Mat 540 Quiz

Name: __________________________ Date: _____________

1.|The strength of the demand for a resource depends on the:|
A)|supply of the resource.|
B)|productivity of the resource.|
C)|law of increasing product cost.|
D)|law of diminishing marginal utility.|

2.|The demand for a productive resource is said to be "derived" because the demand for the factor: |
A)|depends on the demand for the product it is used to make. |
B)|depends on the demand for a complementary factor. |
C)|is derived from the state of the economy. |
D)|is derived from government policy. |

3.|An increase in the demand for computers leads to an increase in demand for computer programmers. This situation arises because: |
A)|programmers minimize the costs
If the product the firm produces sells for a constant $2 per unit, the marginal revenue product of the third unit of the resource is: |
A)|$12. |
B)|$20. |
C)|$24. |
D)|$36. |

8.|Refer to the above table. If the firm's product sells for a constant $2 and the price of a resource is $16, the firm will employ how many units of the resource? |
A)|2 |
B)|3 |
C)|4 |
D)|5 |

9.|The demand for labor will decrease in response to: |
A)|increased productivity. |
B)|better training of all laborers. |
C)|a decrease in the supply of labor. |
D)|decreased demand in markets for consumer goods and services. |

10.|If two inputs are complementary and employed in fixed proportions, an increase in the price of one input will: |
A)|decrease the demand for the other input. |
B)|increase the demand for the other input. |
C)|increase the quantity demanded for the other input. |
D)|have no effect on the demand for the other input. |

11.|If capital and labor are used in rigidly fixed proportions and the price of capital falls, it can be concluded that: |
A)|the substitution and output effects will work in opposite directions so no judgment can be made as to the effect on labor demand.
|
C)|the elasticity of demand for both labor and capital will increase. |
D)|labor demand will necessarily decline. |

12.|In a purely competitive industry, which of the following could cause a firm's marginal revenue product curve for an economic resource to increase? |
A)|an increase in demand for the firm's product |
B)|a reduction in the price of the resource |
C)|an increase in the elasticity of the firm's supply curve |
D)|a decrease in the price of the product produced by the resource |

13.|Other things being equal, a firm's demand for labor is likely to be more elastic than its demand for capital if: |
A)|labor costs are a smaller proportion of total costs than capital costs. |
B)|the firm uses labor-intensive production techniques. |
C)|substitutions of one resource for another are difficult. |
D)|the demand for its final product is price elastic.