Resource and Financial Markets Quiz

The prices paid for resources affect

• the money incomes of households in the economy

• the allocation of resources among different firms and industries in the economy

• the quantities of different resources employed to produce a product.

• all the above

In a competitive resource market, the firm employing a resource such as labor is

• price maker

• cost maker

• wage taker

• revenue taker

The demand for a resource is derived from the

• demand for the products it helps produce.

• price of the resource

• supply of the resource

• income of the firm selling the resource

Which would increase a firm’s demand for a resource?

• an increase in the prices of complementary resources used by the firm.

• a decrease in the demand for the firm’s product

• an increase in the productivity of the resource

• an increase in the price of the resource

Real wages would decline if the

• prices of goods and services rose more rapidly than nominal-wage rates.

• prices of goods and services rose less rapidly than nominal-wage rates.

• prices of goods and services and wages rates both increase

• prices of goods and services and wage rates both decrease

The basic explanation for high real wages in the United States and other industrially advanced economies is that the

• price levels in those nations have increased at a faster rate than nominal wages.

• governments in those nations have imposed effective minimum-wage laws to improve the conditions of labor.

• the demand for labor in those nations is quite high relative to the supply of labor.

• the supply of labor in those nations is quite large relative to the demand for labor.

A characteristic of a purely competitive labor market would be

• firms hiring different types of labor.

• workers supplying labor under a union contract.

• wage taker behavior by firms

• price maker behavior by firms

The supply curve for labor in a purely competitive market is upwardly sloping because the

• opportunity costs for workers rise.

• marginal resource cost is constant.

• wage rate paid to workers falls.

• marginal revenue product rises

The individual firm that hires labor under purely competitive conditions faces a supply curve for labor that

• is perfectly inelastic.

• is of unitary elasticity.

• is perfectly elastic.

• slopes upward from left to right.

A monopsonist pays a wage rate that is

• greater than the marginal revenue product of labor

• equal to the marginal revenue product of labor

• equal to the firm’s marginal labor cost

• less than the marginal revenue product of labor