Which of the following statements best illustrates the concept of derived demand?
A decline in the demand for shoes will cause the demand for leather to decline.
we demand the product that labor helps produce rather than labor service per se.
amount by which the extra production of one more worker increases a firm's total revenue.
the firm's resource demand schedule.
The purely competitive employer of resource A will maximize the profits from A by equating the:
A firm will find it profitable to hire workers up to the point at which their:
marginal resource cost is equal to their MRP.
Refer to the above data. How many units of output are produced when 2 workers are employed?
marginal revenue product.
The marginal revenue product of any input is the:
additional revenue resulting from the use of one more unit of that input.
move from a to b along labor demand curve D1.
shift from D2 to D3 assuming the substitution effect exceeds the output effect.
because a change in the price of a resource will alter costs and therefore the equilibrium output.
The substitution effect indicates that a profit-seeking firm will use:
The elasticity of resource demand measures the:
responsiveness of producers to changes in resource prices.
If the marginal product of an input declines slowly as additional units are employed:
the demand for the input will tend to be elastic.
Gamma should export tea to Sigma and Sigma should export pots to Gamma.
Refer to the above data. What are the limits of the terms of trade between Gamma and Sigma?
1 tea = 1 pot to 1 tea = 3 pots
Assume that by devoting all of its resources to the production of X, nation Alpha can produce 40 units of X. By devoting all of its resources to Y, Alpha can produce 60Y. Comparable figures for nation Beta are 60X and 40Y. We can conclude that:
Alpha should specialize in Y and Beta in X.
In the theory of comparative advantage, a good should be produced in that nation where:
its cost is least in terms of alternative goods that might otherwise be produced.
The fact that international specialization and trade based on comparative advantage can increase world output is demonstrated by the reality that:
a nation's trading possibilities line lies to the right of its production possibilities line.
The impact of increasing, as opposed to constant, costs is to:
cause the bases for further specialization to disappear as nations specialize according to comparative advantage.
Suppose the domestic price (no-international-trade price) of copper is $1.20 a pound in the United States while the world price is $1.00 a pound. Assuming no transportation costs, the United States will:
Suppose the domestic price (no-international-trade price) of wheat is $3.50 a bushel in the United States while the world price is $4.00 a bushel. Assuming no transportation costs, the United States will:
A nation's import demand curve for a specific product:
shows the amount of the product it will import at prices below its domestic price.
A nation's export supply curve for a specific product:
Refer to the above diagram showing the domestic demand and supply curves for a specific standardized product in a particular nation. If the world price for this product is $1.60, this nation will experience a domestic:
surplus of 160 units, which it will export.
Refer to the above diagram pertaining to two nations and a specific product. Lines FA and GB are:
export supply curves for two countries.
Refer to the above diagram pertaining to two nations and a specific product. Point G is the:
domestic price for the nation represented by lines GB and GD.
may be imposed either to raise revenue (revenue tariffs) or to shield domestic producers from foreign competition (protective tariffs).
An excise tax on an imported good that is not produced domestically is called a:
An excise tax on an imported good that is also produced by domestic firms is called a:
Country A limits other nation's exports to Country A to 1,000 tons of coal annually. This is an example of a(n):
Refer to the above diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product. If this economy was entirely closed to international trade, equilibrium price and quantity would be:
Pa and x.
Refer to the above diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product. If the economy is opened to free trade, the price and quantity sold of this product would be:
Pc and z.
Refer to the above diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product. With free trade, that is, assuming no tariff, the outputs produced by domestic and foreign producers respectively would be:
v and vz.
Suppose the United States eliminates high tariffs on German bicycles. As a result, we would expect:
employment to decrease in the U.S. bicycle industry.
Other things equal, a tariff is:
superior to an import quota for Americans because a tariff generates revenue for the United States Treasury.
The increase-domestic-employment argument for tariff protection holds that:
an increase in tariffs will increase net exports and stimulate domestic employment.
Which of the following arguments comes closest to constituting a legitimate economic exception to the case for free trade?
the infant-industry argument
A major difficulty with the argument that trade barriers are necessary because foreign workers are paid low wages is that:
Dumping of goods abroad:
may be part of a firm's price discrimination strategy.