When economists say that the demand for labor is a derived demand. they mean that it is

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14. When economists say that the demand for labor is a derived demand, they mean is: it is: a B) related to the demand for the product or service labor is producing rates. on the desire of businesses exploit labor by paying below equilibrium wage D) based on the assumption that workers are to maximize their money incomes. trying 15. Marginal revenue measures the: worker increases afirms total revenue. worker. A) by which the addition of one more more B) in product price that a must accept to sell the extra output of one increase in total resource cost resulting from the hire of one extra unit of a resource. D) increase in total revenue resulting from the production of one more unit ofa product. 16, Marginal product is: A) the output of the least skilled worker. at which each unit can be sold. B) a workers output multiplied by the price C) the amount an additional worker adds to the firms total output. D) the amount any given worker contributes to the firms total revenue. Use the following to answer questions 17& 18: Quantity of labor 17. Refer to the above graph. A move from a to b along labor demand curve Dh would result from: output effect. A) a decrease in the price of a substitute resource, assuming that the substitution effect exceeds the B) an increase in the wage rate. C) a decrease in the wage rate. ishelping to produce. D) an increase in the demand for the product that this labor 18. Refer to the above graph. Which ofthe following will cause the demand curve to shift from D2 to Di? A) an increase in the demand ofthe product. B) an decrease in the price of a substitute resource. in the productivity of labor. D) all of the above. 19. A profit maximizing firm employs resources to the point where: A) MR- MC. price. B) Resource price equals product C) MRP MRC. D) MP product price.

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The correct answers are:

14. The answer is B.

15. The answer is D.

16. The answer is C.

17. The answer is C.

18. The answer is B.

19. The answer is C.

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