9-1 Economists say that "the demand for labor is a derived demand." This means that
A. Incorrect. While the demand for labor is downward sloping, derived demand means something more specific.
B. Incorrect. The demand for labor is downward sloping.
D. Incorrect. The demand for labor is based on what employers (buyers) want to do, while the supply is based on what employees (sellers) want to do.
E. Incorrect. Variations in demand explain some of the differences in wages, but derived demand is something else.
9-2 The quantity demanded of a resource is inversely related to its price. This is because
A. Correct. This is one reason why the demand slopes down.
B. Incorrect. Product prices will rise as the prices of resources rise.
C. Incorrect. Product prices will rise as the prices of resources rise. The higher product price will reduce the quantity of products demanded.
D. Incorrect. Product prices will rise as the prices of resources rise.
E. Incorrect. The higher price of some resources will force producers to substitute other resources which are less costly, but output will be reduced, not expanded, as a result.
9-3 The quantity demanded of a resource is inversely related to its price. This is because
A. Incorrect. Cost-conscious firms will those resources which become less expensive.
C. Incorrect. Product prices will rise as the prices of resources rise. The higher product price will reduce quantity demanded.
D. Incorrect. Product prices will rise as the prices of resources rise
E. Incorrect. The higher price of some resources will force producers to substitute other resources which are more costly than those used originally (otherwise, they would have been used in the first place).
9-4 The demand of an individual employer for labor is based directly upon
A. Incorrect. The demand for labor is based on what employers (buyers) want to do, while the supply is based on what employees (sellers) want to do.
B. Correct. This is meaning of derived demand.
C. Incorrect. The price of the labor at equilibrium is set by demand and supply together, not the other way around.
D. Incorrect. The marginal cost of the workers' time determines supply.
9-5 Which of the following will cause the demand for skilled welders to increase?
A. Incorrect. A decrease in the wages paid skilled welders could be caused by changes in demand, but cannot cause a change in demand.
B. Incorrect. An increase in the number of schools for training welders would increase supply, but would not affect demand.
C. Incorrect. A decrease in the number of schools for training welders would reduce supply, but would not affect demand.
D. Incorrect. A decrease in the demand for products produced by welders would reduce demand for welders.
9-6 Which of the following will cause the demand for auto mechanics to increase?
A. Incorrect. A decrease in the wages paid skilled welders could be caused by changes in demand, but cannot cause a change in demand.
B. Incorrect. An increase in the number of schools for training auto mechanics would increase supply, not demand.
C. Incorrect. A decrease in the number of schools for training auto mechanics will reduce supply, but it will not affect demand.
D. Incorrect. A decrease in the demand for auto repairs will reduce demand for auto mechanics.
9-7 Which of the following will cause the demand for computer repair technicians to increase?
A. Incorrect. A decrease in the wages paid computer repair technicians would increase quantity demanded, not demand.
B. Incorrect.An increase in the number of schools for training computer repair technicians would increase supply, not demand.
C. Incorrect. A decrease in the number of schools for training computer repair technicians would decrease supply, but would not affect demand.
D. Incorrect. This would lower demand for computer repair technicians.
E. Correct. The lower price of a complement increases demand.
9-8. An employer's demand curve for labor is downward sloping:
A. Incorrect. Employers are buyers of labor services.
B. Correct. The value of additional employees falls as more are hired due to the law of diminishing marginal returns.
C. Incorrect. The demand and supply of labor are determined independently.
D. Incorrect. The demand and supply of labor are determined independently.
9-9 If other circumstances remain the same, as more workers are hired by an employer,
A. Incorrect. As more workers are hired, the law of diminishing returns sets in.
B. Correct. This is due to the law of diminishing returns.
C. Incorrect. As more workers are hired, the law of diminishing returns sets in.
D. Incorrect. As more workers are hired, the the cost of hiring an additional worker might rise (due to the upward-sloping supply curve for labor).
E. Incorrect. The more workers that have been hired, the less valuable an additional worker is, but this determines the demand.
9-10 An employer would be inclined to hire an additional worker if he or she can:
B. Incorrect. A worker must contribute more to the employer's revenue than to the employer's cost in order to be hired.
C. Incorrect. Even if a worker increases costs (as most will), he or she still may be worthwhile to hire.
D . Incorrect. Every potential worker will probably increase the employer's costs. Employers must compare the higher cost with the value of what the workers produce.
E . Incorrect. Although a fun workplace may be nice, employers must weigh the costs against the benefits of hiring workers.