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16 terms

Chapter 12

The demand for Resources
STUDY
PLAY
Resource pricing is important because:
1. resource prices are a major determinant of money incomes
2. resources prices allocate scarce resources among alternative uses
3. resources prices, along with resource productivity, are important to firms in minimizing their costs
A decline in the demand for shoes will cause the demand for leather to decline
Which of the following statements best illustrates the concept of derived demand?
Consumers have a greater demand for football games than for soccer games
In the United States professional football players earn much higher incomes than professional soccer players. This occurs because:
slope downward because of diminishing marginal productivity
The labor demand curve of a purely competitive seller:
The MRP exceeds the wage rate
A competitive employer should hire additional labor as long as:
marginal resource cost is equal to their MRP
A firm will find it profitable to hire workers up to the point at which their:
MRP = MRC
A profit-maximizing firm employs resources to the point where:
profits will be increased by hiring fewer workers
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:
both because of diminishing returns and the necessity to lower price to sell more output
The labor demand curve of an imperfectly competitive seller is downsloping:
slopes downward because the marginal product of successive workers declines
The labor demand curve of a purely competitive seller:
Should hire more labor because this will increase profits
A competitive employer is using labor in such an amount that labor's MRP is $10 and its wag rate is $8. This firm:
a decline in the price of resource X
Which of the following will not cause a shift in the demand for resource X?
increase the demand for complementary resource B
A decline in the price of resource A will:
the output effect is greater than the substitution effect
Assume the price of capital falls relative to the price of labor and, as a result, the demand for labor increases. Therefore:
a change in the wage rate
Which of the following will not shift the demand curve for labor?
productivity of the resource increases
Employers will hire more units of a resource if the: