreases as production increases.
D. increases as production increases.
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 16-02 Convey how the marginal revenue productivity of a resource relates to a firms demand for that resource.
Test Bank: II Topic: Marginal Productivity Theory of Resource Demand
212.
Refer to the table. How many units of a resource would the profit-maximizing firm use if the price of this resource was $19.00?
A. 1
B. 2
3
4
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 16-02 Convey how the marginal revenue productivity of a resource relates to a firms demand for that resource.
Test Bank: II Topic: Marginal Productivity Theory of Resource Demand
If the price of a resource is greater than its marginal revenue product, the firm should
charge a higher price for its product.
make no change in the units of the resource used.
increase the units of the resource used in order to increase profits.
D. decrease the units of the resource used in order to increase profits.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 16-02 Convey how the marginal revenue productivity of a resource relates to a firms demand for that resource.
Test Bank: II Topic: Marginal Productivity Theory of Resource Demand
In a given labor market, the demand for labor by employers will shift to the right or left with changes in all of the following, except
A. the demand for the products produced by the employers.
B. the price of labor that the employers must pay.
the prices of other resources that the firms must use.
occupational trends affecting the particular labor in the market.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 16-03 List the factors that increase or decrease resource demand.
Test Bank: II Topic: Determinants of Resource Demand
215.
A firm operating in competitive input and output markets purchases new technology, which shifts the total product schedule from A to B, as shown in the data in the table. At the market wage rate of $30 and product price of $5, this firm will
hire the same number of laborers in both situations.
increase the number of laborers hired from 4 to 6.
decrease the number of laborers hired from 4 to 3.
D. increase the number of laborers hired from 4 to 5.
AACSB: Knowledge Application
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 16-03 List the factors that increase or decrease resource demand.
Test Bank: II Topic: Determinants of Resource Demand
A firm's demand curve for labor
A. is its marginal product curve.
B. will shift to the left if the price of the product the labor is producing should fall.
is perfectly elastic if the firm is selling its product in a purely competitive market.
reflects a direct (positive) relationship between the number of workers hired and the money wage rate.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 16-03 List the factors that increase or decrease resource demand.
Test Bank: II Topic: Determinants of Resource Demand
Which of the following increases in labor demand is due to a change in the product demand?
A. Access to computers increases the productivity of mail order businesses, thus increasing the demand for their workers.
B. Tourism increases in popularity, increasing the demand for workers at tourist resorts.
A decrease in the price of trucks decreases the cost of transporting goods, thus increasing the demand for truckers.
A change in work rules increases output per worker in the auto industry, thus increasing the demand for autoworkers.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 16-03 List the factors that increase or decrease resource demand.
Test Bank: II Topic: Determinants of Resource Demand
Which of the following increases in labor demand is due to a change in the price of a related resource?
Software sales rise, thus increasing the demand for software developers.
Snowboarding increases in popularity, thus increasing the demand for the workers who make snowboards.
C. A decrease in the price of wood decreases the cost of furniture, thus increasing the demand for furniture workers.
D. A technological change increases output per worker in the computer industry, thus increasing the demand for computer workers.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 16-03 List the factors that increase or decrease resource demand.
Test Bank: II Topic: Determinants of Resource Demand
Which of the following decreases in labor demand is due to a change in the price of a related resource?
A decline in the demand for computers in Europe reduces the demand for workers in the domestic computer industry.
The rise of hair salons for both men and women reduces the demand for barbers.
A decrease in the educational skills of manufacturing workers decreases the demand for such workers.
D. An increase in the price of chemical equipment increases the cost of producing fertilizer, thus decreasing the demand for workers who make fertilizer.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 16-03 List the factors that increase or decrease resource demand.
Test Bank: II Topic: Determinants of Resource Demand
Which of the following decreases in labor demand is due to a change in product demand?
