Ch013TestBank - CHAPTER 25 The Demand for Resources Topic 1...

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CHAPTER 25 The Demand for Resources Topic Question numbers ___________________________________________________________________________________________________ 1. Derived demand 1-8 2. Resource demand curve; optimal hiring 9-59 3. Determinants of resource demand 60-97 4. Elasticity of resource demand 98-114 5. Optimal combination of resources 115-145 6. Marginal productivity theory of income distribution 146-149 Consider This 150-151 Last Word 152-154 True-False 155-170 ___________________________________________________________________________________________________ Multiple Choice Questions Derived demand Econ: 489 LO: 25-1 Micro: 255 Topic: 1 Type: Fact 1. Resource pricing is important because: A) resource prices are a major determinant of money incomes. B) resource prices allocate scarce resources among alternative uses. C) resource prices, along with resource productivity, are important to firms in minimizing their costs. D) of all of the above reasons. Ans: D Econ: 489 LO: 25-2 Micro: 255 Topic: 1 Type: Application of a Concept 2. Which of the following statements best illustrates the concept of derived demand? A) As income goes up the demand for farm products will increase by a smaller relative amount. B) A decline in the price of margarine will reduce the demand for butter. C) A decline in the demand for shoes will cause the demand for leather to decline. D) When the price of gasoline goes up, the demand for motor oil will decline. Ans: C Econ: 489 LO: 25-2 Micro: 255 Topic: 1 Type: Definition 3. When economists say that the demand for labor is a derived demand, they mean that it is: A) dependent on government expenditures for public goods and services. B) related to the demand for the product or service labor is producing. C) based on the desire of businesses to exploit labor by paying below equilibrium wage rates. D) based on the assumption that workers are trying to maximize their money incomes. Ans: B
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Econ: 489 LO: 25-2 Micro: 255 Topic: 1 Type: Application of a Concept 4. The demand for airline pilots results from the demand for air travel. This fact is an example of: A) resource substitutability. C) rising marginal resource cost. B) elasticity of resource demand. D) the derived demand for labor. Ans: D Econ: 489 LO: 25-2 Micro: 255 Topic: 1 Type: Definition 5. 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. Ans: B Econ: 489 LO: 25-2 Micro: 255 Topic: 1 Type: Application of a Concept 6. The demand for a resource depends primarily on: A) the supply of that resource. B)
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Ch013TestBank - CHAPTER 25 The Demand for Resources Topic 1...

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