Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
16-41
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: Remember
D iffi cu l t y:
01 Easy
Learning Objective: 16-03 List the factors that increase or decrease resource demand.
Test Bank: I
To pi c :
Determinants of Resource Demand
83.
Which of the following occupations is projected to be the fastest growing in the U.S. in
terms of percentage increases?
A.
medical assistants
84.
Which of the following statements is most accurate about the occupations projected to be
the fastest growing in the U.S. in terms of percentage increases?
A.
The majority are in engineering professions.
85.
Which of the following statements is most accurate about the occupations projected to be
the most rapidly declining in the U.S. in terms of percentage decreases?
A.
The majority are in education related professions.
16-42
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
C.
The majority are in manufacturing related professions.
D. The majority are in unskilled jobs.
86.
Elasticity of resource demand is measured by the
A. absolute change in resource quantity demanded divided by the absolute change in
resource price.
87.
When the elasticity coefficient for resource demand is greater than one, resource demand
is
16-43
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
To pi c :
Elasticity of Resource Demand
88.
When the elasticity coefficient for resource demand is less than one, resource demand is
C.
unit-elastic.
D.
infinitely elastic.
89.
Suppose that a union successfully negotiated a 10 percent wage increase and the quantity
of labor demanded increased by 10 percent. We can conclude that
D.
labor demand is unit-elastic.
90.
Suppose that a union successfully negotiated a 10 percent wage increase and the quantity
of labor demanded decreased by 10 percent. Given a fixed labor demand curve,
we can
conclude that
A.
the labor demand curve is upsloping.
16-44
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Blooms: Understand
Difficulty:
02 Medium
Learning Objective: 16-04 Discuss the determinants of elasticity of resource demand.
Test Bank: I
To p i c:
Elasticity of Resource Demand
91.
Resource X has many close substitutes, whereas resource Y has no close substitutes.
Other things equal, we would expect
A.
the demand for resource Y to be more elastic than the demand for resource X.
92.
The elasticity of resource demand measures the
A. responsiveness of workers to changes in wage rates.
93.
Wage Rate
Quantity of Labor Demanded
$16
800
14
1,000
12
1,200
10
1,600
8
1,800
Refer to the given data. For the $16 to $14 range of wage rates, labor demand is
A. perfectly elastic.
94.
Wage Rate
Quantity of Labor Demanded
$16
800
14
1,000
12
1,200
10
1,600
8
1,800
Refer to the given data. Over the $10 to $8 range of wage rates, the demand for labor is
A.
perfectly elastic.
16-46
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
To p i c:
Elasticity of Resource Demand
Type: Table
95.
Wage Rate
Quantity of Labor Demanded
$16
800
14
1,000
12
1,200
10
1,600
8
1,800
Refer to the given data. Suppose that the union that provides labor to firms in this market
successfully negotiates an increase in the wage rate from $10 to $12. As a result
of the
wage increase, firms will hire
D.
more capital, if capital and labor are used in fixed proportions in production.
96.
Wage Rate
Quantity of Labor Demanded
$16
800
14
1,000
12
1,200
10
1,600
8
1,800
A. fewer workers, and the total paid out for wages will decline.
97.
The elasticity of resource demand will be greater the
A.
smaller the portion of the product's total costs accounted for by the resource.
98.
The relationship between the elasticity of product demand and the elasticity of demand
for labor employed in its production is such that, other things being equal,
A. the more elastic the demand for the product, the less elastic the demand for labor.
16-48
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Learning Objective: 16-04 Discuss the determinants of elasticity of resource demand.
Test Bank: I
To p i c:
Elasticity of Resource Demand
99.
Other things equal, the relationship between the relative importance of a given type of
labor in a firm's total costs and the elasticity of demand for that labor is such that
the
A.
demand for labor will be elastic only if labor accounts for less than 50 percent of total
costs.
100.
Other things equal, if wage rates increase by 20 percent, the greatest decline in
employment will occur when labor costs are a
D.
small proportion of total costs and product demand is inelastic.
