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16-21
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Top i c:
Marginal Productivity Theory of Resource Demand
40.
The labor demand curve of an imperfectly competitive seller is downsloping
A. solely because of diminishing marginal utility.
41.
If a firm is selling in an imperfectly competitive product market, then
A. average product will be less than marginal product for any number of workers hired.
42.
Other things equal, we would expect the labor demand curve of a monopolistic seller to
D.
be more elastic than that of a purely competitive seller.
16-22
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
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: I
Top i c:
Marginal Productivity Theory of Resource Demand
43.
The change in a firm's total revenue that results from hiring an additional worker is
measured by
A.
the marginal product.
44.
The labor demand curve of a purely competitive seller
A.
slopes downward because the firm must lower price to sell more output.
45.
The MRP curve for labor
16-23
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
B.
is perfectly elastic if the firm is selling its output competitively.
C.
is upsloping and lies above the labor supply curve.
D.
will shift location when the wage rate changes.
46.
If the wage rate increases,
D. an imperfectly competitive producer may find it profitable to hire either more or less
labor.
47.
A farmer who has fixed amounts of land and capital finds that total product is 24 for the
first worker hired, 32 when two workers are hired, 37 when three are hired, and
40 when
four are hired. The farmer's product sells for $3 per unit, and the wage rate is $13 per
worker. The marginal product of the second worker is
A. 24.
16-24
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
A c c e s s i b i l i t y :
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: I
Top i c:
Marginal Productivity Theory of Resource Demand
48.
A farmer who has fixed amounts of land and capital finds that total product is 24 for the
first worker hired, 32 when two workers are hired, 37 when three are hired, and
40 when
four are hired. The farmer's product sells for $3 per unit, and the wage rate is $13 per
worker. The marginal revenue product of the second worker is
D. $9.
49.
A farmer who has fixed amounts of land and capital finds that total product is 24 for the
first worker hired, 32 when two workers are hired, 37 when three are hired, and
40 when
four are hired. The farmer's product sells for $3 per unit, and the wage rate is $13 per
worker. How many workers should the farmer hire?
A.
1
16-25
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Top i c:
Marginal Productivity Theory of Resource Demand
50.
A farmer who has fixed amounts of land and capital finds that total product is 24 for the
first worker hired, 32 when two workers are hired, 37 when three are hired, and
40 when
four are hired. The farmer's product sells for $3 per unit, and the wage rate is $13 per
worker. What is the farmer's profit-maximizing output?
A.
20
51.
A competitive employer is using labor in such an amount that labor's MRP is $10 and its
wage rate is $8. This firm
D.
is selling its product in an imperfectly competitive market.
52.
For a firm selling its product in a purely competitive market, the marginal revenue
product of labor can be found by
D. dividing marginal product by product price.
53.
For a firm selling its product in an imperfectly competitive market, the marginal revenue
product of labor can be found by
A.
adding marginal product to total product as one more unit of labor is employed.
54.
Refer to the graph. A move from b to a along labor demand curve D1 would result from
A. a decrease in the price of a substitute resource, assuming that the substitution effect
exceeds the output effect.
55.
Refer to the graph. Each of the three labor demand curves shown slopes downward because
of the
A.
law of diminishing marginal utility.
56.
Refer to the graph. Other things equal, an increase in labor productivity would cause a
A. move from a to b on D1.
57.
Refer to the graph. Other things equal, an increase in the price of a complementary resource
would cause a
A.
move from a to b on D1.
58.
Refer to the graph. Other things equal, a decrease in the price of a substitute resource would
cause a
A. move from a to b on D1.
16-32
59.
Refer to the graph. Other things equal, an increase in the price of substitute resource would
cause a
D.
shift from D3 to D2, assuming the substitution effect exceeds the output effect.
60.
Suppose the demand for strawberries rises sharply, resulting in an increased price for
strawberries. As it relates to strawberry pickers, we could expect the
D.
