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  1. Chapter Ten: Demand and Supply of Inputs

Chapter Ten: Demand and Supply of Inputs

1
Question 1

A profit maximizing firm which has a given capital stock has to decide how many workers to hire per week in the range of 10-15. The weekly wage that has to be paid to every worker is constant at £850 and the total revenue per week received after hiring the numbers of possible workers is given below:

Worker 10 11 12 13 14 15
Total revenue £10,300 £11,300 £12,200 £12,950 £13,600 £14,100


How many workers will be hired?

a)
b)
c)
d)
e)
Correct.Incorrect. The answer is b) 12Your answer has been saved.
Check your answer


2
Question 2

A demand curve for a specific input for a profit maximizing firm will be the same as:

a)
b)
c)
d)
e)
Correct.Incorrect. The answer is c) The marginal revenue product curve of the input.Your answer has been saved.
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3
Question 3

A profit maximizing firm which has a given capital stock has to decide how many workers to hire per week in the range of 10-15. The weekly wage that has to be paid to every worker is constant at £500 and the total revenue per week received after hiring the numbers of possible workers is given below:

Worker 10 11 12 13 14 15
Total revenue £10,500 £11,200 £11,750 £12,200 £12,600 £12,950


How many workers will be hired?

a)
b)
c)
d)
e)
Correct.Incorrect. The answer is b) 12Your answer has been saved.
Check your answer


4
Question 4

A profit maximizing firm which has a given capital stock has to decide how many workers to hire per week in the range of 10-15. The weekly wage that has to be paid to every worker is constant at £700 and the total revenue per week received after hiring the numbers of possible workers is given below:

Worker 10 11 12 13 14 15
Total revenue £10,300 £11,300 £12,200 £12,950 £13,600 £14,100


How many workers will be hired?

a)
b)
c)
d)
e)
Correct.Incorrect. The answer is c) 13Your answer has been saved.
Check your answer


5
Question 5

A profit maximizing firm which has a given capital stock has to decide how many workers to hire per week in the range of 10-15. The weekly wage that has to be paid to every worker is constant at £600 and the total revenue per week received after hiring the numbers of possible workers is given below:

Worker 10 11 12 13 14 15
Total revenue £10,500 £11,200 £11,750 £12,200 £12,600 £12,950


How many workers will be hired?

a)
b)
c)
d)
e)
Correct.Incorrect. The answer is a) 11Your answer has been saved.
Check your answer


6
Quetion 6

A firm will hire a specific input up to a point where:

a)
b)
c)
d)
e)
Correct.Incorrect. The answer is c) The marginal cost of the input is equal to its marginal revenue product.Your answer has been saved.
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7
Question 7

'Economic rent' applies to which one of the following?

a)
b)
c)
d)
e)
Correct.Incorrect. The answer is e) It is equivalent to producers' surplus, that is, the return in excess of the minimum required for that quantity supplied to be forthcoming in the industry concerned.Your answer has been saved.
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8
Question 8

Explain what you understand by the term 'distribution theory'.

Hint: Re-read the section 'A theory of distribution' pp207-08, including Box 10.1. You will find it useful differentiate between neoclassical, functional and size-based approaches.Hint

9
Question 9

Give some examples of 'derived demand'.

Hint: Re-read the section 'The demand for inputs' p210 and then think of your own examples.Hint

10
Question 10

What are the four principles of derived demand?

Hint: Re-read the section 'Elasticity of demand for inputs' pp214-16, including Box 10.4.Hint

11
Question 11

What factors will influence an individual's willingness and ability to work?

Hint: Re-read the section 'The labour force' p217. You may wish to consider which of the factors you cite apply identically to males and females and which do not.Hint

12
Question 12

Explain what you understand by the phrase 'a rise in the wage rate increases the opportunity cost of leisure'.

Hint: Re-read the section 'Hours worked' p217.Hint

13
Question 13

Under what circumstances will the labour supply curve be backward bending? In answering the question, consider how your response would differ if you are explaining the answer to:

(a) a non-economist;
(b) someone who has already studied economics.

Hint: Re-read the section 'Total supply of labour' pp217-18, including Box 10.5.Hint

14
Question 14

Considering each of the three factors of production (land, labour and capital), use examples to explain what you understand by the term 'resource mobility'.

Hint: Re-read the section 'The supply of inputs for a particular use' pp218-20.Hint

15
Question 15

Why do some jobs pay more than others?

Hint: Re-read the section 'Reward differentials' p220-22.Hint

16
Question 16

In the light of you answer to Q8 (above), what explanation would you give for the huge disparity of earnings that exists between individuals undertaking day-to-day jobs (such as nursing, plumbing and teaching) and individuals who are 'sports superstars' such as Tiger Woods, Roger Federer or Christiano Ronaldo

Hint: we will re-visit this question to see if the material in Chapter Eleven helps provide further insights into this question.Hint

17
Question 17

What is the difference between the terms 'rent' and 'economic rent'?

Hint: Re-read the section 'Economic rent' pp222-24.Hint