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Exam 16: The Demand for Resources

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Question 121

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We say that the demand for labor is a derived demand because

A) labor is a necessary input in the production of every good or service.
B) we demand the product that labor helps produce rather than labor service per se.
C) the forces of supply and demand do not apply directly to labor markets.
D) labor is hired using the MRP = MRC rule.

E) B) and C)
F) A) and D)

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Question 122

Multiple Choice

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The strength of the demand for a resource depends on the following factors, except the

A) supply of the resource.
B) productivity of the resource.
C) price of the product the resource helps to produce.
D) demand for the product the resource helps to produce.

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

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Question 123

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Harry owns a barbershop and charges $6 per haircut. By hiring one barber at $10 per hour, the shop can provide 24 haircuts per eight-hour day. By hiring a second barber at the same wage rate, the shop can now provide a total of 42 haircuts per day. The MRP of the second barber is

An employer hiring in a competitive labor market should hire additional labor as long as

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

Assume Manfred's Shoe Shine Parlor hires labor, its only variable input, under purely competitive conditions. Shoe shines are also sold competitively. $\begin{array} {| c | c | c | c|} \text { Units of Labor } & \text { Total Product } & \begin{array} { c } \text { Marginal } \\\text { Product }\end{array} & \begin{array} { c } \text { Total } \\\text { Revenue }\end{array} \\\hline 0 & 0 & & \\\hline 1 & 14 & 14 & \$ 42 \\\hline 2 & & 10 & \\\hline 3 & 30 & & 90 \\\hline 4 & 35 & & \\\hline 5 & 39 & & 117 \\\hline 6 & & & 126 \\\hline 7 & 44 & 2 & 132 \\\hline\end{array}$ If the wage rate is $11 and Manfred's only fixed input is capital, the total cost of which is $30, then what will be his economic profit?

According to the marginal productivity theory of resource demand, the labor-demand schedule for a producer selling in a purely competitive market is

Critics of the marginal productivity theory of income distribution claim that the theory is flawed because of

Producers should hire resources until the total output of each is equal.

A firm's demand schedule for a resource is the firm's marginal product schedule for the resource.

Assume Manfred's Shoe Shine Parlor hires labor, its only variable input, under purely competitive conditions. Shoe shines are also sold competitively. $\begin{array} {| c | c | c | c|} \text { Units of Labor } & \text { Total Product } & \begin{array} { c } \text { Marginal } \\\text { Product }\end{array} & \begin{array} { c } \text { Total } \\\text { Revenue }\end{array} \\\hline 0 & 0 & & \\\hline 1 & 14 & 14 & \$ 42 \\\hline 2 & & 10 & \\\hline 3 & 30 & & 90 \\\hline 4 & 35 & & \\\hline 5 & 39 & & 117 \\\hline 6 & & & 126 \\\hline 7 & 44 & 2 & 132 \\\hline\end{array}$ What is the marginal product of the sixth worker?

Suppose a competitive firm in both the resource and product markets is using inputs such that the marginal product of labor is 16 and the price of labor is $4 per unit, while the marginal product of capital is 12 and the price of capital is $3 per unit. At the maximum profit equilibrium point, the price of the product is

If the wage rate increases,

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

Assume that a purely competitive firm uses two resources, labor (L) and capital (C) , to produce a product. In which situation would the firm be maximizing profit? $\begin{array}{|c|c|c|c|c|}\hline & \text { MRPL } & \text { MRPC } & \text { PL } & \text { PC } \\\hline \text { A } & 20 & 40 & 60 & 80 \\\hline \mathrm{B} & 20 & 40 & 20 & 40 \\\hline \mathrm{C} & 30 & 30 & 20 & 20 \\\hline \mathrm{D} & 60 & 80 & 20 & 10 \\\hline\end{array}$

The marginal revenue product schedule is

Which of the following occupations is projected to be the fastest growing in the U.S. in terms of percentage increases?

The equation MP_L / P_L = MP_C / P_C

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)

A computer manufacturer's elasticity of demand for labor is not likely to be affected by the