question
Total Product (TP)
answer
the total amount of output produced with a given amount of resources
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Marginal Product (MP)
answer
the additional output produced as a result of utilizing one more unit of a variable resource
MP= change TP/ change in variable resource
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Marginal Revenue Product (MRP)
answer
the additional revenue generated as a result of utilizing one more unit of a variable resource
MRP= change in TP/ change in variable resource
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The marginal ___ product represents the additional revenue generated from using an additional unit of a resource.
answer
revenue
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The change in total product associated with hiring an additional worker is called:
answer
marginal product.
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In deciding how many workers a business should employ,:
answer
the marginal revenue product is key.
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If the employee’s wage is tied at all to his or her productivity,:
answer
a higher marginal revenue product should result in a higher wage for that employee.
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For firms operating in perfectly competitive markets, if the price of a product is constant, the marginal revenue product is equal to the marginal product times the ___
answer
price
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The marginal revenue ___ represents the additional revenue generated from using an additional unit of a resource.
answer
product
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Marginal Revenue Cost (MRC)
answer
the additional cost incurred as a result of utilizing one more unit of a variable resource
MRC= change in total resource cost/ change in resource quantity
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Resources, sometimes referred to as “gifts of nature,” are classified as ___
answer
land
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The additional output produced as a result of utilizing one more unit of a variable resource is known as the ___ ___
answer
marginal; product
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A firm tends to emphasize ___ revenue product when deciding how many workers to employ.
answer
marginal
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In the circular flow model, ___ and ___ interact in the resource market and the product market.
answer
firms; households
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When making hiring decisions, employers need to consider:
answer
the productivity of their workers and the price of their products.
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The payment name for labor is
answer
wages
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For firms operating in perfectly competitive markets, if the price of a product is constant, the marginal product times the price equals the:
answer
marginal revenue product.
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Which of the following will a firm do when it wants to produce additional output?
answer
It will hire additional workers.
It will make decisions at the margin.
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Capital is sometimes divided into ___ capital and ___ capital.
answer
physical; human
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A firm will purchase a resource if the benefit associated with the purchase is greater than or equal to its ___
answer
cost
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The additional cost incurred as a result of utilizing one more unit of a variable resource is called the ___ resource cost.
answer
marginal
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In the circular-flow model, the two markets are the ___ market and the ___ market.
answer
resource; product
question
The table represents a sandwich shop’s resource costs. The market wage rate for each worker is $15 per hour. Complete the table. What is the total labor cost of 4 workers?
answer
$60
To find the total labor cost, multiply the wage rate by the number of workers = (15)(4) = $60.
question
The payment name for land is
answer
rent
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When firms want to produce additional output, they make decisions at the
answer
margin
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A firm will purchase a resource if the ___ associated with the purchase is greater than or equal to its cost.
answer
benefit
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Suppose market conditions change in an economy and, as a result, firms face an increase in the cost of each additional worker they hire. Which of the following is true in this case?
answer
The marginal revenue cost curve shifts upward.
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Use the table above to answer the following question. The table represents a sandwich shop’s resource costs. The marginal resource cost of the 3rd worker is
answer
$15
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The payment name for capital is
answer
interest
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If employees pay partially for higher resource costs, the:
answer
marginal resource cost curve does not shift.
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A firm will purchase a resource if:
answer
the benefit associated with the purchase is greater than or equal to its cost.
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Suppose that market conditions change in an area and, as a result, a firm faces a decrease in the cost of each additional worker it hires. In this case,:
answer
the marginal revenue cost curve shifts downward.
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The marginal resource cost curve for the firm will not shift if:
answer
employees fully pay for higher resource costs.
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Derived Demand
answer
a type of demand specific to resources that occurs as a result of the demand for the goods and services produced by those resources
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When economists refer to resource demand being a derived demand, they mean that the demand for the resource:
answer
depends on the demand for the goods and services produced by those resources.
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The payment name for ___ is interest.
answer
capital
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The cost of an additional unit of a resource, such as labor, is called the:
answer
marginal resource cost.
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The marginal resource cost curve for a firm will shift if the:
answer
employers pay for part of or all higher resource costs.
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The marginal revenue product associated with hiring one additional worker is:
Multiple choice question.
answer
a downward-sloping line.
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The marginal product is the:
answer
additional output produced as a result of utilizing one more unit of a variable resource.
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If the wage rate is constant, the marginal resource cost associated with hiring one additional worker is a(n) ___ line at the wage.
answer
horizontal
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The demand for labor is:
answer
derived from its marginal revenue product.
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If consumers develop a taste for sushi, there will be an increase in the ___ demand for sushi chefs.
answer
derived
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The marginal revenue product is equal to:
answer
the change in the total revenue divided by the change in the resource quantity.
question
The marginal revenue product associated with hiring one additional worker is:
answer
a downward-sloping line.
question
For firms operating in perfectly competitive markets, if the price of a product is constant, the marginal revenue product is equal to:
answer
the marginal product times the price.
question
The additional cost incurred as a result of utilizing one more unit of a variable resource is called the marginal resource:
answer
cost.
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The ___ for labor is derived from its marginal revenue product.
answer
demand
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The marginal revenue product curve also represents the ___ demand curve.
answer
resource
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Derived demand refers to:
answer
a type of demand that is specific to resources.
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The amount of a good or service produced by all workers is called:
answer
total product.
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The ___ revenue product represents the additional revenue generated from using an additional unit of a resource.
answer
marginal
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The optimal level of resource utilization occurs where the:
answer
marginal revenue product equals the marginal resource cost.
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The additional cost incurred as a result of utilizing one more unit of a variable resource is called the marginal ___ cost.
answer
resource
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Resource utilization and marginal resource costs move in ___ directions.
answer
opposite
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The marginal revenue product curve also represents the resource ___ curve.
answer
demand
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If the wage rate is constant, the marginal resource cost associated with hiring one additional worker is:
answer
a horizontal line at the wage.
question
Change (Shift) in Resource Demand
answer
a change in the quantity of a resource demanded at every resource price. Graphically, an increase in resource demand is represented by a rightward shift of the resource demand curve, while a decrease in resource demand is represented by a leftward shift of the resource demand curve
question
The optimal level of resource utilization for a firm occurs where the marginal revenue product ___ the marginal resource cost.
answer
equals
question
The marginal revenue product curve also represents the resource curve.
answer
demand
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The optimal level of resource utilization increases when the marginal resource cost
answer
decreases
question
The demand for a resource increases when the price of its ___ resource increases.
answer
substitute
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When marginal revenue product equals marginal revenue cost:
answer
resources have been used optimally.
question
If the price of a resource increases, there is:
answer
a decrease in the quantity of the resource demanded.
question
For firms operating in ___ competitive markets - if the price of a product is constant - the marginal revenue product is equal to the marginal ___ times the ___
answer
perfectly; product; price
question
The demand for a resource decreases when the price of its ___ resource increases.
answer
complementary
question
Optimal resource utilization occurs where:
answer
marginal revenue product equals marginal revenue cost.
question
In the case of a higher wage, there will be:
answer
a decrease in the quantity of labor demanded
question
All else equal, when the demand for the good or service a resource produces decreases, the demand for the resource used to produce it will:
answer
decrease, shifting to the left.
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