A. An increase in the price of paper increases the cost of making books, thus decreasing the demand for bookbinders.
B. The widespread availability of news on the web reduces the demand for newspaper workers.
An increase in the price of steel increases the cost of producing cars and trucks, thus decreasing the demand for automobile workers.
A decline in productivity in retailing decreases the demand for retail sales workers.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 16-03 List the factors that increase or decrease resource demand.
Test Bank: II Topic: Determinants of Resource Demand
221.
Use the graph to answer the question about the labor resource market faced by producers of good X. What will shift D1 to D2?
a decrease in the price of labor
a decrease in demand for good X
an increase in the price of a complementary input
D. an increase in the price of good X
AACSB: Knowledge Application
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 16-03 List the factors that increase or decrease resource demand.
Test Bank: II Topic: Determinants of Resource Demand
222.
Use the graph to answer the question about the labor resource market faced by producers of good X. What will shift D1 to D2?
an increase in the price of a substitute input (if output effect > substitution effect)
a decrease in the price of a substitute input (if substitution effect > output effect)
C. a decrease in the price of a substitute input (if output effect > substitution effect)
D. an increase in the price of a complementary resource
AACSB: Knowledge Application
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 16-03 List the factors that increase or decrease resource demand.
Test Bank: II Topic: Determinants of Resource Demand
223.
Use the graph to answer the question about the labor resource market faced by producers of good X. What will shift D2 to D1?
A. a decrease in productivity of labor
a decrease in the price of labor
a decrease in the price of complementary input
a decrease in the price of a substitute input (if the output effect > substitution effect)
AACSB: Knowledge Application
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 16-03 List the factors that increase or decrease resource demand.
Test Bank: II Topic: Determinants of Resource Demand
224.
Use the graph to answer the question about the labor resource market faced by producers of good X. What will shift D2 to D1?
A decrease in the price of a substitute input (if the output effect > substitution effect)
An increase in the price of a substitute input (if the substitution effect > output effect)
C. An increase in the price of a substitute input (if the output effect > substitution effect)
D. A decrease in the price of a complementary resource
AACSB: Knowledge Application
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 16-03 List the factors that increase or decrease resource demand.
Test Bank: II Topic: Determinants of Resource Demand
As the baby boomers in America grow old, the demand for health care workers increases. This would be an example of which determinant of labor demand?
A. an increase in labor productivity
B. an increase in product demand
a decrease in the price of another resource
an increase in the price of another resource
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 16-03 List the factors that increase or decrease resource demand.
Test Bank: II Topic: Determinants of Resource Demand
If the price of a good increases, then in the market for the type of labor needed to produce this good,
employment will decrease.
the labor supply will increase.
the marginal product (MP) of labor will increase.
D. the marginal revenue product (MRP) of labor will increase.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 16-03 List the factors that increase or decrease resource demand.
Test Bank: II Topic: Determinants of Resource Demand
A decrease in the price of a productive resource will result in each of the following except a(n)
downward shift in the average-cost curves for all products that use the resource.
rightward shift in the supply of products which use the resource.
C. rightward shift in the demand curves for all products that use the resource.
D. increase in the quantity demanded of this productive resource.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 16-03 List the factors that increase or decrease resource demand.
Test Bank: II Topic: Determinants of Resource Demand
A technological improvement that causes an increase in the marginal product of a resource will
A. decrease the demand for the resource.
B. increase the demand for the resource.
decrease the marginal revenue product.
increase the marginal resource cost.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 16-03 List the factors that increase or decrease resource demand.
Test Bank: II Topic: Determinants of Resource Demand
The demand for a resource will increase if the
price of the resource decreases.
supply of the resource decreases.
C. price of the product requiring this resource increases.
D. price of the product requiring this resource decreases.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 16-03 List the factors that increase or decrease resource demand.
Test Bank: II Topic: Determinants of Resource Demand
In a competitive resource market, a decrease in the demand for a productive resource, ceteris paribus, will cause all of the following except a(n)