ECO/365

PRINCIPLES OF MICROECONOMICS

The Latest Version A+ Study Guide

**********************************************
ECO 365 Entire Course Link
https://uopcourse.com/category/eco-365/
**********************************************

ECO 365 Week 5 Practice: The Microeconomics

of Resource Markets and Trade Quiz
Complete the Week 5 The Microeconomics of
Resource Markets and Trade Quiz in McGraw-Hill
Connect®. These are randomized questions.

Note: You have unlimited attempts available to

complete practice assignments. The highest scored
attempt will be recorded. These assignments have
earlier due dates, so plan accordingly. Grades must
be transferred manually to eCampus by your
instructor. Don't worry, this might happen after the
due date.

Which of the following scenarios would lead to a

decrease in the demand for labor at Stephanie’s earring
shop?

•
Labor productivity increases.
•
The cost of capital (a substitute for labor) decreases.
•
The price of earrings increases.
•
The wage rate increases.

Which of the following scenarios would lead to an

increase in the demand for mixers at Henry’s bread
bakery?
•
The market price of mixers decreases.
•
The productivity of mixers decreases.
•
The wage rate of labor (a substitute for capital)
decreases.
•
The market price of bread increases.

Instructions: Enter your answers as a whole number.

Henry's Bakery and Revenues

Capital (mixers) Total Product (loaves of bread)
Marginal Product (loaves of bread) Price (dollars)
Total Revenue (dollars) Marginal Revenue Product
(dollars)
0 0 — $4 $0 —
1 8 8 4 32 $ 32
2 20 12 4 80 48
3 28 8 4 112 32
4 34 6 4 136 24
5 38 4 4 152 16
6 40 2 4 160 8
7 41 1 4 164 4

The marginal revenue product schedule is

rev: 06_21_2018
Multiple Choice
•
upsloping.
•
the same whether the firm is selling in a purely
competitive or imperfectly competitive market.
•
the firm's resource demand schedule.
•
the firm's resource supply schedule.
Marginal product is
rev: 06_21_2018
Multiple Choice
•
the output of the least skilled worker.
•
the amount an additional worker adds to the firm's total
output.
•
the amount any given worker contributes to the firm's
total revenue.
•
a worker's output multiplied by the price at which each
unit can be sold.

The change in a firm's total revenue that results from

hiring an additional worker is measured by the
rev: 06_21_2018
Multiple Choice
•
marginal product.
•
average revenue product.
•
marginal revenue.
•
marginal revenue product.

Marginal revenue product measures the

rev: 06_21_2018
Multiple Choice
•
increase in total revenue resulting from the production of
one more unit of a product.
•
increase in total resource cost resulting from the hire of
one extra unit of a resource.
•
amount by which the extra production of one more
worker increases a firm's total revenue.
•
decline in product price that a firm must accept to sell the
extra output of one more worker.

If the marginal revenue product (MRP) of labor is less

than the wage rate
rev: 06_21_2018
Multiple Choice
•
more labor should be employed.
•
the firm is making profits.
•
the firm is incurring losses.
•
less labor should be employed.

A profit-maximizing firm employs resources to the point

where
rev: 06_21_2018
Multiple Choice
•
MRP = MRC.
•
resource price equals product price.
•
MRC = MP.
•
MP = product price.

The following is a total-product schedule for a resource.

Assume that the quantities of other resources the firm
employs remain constant.

Units of Resource Total Product

1 24
2 42
3 54
4 64
5 72

If the firm's product sells for a constant $2 and the price

of the resource is a constant $16, the firm will employ
how many units of the resource?
rev: 06_21_2018
Multiple Choice
•
2
•
3
•
4
•
5

Marginal resource cost is

rev: 06_21_2018
Multiple Choice
•
the increase in total resource cost associated with the
production of one more unit of output.
•
total resource cost divided by the number of inputs
employed.
•
the change in total revenue associated with the
employment of one more unit of the resource.
•
the increase in total resource cost associated with the hire
of one more unit of the resource.

