Principles of Economics test and answer.doc

Principles of Economics Problem Set for Week 9 Due: online 10pm Apr.27, Tuesday I. Choose one answer that fits the best. (4 points each for questions 1-21, total 84 points) 1. Which of the following best illustrates the concept of “derived demand?” a. An increase in the wages of autoworkers will lead to an increase in the demand for robots in automobile factories. b. An automobile producers decision to supply more cars will lead to an increase in the demand for automobile production workers. c. An automobile producers decision to supply more minivans results from a decrease in the demand for station wagons. d. An increase in the price of gasoline will lead to an increase in the demand for small cars. 2. When a firm is a profit maximizer a. it is driven to produce as much of its product as possible. b. it will measure its success by the number of employees it has. c. its revenue will always be maximized as well. d. it does not care directly about the number of workers it hires. 3. Which of the following statements is correct? An individual worker’s labor supply curve a. can never slope downward. b. slopes downward if that person responds to a higher wage by taking fewer hours of leisure per week. c. slopes downward if that person responds to a higher opportunity cost of leisure by working fewer hours per week. d. is horizontal if that person works the same number of hours per week, regardless of the opportunity cost of leisure. 4. Suppose medical research provides evidence that eating bananas provides far greater health benefits than was previously thought. The resulting increase in the demand for bananas a. increases the marginal product of banana pickers for any given number of banana pickers. b. increases the value of the marginal product of banana pickers for any given number of banana pickers. c. increases the supply of banana pickers. d. All of the above are correct. ?????5. As a result of a severe flooding, a farmer loses one half of h