Question 1

The change in total revenue that results from a one-unit change in the amount of a variable resource used is

Accepted Answer

A)   average resource cost
B)   marginal resource cost
C)   marginal product
D)   marginal revenue product
E)   average revenue product

Question 2

If two resources, such as labor and farm machinery, are complementary,

Accepted Answer

A)   one can be used in place of the other
B)   an increase in the price of one will increase the demand for the other
C)   an increase in the price of one will increase the supply of the other
D)   a decrease in the price of one will increase the productivity of the other, which will decrease the demand for that other resource
E)   a decrease in the price of one will increase the demand for the other

Question 3

A resource that earns only economic rent

Accepted Answer

A)   cannot be employed in any other line of production, so its opportunity cost is zero
B)   is rental payment for a resource that has already been paid for
C)   is impossible because all resources have an opportunity cost associated with their use
D)   is not fixed in quantity
E)   has a perfectly elastic supply curve

Question 4

NARRBEGIN: Exhibit 11-10
Exhibit 11-10
 
-Exhibit 11-10 shows data on watch production. If the marginal resource cost is constant at $18 per unit of labor, how many workers should the firm hire to maximize its profit?

Accepted Answer

A)   one
B)   two
C)   three
D)   four
E)   five

Question 5

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?

Accepted Answer

A)   All of the resource earnings in market A are opportunity costs.
B)   All of the resource earnings in both markets are opportunity costs.
C)   All of the resource earnings in market B are opportunity costs.
D)   None of the resource earnings in either market is an opportunity cost.
E)   None of the resource earnings in either market is economic rent.

Question 6

Marginal revenue product is defined as the

Accepted Answer

A)   change in total output that results from the employment of an additional unit of a resource
B)   change in total product that results from the employment of an additional unit of a resource
C)   change in total revenue that results from the employment of an additional unit of a resource
D)   change in resource employment that results from a change in total output
E)   change in marginal revenue that results from a change in the employment of an additional unit of a resource

Question 7

Resource price differentials that trigger the reallocation of resources so as to equalize payments for similar resources are known as

Accepted Answer

A)   permanent differentials
B)   trigger price differentials
C)   reallocation differentials
D)   equal differentials
E)   temporary differentials

Question 8

Permanent differentials in resource prices will cause

Accepted Answer

A)   all of the following
B)   the allocation of fewer resources to lower-paid uses
C)   the equalization of payments for the same resource in different uses
D)   no change in the allocation of resources
E)   the allocation of more resources to higher-paid uses

Question 9

NARRBEGIN: Exhibit 11-5
Exhibit 11-5
 
-In Exhibit 11-5, total earnings by the resource in equilibrium is represented by area

Accepted Answer

A)   0deh
B)   bed
C)   dcf
D)   0cfg
E)   bed + 0deh E

Question 10

If coal and oil are substitute inputs in the production of electricity, an increase in the price of oil

Accepted Answer

A)   will increase the demand for coal
B)   will reduce the demand for coal
C)   will increase the supply of coal
D)   will reduce the supply of coal
E)   will not affect the demand for coal

Question 11

NARRBEGIN: Exhibit 11-1
Exhibit 11-1
 
-In Exhibit 11-1, which unit of the resource is earning the least economic rent?

Accepted Answer

A)   the fifth
B)   the tenth
C)   the fifteenth
D)   the twentieth
E)   they are all earning the same economic rent

Question 12

If the marginal revenue product of the fifth worker is $15, the price of the last unit of output produced is $5, and the firm sells as a price searcher, then the marginal product of the fifth worker is

Accepted Answer

A)   3 units of output
B)   45 units of output
C)   fewer than 3 units of output
D)   greater than 3 units of output
E)   greater than 75 units of output D

Question 13

NARRBEGIN: Exhibit 11-5
Exhibit 11-5
 
-In Exhibit 11-5, economic rent in equilibrium is represented by area

Accepted Answer

A)   abe
B)   befc
C)   gfeh
D)   cdf
E)   bed

Question 14

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

Accepted Answer

A)   producers will substitute away from that resource
B)   producers fear starting a trend toward higher resource prices
C)   the demand curve for the product will shift to the left
D)   highly paid resources don't produce as much
E)   it makes other resources look expensive as well A

Question 15

Which resource earns the highest economic rent as a proportion of total earnings?

Accepted Answer

A)   a resource specialized in one task
B)   a nonspecialized resource
C)   a resource with inelastic demand
D)   a resource in low demand
E)   a resource with elastic demand

Question 16

When the U.S. housing market slumped from 2005 to 2007, we would expect the demand curve for lumber

Accepted Answer

A)   exhibited a movement along to the right
B)   shifted to the left
C)   exhibited a movement along to the left
D)   shifted to the right
E)   None of the answers is correct.

Question 17

Along the supply curve of lifeguards at local public pools,

Accepted Answer

A)   the wage paid to lifeguards is held constant
B)   the number of lifeguards is held constant
C)   the wage paid to lifeguards at private clubs is held constant
D)   the demand for lifeguards is assumed constant
E)   the admission price to these public pools rises as the wage rate for lifeguards increases

Question 18

NARRBEGIN: Exhibit 11-9-1
Exhibit 11-9
 
-How low would the wage rate have to fall before the firm in Exhibit 11-9 would hire nine workers?