101.
If a 10 percent wage increase in a particular labor market results in a 5 percent decline
in employment in that market, labor demand is
16-49
D. perfectly elastic.
102.
Assume that the coefficient of elasticity of product demand is 0.5 in industry A and is
3.2 in industry B. Other things equal, labor demand will be
A.
more elastic in industry A than in B.
103.
Suppose that the labor cost to total cost ratio in industry A is 82 percent, while in
industry B it is 21 percent. Other things equal, labor demand will be
D.
relatively elastic in both industries A and B.
104.
Which of the following statements is true? Other things equal, the demand for labor will
be less elastic the
A.
easier it is to substitute capital for labor.
105.
Assuming a competitive resource market, a firm is hiring resources in the profit-
maximizing amounts when the
A. firm's total outlay on resources is minimized.
106.
Assume that an appliance manufacturer is employing variable resources X and Y in
such amounts that the MRPs of the last units of X and Y employed are $100 and $60,
respectively. Resource X can be hired at $50 per unit and resource Y at $20 per unit. The
firm
D.
is using the least-costly combination of X and Y but could increase its profits by
employing less of both X and Y.
16-51
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: 16-05 Determine how a competitive firm selects its optimal
combination of resources.
Test Bank: I
To pi c :
Optimal Combination of Resources
107.
A firm is hiring resources X, Y, and Z in the profit-maximizing amounts when
D.
the marginal revenue product of the last dollar spent on each of the three resources is the
same.
108.
Inputs of a
MPa
Inputs of b
MPb
1
25
1
40
2
20
2
36
3
15
3
32
4
10
4
24
5
5
5
20
6
2
6
16
7
1
7
8
The table gives marginal product data for resources a and b. The output of these independent
resources sells in a purely competitive market at $1 per unit. Assuming the
prices of
resources a and b are $5 and $8 respectively, what is the least costly combination of
resources for the firm to employ in producing 192 units of output?
A.
2 of a and 6 of b
109.
Inputs of a
MPa
Inputs of b
MPb
1
25
1
40
2
20
2
36
3
15
3
32
4
10
4
24
5
5
5
20
6
2
6
16
7
1
7
8
The table gives marginal product data for resources a and b. The output of these independent
resources sells in a purely competitive market at $1 per unit. Assuming the
prices of
resources a and b are $5 and $8, respectively, what is the profit-maximizing combination of
resources?
A.
7 of a and 7 of b
D. 4 of a and 4 of b
16-53
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
To pi c :
Optimal Combination of Resources
Type: Table
110.
Inputs of a
MPa
Inputs of b
MPb
1
25
1
40
2
20
2
36
3
15
3
32
4
10
4
24
5
5
5
20
6
2
6
16
7
1
7
8
The table gives marginal product data for resources a and b. The output of these independent
resources sells in a purely competitive market at $1 per unit. Assuming the
prices of
resources a and b are $5 and $8, respectively, when the firm hires the profit-maximizing
combination of resources, its economic profit will be
D. $138.
111.
Inputs of a
MPa
Inputs of b
MPb
1
25
1
40
2
20
2
36
3
15
3
32
4
10
4
24
5
5
5
20
16-54
6
2
6
16
7
1
7
8
The table gives marginal product data for resources a and b. The output of these independent
resources sells in a purely competitive market at $1 per unit. Assume that
the prices of a
and b are $15 and $20, respectively. To maximize profits, what combination of a and b
should the employer hire?
D.
6 of a and 2 of b
112.
The equation MPL / PL = MPC / PC
A.
designates the MR = MC level of output.
D.
is a necessary, but not sufficient, condition for the maximization of profits.
113.
Assume a firm purchases resources a and b under purely competitive conditions and
combines these resources to produce X. Product X is sold in a purely competitive
market.
The MPs of a and b are 6 and 3, respectively, and the prices of a and b are $12 and $6,
respectively. If equilibrium exists, the price of X will be
A. $1.
114.