Daphne has received job offers in six different cities

across the United States. The table below shows the
nominal wage she is being offered in each city and the
average monthly rent for an apartment in each city.

a. Calculate Daphne’s real wage in terms of how many

months of rent her wage could purchase in each city and
complete the “Real Wage” column in the table below.
Instructions: Enter your answers rounded to the nearest
whole number.

Daphne's Nominal and Real Wages

City Nominal Salary (dollars) Monthly Rent (dollars)
 Real Wage (months of rent)
Atlanta $50,000 $1,200 42 ± 1%
Austin 50,500 1,36837 ± 1%
Chicago 65,000 1,92034 ± 1%
Lincoln 45,000 840 54 ± 1%
Madison 48,000 1,16441 ± 1%
New York 95,000 3,20430 ± 1%

b. In which city is the nominal wage highest? New York

c. In which city is the real wage highest? Lincoln

Which of the following scenarios would result in an

increase in the wage rate of solar panel installers and a
decrease in the quantity of solar panel installers
employed in Billy’s town?

•
A decrease in people’s income decreases the demand for
solar panels.
•
A solar panel company shuts down in another town and
solar panel installers try to find jobs in Billy’s town.
•
Wages of solar panel installers increase in another town
and attract workers away from Billy’s town.
•
An increase in the demand for solar panels raises the
price of each installation.

The marginal revenue product of an input tends to

decrease as
rev: 06_13_2018
Multiple Choice
•
more of the input is used.
•
productivity increases.
•
the price of the input decreases.
•
the price of output increases.
Rising wages can be explained by which of the
following?
rev: 06_13_2018
Multiple Choice
•
Labor demand increases more rapidly than labor supply.
•
Labor supply is highly sensitive to changes in labor
productivity.
•
Labor supply increases more rapidly than labor demand.
•
Labor demand is stable and predictable.

Suppose two workers can harvest $46 and three workers

can harvest $60 worth of apples per day. On the basis of
this information we can say that the
rev: 06_13_2018
Multiple Choice
•
marginal revenue product of each of the first two workers
is $23.
•
marginal revenue product of the third worker is $14.
•
marginal product of each of the first two workers is 23.
•
third worker should not be hired.

A characteristic of a competitive labor market is

rev: 06_13_2018
Multiple Choice
•
an overall reduction in employment due to firms having
market power.
•
an equilibrium wage and quantity supplied.
•
high levels of unemployment.
•
labor supply changing as the wage changes.

Labor productivity and the price of the good being

produced are two variables that contribute to
rev: 06_13_2018
Multiple Choice
•
the demand for the product.
•
the wage rate.
•
the marginal product.
•
whether or not a union forms.

As the real wage decreases, the quantity of labor

demanded ______ and the quantity of labor supplied
_______.
rev: 06_13_2018
Multiple Choice
•
increases; decreases
•
decreases; increases
•
increases; increases
•
decreases; decreases

An inclusive union
rev: 06_13_2018
Multiple Choice
•
organizes a wide range of workers in an industry to gain
bargaining power.
•
is most effective in a purely competitive industry.
•
restricts supply of labor through licensing requirements.
•
is most concerned with increasing the demand for
workers in an industry.

The supply curve for labor in a purely competitive

market slopes upward because
rev: 06_13_2018
Multiple Choice
•
higher wages must be paid to bid workers away from
other opportunities.
•
marginal resource cost rises as productivity increases.
•
the marginal product of labor falls as output increases.
•
the wage rate paid to workers falls as more are hired.

Compared to a competitive labor market, workers

participating in an inclusive union will enjoy
rev: 06_13_2018
Multiple Choice
•
higher wages and more workers employed.
•
higher wages and fewer workers employed.
•
similar outcomes with respect to pay and employment.
•
lower pay and more workers employed.

The concept of "wages" does not include which of the

following items?
rev: 06_13_2018
Multiple Choice
•
money spent by workers
•
direct money payments, like salaries and commissions
•
bonuses and royalties earned
•
fringe benefits, like health insurance and paid leave
Use the following graph (where L is the quantity of
labor) to answer the next question.