Accepted Answer

A)   $198
B)   $4
C)   $396
D)   $28
E)   The firm would have to be paid to hire nine workers.

Question 19

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?

Accepted Answer

A)   All of the resource earnings in market A are economic rent.
B)   All of the resource earnings in both markets are economic rent.
C)   All of the resource earnings in market B are economic rent.
D)   None of the resource earnings in either market is an opportunity cost.
E)   None of the resource earnings in either market is economic rent.

Question 20

For a resource in a perfectly competitive market, marginal revenue product is equal to the price of the resource.

Accepted Answer

A) True 
 B)False

Exam 11: Resource Markets

The change in total revenue that results from a one-unit change in the amount of a variable resource used is

Correct Answer
verified

If two resources, such as labor and farm machinery, are complementary,

Correct Answer
verified

A resource that earns only economic rent

Correct Answer
verified

NARRBEGIN: Exhibit 11-10 Exhibit 11-10 -Exhibit 11-10 shows data on watch production. If the marginal resource cost is constant at $18 per unit of labor, how many workers should the firm hire to maximize its profit?

Correct Answer
verified

Correct Answer
verified

Marginal revenue product is defined as the

Correct Answer
verified

Resource price differentials that trigger the reallocation of resources so as to equalize payments for similar resources are known as

Correct Answer
verified

Permanent differentials in resource prices will cause

Correct Answer
verified

NARRBEGIN: Exhibit 11-5 Exhibit 11-5 -In Exhibit 11-5, total earnings by the resource in equilibrium is represented by area

Correct Answer
verified
E

If coal and oil are substitute inputs in the production of electricity, an increase in the price of oil

Correct Answer
verified

NARRBEGIN: Exhibit 11-1 Exhibit 11-1 -In Exhibit 11-1, which unit of the resource is earning the least economic rent?

Correct Answer
verified

If the marginal revenue product of the fifth worker is $15, the price of the last unit of output produced is $5, and the firm sells as a price searcher, then the marginal product of the fifth worker is

Correct Answer
verified
D

NARRBEGIN: Exhibit 11-5 Exhibit 11-5 -In Exhibit 11-5, economic rent in equilibrium is represented by area

Correct Answer
verified

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

Correct Answer
verified
A

Which resource earns the highest economic rent as a proportion of total earnings?

Correct Answer
verified

When the U.S. housing market slumped from 2005 to 2007, we would expect the demand curve for lumber

Correct Answer
verified

Along the supply curve of lifeguards at local public pools,

Correct Answer
verified

NARRBEGIN: Exhibit 11-9-1 Exhibit 11-9 -How low would the wage rate have to fall before the firm in Exhibit 11-9 would hire nine workers?

Correct Answer
verified

Correct Answer
verified

For a resource in a perfectly competitive market, marginal revenue product is equal to the price of the resource.

Correct Answer
verified

Exam 11: Resource Markets

The change in total revenue that results from a one-unit change in the amount of a variable resource used is

Correct AnswerverifiedShow Answer

If two resources, such as labor and farm machinery, are complementary,

Correct AnswerverifiedShow Answer

A resource that earns only economic rent

Correct AnswerverifiedShow Answer

NARRBEGIN: Exhibit 11-10 Exhibit 11-10 -Exhibit 11-10 shows data on watch production. If the marginal resource cost is constant at $18 per unit of labor, how many workers should the firm hire to maximize its profit?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Marginal revenue product is defined as the

Correct AnswerverifiedShow Answer

Resource price differentials that trigger the reallocation of resources so as to equalize payments for similar resources are known as

Correct AnswerverifiedShow Answer

Permanent differentials in resource prices will cause

Correct AnswerverifiedShow Answer

NARRBEGIN: Exhibit 11-5 Exhibit 11-5 -In Exhibit 11-5, total earnings by the resource in equilibrium is represented by area

Correct AnswerverifiedE

If coal and oil are substitute inputs in the production of electricity, an increase in the price of oil

Correct AnswerverifiedShow Answer

NARRBEGIN: Exhibit 11-1 Exhibit 11-1 -In Exhibit 11-1, which unit of the resource is earning the least economic rent?

Correct AnswerverifiedShow Answer

If the marginal revenue product of the fifth worker is $15, the price of the last unit of output produced is $5, and the firm sells as a price searcher, then the marginal product of the fifth worker is

Correct AnswerverifiedD

NARRBEGIN: Exhibit 11-5 Exhibit 11-5 -In Exhibit 11-5, economic rent in equilibrium is represented by area

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedA

Which resource earns the highest economic rent as a proportion of total earnings?

Correct AnswerverifiedShow Answer

When the U.S. housing market slumped from 2005 to 2007, we would expect the demand curve for lumber

Correct AnswerverifiedShow Answer

Along the supply curve of lifeguards at local public pools,

Correct AnswerverifiedShow Answer

NARRBEGIN: Exhibit 11-9-1 Exhibit 11-9 -How low would the wage rate have to fall before the firm in Exhibit 11-9 would hire nine workers?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

For a resource in a perfectly competitive market, marginal revenue product is equal to the price of the resource.

Correct AnswerverifiedShow Answer

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E

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D

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A

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