Which of the following statements is correct?
D.
If the cost-minimization rule is fulfilled, it necessarily follows that the profit-maximizing
rule is being fulfilled.
115.
If MPa / Pa = MPb / Pb and MRPa / Pa = MRPb / Pb > 1, this firm is
D.
combining resources a and b so as to minimize costs and maximize profits.
16-56
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: 16-05 Determine how a competitive firm selects its optimal
combination of resources.
Test Bank: I
To pi c :
Optimal Combination of Resources
116.
Assuming pure competition, which of the following are equivalents?
A.
MRPL / PL = MRPC / PC and Px = 1/MC
117.
Suppose a firm is hiring resources l and m under purely competitive conditions to
produce product Y, which sells for $2 in a purely competitive market. The prices of l
and m are $10 and $4, respectively. In equilibrium, the MPs of l and m, respectively, are
A.
1 and 1.
118.
If a firm is hiring variable resources D and F in perfectly competitive input markets, it
will minimize the cost of producing any level of output by employing D and F in
such
16-57
amounts that
A.
the price of each input equals its MP.
119.
Assume a pencil manufacturer is employing resources C and D in such quantities that
the MRPs of the last units hired are $80 and $50, respectively. The price of
resource C is
$90, and the price of D is $35. This firm
D.
is using the least-cost combination of C and D.
120.
Quantity of
Labor
MP of
Labor
MRP of
Labor
Quantity of
Capital
MP of
Capital
MRP of
Capital
1
15
$45
1
8
$24
2
12
36
2
6
18
3
9
27
3
5
15
4
6
18
4
4
12
5
3
9
5
3
9
6
1
3
6
2
6
Refer to the given data. This firm is selling its product in
A. an imperfectly competitive market at prices that decline as sales increase.
121.
Quantity of
Labor
MP of
Labor
MRP of
Labor
Quantity of
Capital
MP of
Capital
MRP of
Capital
1
15
$45
1
8
$24
2
12
36
2
6
18
3
9
27
3
5
15
4
6
18
4
4
12
5
3
9
5
3
9
6
1
3
6
2
6
Refer to the given data. If the prices of labor and capital are $9 and $15, respectively, the
profit-maximizing firm will hire
D.
3 units of labor and 4 of capital.
16-59
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Learning Objective: 16-05 Determine how a competitive firm selects its optimal
combination of resources.
Test Bank: I
To p i c:
Optimal Combination of Resources
Type: Table
122.
Quantity of
Labor
MP of
Labor
MRP of
Labor
Quantity of
Capital
MP of
Capital
MRP of
Capital
1
15
$45
1
8
$24
2
12
36
2
6
18
3
9
27
3
5
15
4
6
18
4
4
12
5
3
9
5
3
9
6
1
3
6
2
6
Refer to the given data. If the prices of labor and capital are $9 and $15, respectively, at the
profit-maximizing level, the firm's total output will be
A.
38 units.
123.
Quantity of
Labor
MP of
Labor
MRP of
Labor
Quantity of
Capital
MP of
Capital
MRP of
Capital
1
15
$45
1
8
$24
2
12
36
2
6
18
16-60
3
9
27
3
5
15
4
6
18
4
4
12
5
3
9
5
3
9
6
1
3
6
2
6
Refer to the given data. If the prices of labor and capital are $9 and $15, respectively, at the
profit-maximizing level of output, the firm's total revenue will be
A. $114.
124.
Quantity of
Labor
MP of
Labor
MRP of
Labor
Quantity of
Capital
MP of
Capital
MRP of
Capital
1
15
$45
1
8
$24
2
12
36
2
6
18
3
9
27
3
5
15
4
6
18
4
4
12
5
3
9
5
3
9
6
1
3
6
2
6
Refer to the given data. If the prices of labor and capital are $9 and $15, respectively, and
labor and capital are the only inputs, at the profit-maximizing level of output,
the firm's total
costs will be
A. $106.