It shows a firm that buys its inputs and sells its output in
competitive markets. If the firm develops a new
technology that increases labor productivity, the
equilibrium level of employment for this firm is expected
to be
rev: 06_13_2018
Multiple Choice
•
lower than L0.
•
L0.
•
zero.
•
higher than L0.
The individual firm that hires labor under competitive
conditions faces a labor supply curve that
rev: 06_13_2018
Multiple Choice
•
is horizontal, because individual firms have no control
over wages.
•
slopes upward to the right.
•
is vertical, because workers need a job at any wage.
•
slopes downward to the right.

In a purely competitive labor market, a profit-

maximizing firm will hire labor up to the point where the
marginal revenue product of labor equals the
rev: 06_13_2018
Multiple Choice
•
marginal cost of one extra unit of output.
•
price of the product.
•
average cost of each unit of output.
•
wage rate, or the price of labor.

For each of the following scenarios, determine which

benefit of international trade applies: lower-priced goods,
increased variety of products, or access to scarce
resources.

a. Today most television sets bought in the United Stated

are made in China; however, this was not the case twenty
years ago.

b. In large grocery stores in the United States, consumers

can buy noodles from Asia, soups from France, pickled
herring from Scandinavia, and beer from Germany.
 Increased variety of products

c. The United States has become a prime location for

producers of semiconductors, whose products are then
exported to nations around the world. This choice to
produce in the United States is largely due to the access
to the high-skilled workforce that is required for this type
of production.

d. While many developed nations have at least one

domestic car manufacturer, consumers in these nations
also have access to cars produced in other nations.

e. The United States has long been the world's largest

exporter of wheat. The access to vast, fertile, and highly
productive soil combined with high-technology farming
practices have made the United States a very cost-
efficient producer of agricultural goods.
In economics, goods, services, or resources produced
domestically and sold abroad are known as:
•
imports.
•
net exports.
•
exports.
•
international trade.

Domestic producers might oppose free trade agreements

because
rev: 06_20_2018
Multiple Choice
•
there could be a decrease in consumer surplus.
•
there could be an increase in consumer surplus.
•
there could be a decrease in producer surplus.
•
there could be an increase in producer surplus.

The principal concept behind comparative advantage is

that a nation should
rev: 06_20_2018
Multiple Choice
•
concentrate production on those products for which it has
the lowest domestic opportunity cost.
•
strive to be self-sufficient in the production of essential
goods and services.
•
maximize its volume of trade with other nations.
•
use tariffs and quotas to protect the production of vital
products for the nation.
Use the following table for a certain product’s market in
Marketopia to answer the next question.

Quantity Demanded Domestically Price Quantity

Supplied Domestically
1,400$10 2,200
1,6009 2,000
1,8008 1,800
2,0007 1,600
2,2006 1,400
2,4005 1,200

If Marketopia is entirely closed to international trade, the

equilibrium price and quantity would be
rev: 06_20_2018
Multiple Choice
•
$6 and 1,400 units.
•
$9 and 2,000 units.
•
$7 and 2,000 units.
•
$8 and 1,800 units.

Benefits from international trade are not based on

differences in
rev: 06_20_2018
Multiple Choice
•
resource availability.
•
technological capabilities.
•
product quality and other attributes.
•
income levels.

Limits on the quantity or total value of specific products

imported to a nation are
rev: 06_20_2018
Multiple Choice
•
import quotas.
•
nontariff barriers.
•
protective tariffs.
•
export subsidies.

Governments often intervene in international trade and

impose quotas to
rev: 06_20_2018
Multiple Choice
•
improve the performance of multinational corporations.
•
shift a nation's production possibilities frontier.
•
increase revenues from export subsidies.
•
protect domestic industries from foreign competition.

An import quota on a product reduces the quantity of the

product imported and
rev: 06_20_2018
Multiple Choice
•
will not affect the price of the product to the consumers.
•
increases the total quantity of the product consumed.
•
decreases the price of the product to the consumers.
•
increases the price of the product to the consumers.

