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Exam 16: The Demand for Resources

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Question 71

Multiple Choice

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The MRP curve for labor

A) is downsloping and shows the relationship between wage rates and the quantity of labor demanded.
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.

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

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Question 72

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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

A) the firm will use relatively more capital and relatively less labor.
B) the firm will use relatively more labor and relatively less capital.
C) inputs of capital and labor will be unchanged.
D) the firm's equilibrium output will necessarily increase.

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

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Question 73

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What is the difference between the demand curve for a resource under pure competition and one for a resource under imperfect competition?

Assume that a restaurant is hiring labor in an amount such that the MRC of the last worker is $16 and her MRP is $12. On the basis of this information, we can say that

Refer to the graph, where TP = total product and L = labor input. If this graph is for a firm that sells its product in a purely competitive market, then its marginal revenue product of labor (MRP)

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

Refer to the table. The price of the product being produced by this resource

If two inputs are complementary and employed in fixed proportions, an increase in the price of one input will

Assume Manfred's Shoe Shine Parlor hires labor, its only variable input, under purely competitive conditions. Shoe shines are also sold competitively. How many units of output are produced when 2 workers are employed?

As the baby boomers in America grow older, the demand for health care workers increases. This would be an example of which determinant of labor demand?

Suppose capital is readily substitutable for labor and that the price of capital falls. We can conclude that the

Refer to the table. The marginal revenue product of the fourth unit of input is approximately

Why is the marginal revenue product schedule a demand schedule for the individual firm in a purely competitive resource market and a selling output in a purely competitive product market?

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?

The demand for a resource is a derived demand based on the demand for the product it helps to produce.

The marginal product of labor and the marginal revenue product of labor are both measured in the same units, that is, units of output.

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

A technological improvement that causes an increase in the marginal product of a resource will

Wayne's Jacket Shop sells Wayne's jackets for $20 each. Wayne finds that when he hires different numbers of workers, the corresponding total revenues are as shown in the table. What is the marginal revenue product of the fifth worker?

The labor demand curve of a purely competitive seller