MP curve to shift downward.
16-33
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
AACSB: Knowledge Application
A c c e s s i b i l i t y :
Keyboard Navigation
Blooms: Remember
Di f f i cu l t y :
01 Easy
Learning Objective: 16-03 List the factors that increase or decrease resource demand.
Test Bank: I
Top i c:
Determinants of Resource Demand
61.
Which of the following will not cause a shift in the demand for resource X?
D.
an increase in the productivity of resource X
62.
A decline in the price of resource A will
D.
reduce the demand for complementary resource B.
63.
Assume the price of capital falls relative to the price of labor and, as a result, the demand
for labor increases. Therefore,
16-34
D.
the substitution effect is greater than the output effect.
64.
The labor demand curve of a firm
D.
is the same as its marginal product curve.
65.
Which of the following will not shift the demand curve for labor?
A. the use of a larger stock of capital with the labor force
66.
Employers will hire more units of a resource if the
A. price of the resource increases.
67.
If technology dictates that labor and capital must be used in fixed proportions, an
increase in the price of capital will cause a firm to use
A.
more labor as a consequence of the substitution effect.
68.
If resources A and B are complementary and employed in fixed proportions,
A.
a change in the price of A will have no effect on the quantity of B employed.
69.
If two resources are highly substitutable for one another,
A. a decrease in the price of one will increase unit costs of production.
70.
The substitution effect indicates that a profit-seeking firm will use
D.
less of an input whose price has fallen and more of other inputs in producing a given
output.
71.
Suppose capital and labor are used in fixed proportions so that each machine requires
only one worker. If a decline in the price of capital occurs, then the demand for
labor will
A.
decrease solely because of the substitution effect.
16-37
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Learning Objective: 16-03 List the factors that increase or decrease resource demand.
Test Bank: I
Topi c :
Determinants of Resource Demand
72.
Assume the price of capital doubles and, as a result, firms make no change in the relative
quantities of capital and labor they employ. This implies that
D.
the demand for capital is highly price elastic.
73.
The demand curve for labor would shift leftward as the result of
A. an increase in the price of the product labor is producing.
74.
A firm will employ more of an input whose relative price has fallen and, conversely, will
use less of an input whose relative price has risen. Thus, a fall in the price of
capital will
increase the relative price of labor and thereby reduce the demand for labor. This describes
the
A. output effect.
16-38
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written consent of McGraw-Hill Education.
D.
law of diminishing returns.
75.
A change in an input price will alter both production costs and the profit-maximizing
output. Thus, a decline in the price of capital will reduce production costs, increase
the
profit-maximizing output, and thereby increase the demand for labor. This describes the
D.
law of diminishing returns.
76.
If the price of capital declines, the consequent output effect would be
D.
of consequence only if capital and labor are used in fixed proportions.
77.
Suppose the productivity of labor increases and at the same time the price of capital,
which is complementary to labor, increases. As a result, the demand for labor
A.
will increase.
78.
Suppose a technological improvement increases the productivity of a firm's capital and,
simultaneously, its workers' union negotiates a wage increase. We can predict
that
D.
the firm's equilibrium output will necessarily increase.
79.
Suppose the price of the product that labor is producing increases and simultaneously the
price of capital, which is substitutable for labor, decreases. Assuming that the
substitution
effect is greater than the output effect, the demand for labor
A. will increase.
16-40
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Test Bank: I
Topi c :
Determinants of Resource Demand
80.
Suppose there is a decline in the demand for the product labor is producing. Furthermore,
the price of capital, which is complementary to labor, increases. Thus, the
demand for labor
A. will increase.
81.
Which of the following occupations is not among the 10 projected fastest-growing U.S.
occupations in terms of percentage increases?
D.
wind turbine service technicians
82.
Which of the following occupations is among the 10 projected most rapidly declining
U.S. occupations in terms of percentage decreases?
A.
medical assistants
