Chapter 16 Flashcards
What is it called when a firm in a purely competitive market is unable to influence the market price no matter how much output the firm produces?
price taker
Which of the following best describes derived demand?
* The long lines standing outside a stadium to buy Super Bowl tickets
* The millions of online orders to download music to an iPod
* The orders for farm tractors by farmers to grow crops
* The orders by hungry customers at a fast food restaurant
The orders for farm tractors by farmers to grow crops
The derived demand for an input will rise when it is highly productive in: (More than one answer may be correct.)
* producing a minimally valued commodity.
* reducing the costs to produce a product.
* increasing the costs to produce a product.
* producing a highly valued commodity.
- reducing the costs to produce a product.
- producing a highly valued commodity.
The strength of the demand for any resource will depend on the ____ of the resource and the market ____ of the good or service that the resource helps produce. (Enter one word for each blank)
productivity; value
When a product is in high demand with customers based on its value (quality) or price, the demand for the resources to produce that product will be ____.
very high
In a competitive resource market, a firm is a price ____.
taker
What is the rule that guides profit-seeking firms when deciding to hire more labor or use more of a specific resource?
add additional units of the resource when each successive unit adds more to a firm’s total revenue than it adds to its total cost
MRP = MRC
The purchase of welding equipment at an auto factory to build cars describes what economists call ____ resource demand.
derived
In a purely competitive labor market, market supply and market demand establish ____.
the wagerate
The marginal revenue product (MRP) of the imperfectly competitive seller falls for two reasons, because ____.
MP diminishes and product price falls as output increases
in this case, product price must be lowered to sell the margianl product of each successive worker
Because resource demand is derived from product demand, the strength of the demand for any resource will depend on the ____.
- demand
- market value or price
- productivity of the resource
The derived demand for resources by producers for a product will be low when ____.
the product is selling poorly
To maximize profit, a firm should add additional units of a specific resource as long as each successive unit adds more to the firm’s total ____ than it adds to the firm’s total ____.
revenue; cost
In an imperfectly competitive market, a ____ price accompanying each increase in output (total product) applies not only to the marginal ____ of each successive worker but also to all prior output units that otherwise could have been sold at a(n) ____ price.
lower; product; higher