Tariffs
rev: 06_20_2018
Multiple Choice
•
are excise taxes on goods exported abroad.
•
are per-unit subsidies designed to promote exports.
•
may be imposed either to raise revenue or to shield
domestic producers from foreign competition.
•
are also called import quotas.

Which of the following is the most likely reason for

countries to engage in international trade based upon
specialization of production?
rev: 06_20_2018
Multiple Choice
•
Relative inflation rates
•
Comparative advantage
•
Relative exchange rates
•
Relative levels of GDP
The slopes of the production possibilities curves for two
nations reflect the
rev: 06_20_2018
Multiple Choice
•
relative prices of the resources in the two nations.
•
average income levels in the two nations.
•
amounts of imports and exports of the two nations.
•
opportunity costs of production in the two nations.

If a nation imposes a tariff on an imported product, then

that nation will experience a(n)
rev: 06_20_2018
Multiple Choice
•
decrease in quantity supplied and an increase in the price
of the product.
•
decrease in demand and a decrease in the price of the
product.
•
decrease in the supply of, and an increase in the quantity
demanded of, the product.
•
increase in the quantity supplied of, and a decrease in the
price of the product.

A tariff is a
rev: 06_20_2018
Multiple Choice
•
quantity limit.
•
tax.
•
price ceiling.
•
subsidy.

A tax imposed by the U.S. government on imported

Chinese frozen shrimp would be an example of
rev: 06_20_2018
Multiple Choice
•
a voluntary restriction.
•
a regulatory trade restriction.
•
a tariff.
•
a quota.

A maximum limit set on the amount of a specific good

that may be imported into a country over a given period
of time is called a
rev: 06_20_2018
Multiple Choice
•
voluntary export restriction.
•
tariff.
•
quota.
•
nontariff barrier.

When a nation removes tariffs on imported products that

nation will
rev: 06_20_2018
Multiple Choice
•
experience lower prices and consume lower quantities.
•
experience higher prices and consume lower quantities.
•
experience higher prices and consume higher quantities.
•
experience lower prices and consume higher quantities.
The ratio at which nations will exchange one product for
another is known as the
rev: 06_20_2018
Multiple Choice
•
exchange rate.
•
discount rate.
•
terms of trade.
•
balance of trade.

The higher price of imported products due to trade

barriers causes some consumers to shift their purchases
to a domestically produced product that is now
rev: 06_20_2018
Multiple Choice
•
higher in price because import competition has risen.
•
higher in price because import competition has declined.
•
lower in price because import competition has declined.
•
lower in price because import competition has risen.

The use of tariffs and quotas for trade protection results

in
rev: 06_20_2018
Multiple Choice
•
less rent-seeking activity.
•
lower prices for domestic consumers.
•
less efficiency in the economy.
•
less revenue for the government.
When a nation removes restrictions on imported products
that nation will
rev: 06_20_2018
Multiple Choice
•
experience higher prices and consume lower quantities.
•
experience lower prices and consume lower quantities.
•
experience lower prices and consume higher quantities.
•
experience higher prices and consume higher quantities.

The benefit of saving some American jobs in specific

industries protected from foreign competition
rev: 06_20_2018
Multiple Choice
•
is much greater than the costs to the whole American
economy.
•
has risen in recent years.
•
is much less than the costs to the whole American
economy.
•
has fallen in recent years.

Assume that a tariff is imposed on an imported product.

The difference between the domestic price and the world
price is captured by
rev: 06_20_2018
Multiple Choice
•
the government.
•
domestic producers.
•
foreign exporters.
•
domestic consumers.
Refer to the production possibility curve for Marketopia
below.

The graph indicates that with the resources and

technology it has available, Marketopia
rev: 06_20_2018
Multiple Choice
•
can produce either 40 units of rye or 20 units of eggs.
•
cannot produce both 20 units of rye and 5 units of eggs.
•
cannot produce both 20 units of rye and 10 units of eggs.
•
can produce both 40 units of rye and 20 units of eggs.