Unit 4 : Reading Quiz # 10 : 7 points 1. Which of the following statements best illustrates the concept of derived

demand?

A. As income goes up the demand luxury cars and jewelry will increase.

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.

2. Marginal Product is: A. The output of the least skilled worker. B. The amount an additional worker adds to the firm's total output. C. A worker's output multiplied by the price at which each unit can be sold. D. The amount any given worker contributes to the firm's total revenue. E. The change in total cost associated with a new worker

 

3. If one worker can pick $30 worth of grapes and two workers together can pick $50 worth of grapes, the: A. marginal revenue product of each worker is $25.B. marginal revenue product of the first worker is $20.C. marginal revenue product of the second worker is $20.D. data given do not permit the determination of the marginal revenue product of either worker.

4. A profit-maximizing firm employs resources to the point where: A. MRC = MP.B. Resource price equals product price.C. MRP = MRC.D. MP = product price.

5. 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: A. profits will be increased by hiring additional workers.B. profits will be increased by hiring fewer workers.C. marginal revenue product must exceed average revenue product.D. the restaurant is maximizing profits.

 6. The substitution effect indicates that a profit-seeking firm will use: A. more of an input whose price has fallen and less of other inputs in producing a given output.B. more of all inputs if production costs fall.C. more of those inputs whose marginal productivity is the greatest.D. less of an input whose price has fallen and more of other inputs in producing a given output.

7. The profit-maximizing and the least-cost combination of inputs are: A. the result of unrelated decisions.B. always identical.C. such that the minimization of costs always results in profit maximization.D. such that the maximization of profits always entails the least-cost combination of inputs.