Which of the following statements best explains why we can say that demand for a factor input is a “derived” demand.

a.The demand for the factor inputs is based on the demand for the final product.

b.The demand for the factor input is based on the productivity of the factor inputs

c.The demand for the factor inputs is developed from the relative availability of the factor inputs

d.The demand for the factor inputs is based on the changes in demand resulting from advanced technology

Which of the following statements best describes the relationship between “marginal product” and “diminishing returns”?

a.Increasing marginal product is indicative of diminishing returns from increasing the units of resource

b.Decreasing marginal product reflects diminishing returns from increasing the units of resource

c.Decreasing marginal product is the result of diminishing returns from decreasing the units of resource.

d.Decreasing marginal product reflects diminishing returns from the units of resource, which are always constant.

Which of the following best accounts for the shape of the resource demand curve in imperfect competition?

a.A factor demand curve will have an initial positive slope due to the increase in demand for a product

b.A factor curve will have a downward slope due to the slope of the demand curve for the final product

c .A factor demand curve will be downward sloping due to the diminishing returns associated with factor productivity dand the downward slope of the demand curve for the final product.

d .A factor demand curve has a shape, which depends solely on the shape of the demand curve for the final product.

Select from the alternatives below the one that correctly completes the following sentence: “Since the demand for butter is ­­­_________ because of the availability of margarine, the demand for the resource factors that produce butter tends to be _________”.

a.Elastic; Inelastic

b.Elastic; Available

c.Elastic; Elastic

d.Inelastic; Inelastic

Which of the following is not a justification for studying resource pricing?

a.Resource pricing influences the size of individual income

b.Resource prices allocate scarce resources

c.Resources represent a cost to the firm

d.Resources bring equality in a competitive market

The circular flow model helps explain

a.The price and quantity of goods and services

b.The price and quantity of the factors of production

c.The interaction of households and businesses in the product and resource markets

d.All of the above

The MRP curve is the

aDemand curve for the competitive seller

bDemand curve for the imperfectly competitive seller

cDemand curve for the market

dAll of the above

Which of the following will cause a change in resource demand?

a.The rate of decline of MP

b.Productivity changes

c.A change in the wage rate

d.The percentage of total production costs

The least cost approach states that:

a.When given a specific output, the least – cost approach will also be the profit – maximizing combination.

b.The profit-maximizing combination will also be the least-cost approach

c.The least-cost approach is a separate formula and therefore, independent of the profit-maximizing combination

d.To maximize profits, a firm must maximize the number of inputs.

A firm is producing 100 pencils per week. The production process requires labor and capital as inputs. Labor costs $6 per labor hour and capital costs $12 per machine hour. Currently, the marginal product of labor is 18 pencils and the marginal product of capital is 36 pencils. To minimize the cost of producing this level of output the firm should use:

a.More capital and less labor

b.More labor and less capital

c.Less labor and less capital

d.The current amounts of labor and capital

Marginal revenue product describes the:

a. Output produced by the last unit of labor employed

b. Revenue received for the last unit of output produced

c. Price a consumer paid for the last unit of output produced

d. Revenue received for the additional output produced by the last unit of labor employed