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A resource price taker's resource demand curve is


A) horizontal
B) the same as its marginal resource cost curve
C) the same as its marginal revenue product curve
D) the same as its marginal product curve
E) the same as its average variable cost curve

F) D) and E)
G) A) and D)

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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) 15 units of output
B) 5 units of output
C) 3 units of output
D) 45 units of output
E) 75 units of output

F) B) and D)
G) B) and C)

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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?


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.

F) None of the above
G) C) and D)

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A profit-maximizing firm will hire units of an input to the point at which


A) MRP > price of the input
B) MRP < MRC
C) MRP = the supply of the input
D) MRP = MRC
E) MRP < the supply of the input

F) C) and D)
G) All of the above

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Under certain conditions,the slope of the marginal revenue product curve reflects the combined effects of diminishing marginal returns and a declining price of the product the firm sells.What are these conditions?


A) The firm must be a price searcher in both the product market and the resource market.
B) The firm must be a price searcher in the product market,regardless of whether it is a resource price searcher.
C) The firm must be a price searcher in the product market but not necessarily in a perfectly competitive resource market.
D) The firm must be a price searcher in a perfectly competitive product market.
E) The firm must operate in a decreasing-cost industry.

F) C) and E)
G) A) and D)

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Both sugar and fructose can be used in the production of candy.If the price of sugar increases,


A) the demand for sugar increases
B) sugar becomes relatively more expensive than fructose only if the price of fructose falls
C) sugar becomes relatively more expensive than fructose,other things constant
D) the price of fructose immediately increases
E) the price of fructose immediately decreases

F) B) and C)
G) All of the above

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If a firm is using a resource hired in a perfectly competitive market,and if the price of the resource exceeds the marginal revenue product of the resource,


A) more of the resource should be used
B) less of the resource should be used
C) the firm should pay a lower price for the resource
D) the firm should pay a higher price for the resource
E) the firm is using the optimal amount of the resource

F) C) and D)
G) A) and B)

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The market supply curve of a resource is


A) downward sloping
B) upward sloping
C) horizontal at the market price
D) vertical
E) determined by firms

F) B) and C)
G) A) and B)

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-In Exhibit 11-11,the widgets are sold in a perfectly competitive market at $10 each.The price of rubber is $50 per pound.To maximize profit,the widget producer should produce: A) 0 widgets B) 20 widgets C) 35 widgets D) 45 widgets E) 50 widgets -In Exhibit 11-11,the widgets are sold in a perfectly competitive market at $10 each.The price of rubber is $50 per pound.To maximize profit,the widget producer should produce:


A) 0 widgets
B) 20 widgets
C) 35 widgets
D) 45 widgets
E) 50 widgets

F) A) and D)
G) C) and E)

Correct Answer

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Fred Ramirez is a farmer who charts the relationship between number of acres planted in corn and number of bushels of corn harvested.Which marginal concept can Fred measure with this data?


A) marginal utility
B) marginal product
C) marginal cost
D) marginal revenue product
E) marginal factor cost

F) A) and D)
G) B) and E)

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Exhibit 11-4 Exhibit 11-4 -In Exhibit 11-4,economic rent in equilibrium equals A) $0 B) $120 C) $1,000 D) $300 E) $1,300 -In Exhibit 11-4,economic rent in equilibrium equals


A) $0
B) $120
C) $1,000
D) $300
E) $1,300

F) A) and D)
G) A) and B)

Correct Answer

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Which of the following best illustrates the concept of derived demand?


A) As income rises,the demand for TVs rises.
B) A fall in the price of cameras will increase the demand for film.
C) A fall in the demand for tires will reduce the demand for rubber.
D) When the price of gasoline rises,the demand for automobile repair falls.
E) If consumers expect the price of coffee to rise,demand for coffee rises.

F) A) and E)
G) C) and D)

Correct Answer

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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


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

F) C) and D)
G) A) and D)

Correct Answer

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Exhibit 11-1 Exhibit 11-1 -In Exhibit 11-1,the twentieth unit of the resource is earning a wage of A) $4,all of which is economic rent B) $4,none of which is economic rent C) $8,all of which is economic rent D) $8,none of which is economic rent E) $8,half of which is economic rent -In Exhibit 11-1,the twentieth unit of the resource is earning a wage of


A) $4,all of which is economic rent
B) $4,none of which is economic rent
C) $8,all of which is economic rent
D) $8,none of which is economic rent
E) $8,half of which is economic rent

F) C) and D)
G) B) and E)

Correct Answer

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Economic rent is defined as


A) the opportunity cost of a resource
B) the payment to a resource in excess of its opportunity cost
C) opportunity cost
D) total earnings
E) the part of a homeowner's housing that is included in GDP accounts

F) A) and B)
G) B) and E)

Correct Answer

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Which of the following are complementary resources?


A) margarine and butter used in baking
B) sugar and honey used in cereals
C) a teacher and a chalkboard
D) rye and wheat bread used in a sandwich shop
E) a typewriter and a personal computer used in an office

F) C) and E)
G) A) and E)

Correct Answer

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If the price of a resource falls,other things constant,


A) demand for the product it produces will increase
B) demand for a substitute product will increase
C) demand for a substitute resource will fall
D) supply of that resource will rise
E) supply of a substitute resource will also rise

F) A) and B)
G) A) and E)

Correct Answer

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Exhibit 11-2, Exhibit 11-2, -In Exhibit 11-2,the 100th unit of the resource is earning a resource price of A) $10,all of which is economic rent B) $10,none of which is economic rent C) $4,all of which is economic rent D) $4,none of which is economic rent E) $10,some of which is economic rent -In Exhibit 11-2,the 100th unit of the resource is earning a resource price of


A) $10,all of which is economic rent
B) $10,none of which is economic rent
C) $4,all of which is economic rent
D) $4,none of which is economic rent
E) $10,some of which is economic rent

F) D) and E)
G) C) and D)

Correct Answer

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The market supply curve of capital is


A) upward sloping
B) perfectly inelastic
C) upward sloping at first but then bends backward
D) downward sloping
E) perfectly elastic

F) A) and D)
G) B) and E)

Correct Answer

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Suppose a firm is a price searcher in the product market and hires labor in a perfectly competitive labor market.If the wage rate is $20,the marginal product of the last worker hired is 5,and the firm is hiring the profit-maximizing amount of labor,then the marginal revenue from the last unit of output must be


A) $1
B) $1.50
C) $4
D) $5
E) $20

F) C) and D)
G) A) and E)

Correct Answer

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