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The supply of and demand for productive resources

06.02.2023

The supply of and demand for productive resources

The supply of and demand for productive resources are critical concepts in economics that determine the price and quantity of goods and services produced in an economy. Abundant resources, also known as factors of production, are the inputs used to create goods and services, such as labor, capital, land, and entrepreneurship. The supply of productive resources refers to the quantity of these inputs available. In contrast, the demand for productive resources refers to the amount of these inputs that firms are willing to purchase to produce goods and services.

Various factors, including the availability of labor, capital, and land, technological advancements, and government policies, influence the supply of productive resources. For example, an increase in the availability of labor due to a growing population will increase the labor supply. In contrast, an increase in the cost of capital due to higher interest rates will reduce the money supply.

The demand for productive resources, on the other hand, is determined by the production activities of firms. Firms will demand more of a particular input if they expect to increase their production and require less if they expect to reduce their production. The demand for productive resources is also influenced by the price of the inputs, as firms will demand more input if its price is lower and less if its price is higher.

The interaction between the supply and demand for productive resources determines the price of these inputs, affecting the production and consumption of goods and services. When the supply of a productive resource is greater than the demand, its price will decrease, encouraging firms to use more of that input in production. Conversely, when the demand for a productive resource exceeds the supply, its price will increase, causing firms to use less of that input and potentially switch to alternative inputs.

In conclusion, the supply and demand for productive resources play a critical role in determining the quantity and price of goods and services produced in an economy. Various factors, such as technological advancements and government policies, influence the collection of these inputs. In contrast, firms’ production activities and the information’s price determine the demand. Understanding these concepts is essential for analyzing the functioning of an economy and making informed economic decisions.

1.Suppose there is a sharp decline in the demand for steel products. This will cause:
2.The marginal revenue product curve of labor will shift outwards if:
3.Over time, an increase in the demand for a good will most likely result in a(n):
4.Identify the correct statement.
5.Which of the following is true of the long-run supply of a resource?
6.The labor supply curve reflects how
7.In equilibrium, the marginal revenue product (MRP) of a resource equals the:
8.A profit-maximizing firm will prefer hiring unskilled workers over skilled workers when the:
9.The equilibrium wage rate of workers in the construction sector is likely to increase when:
10.In the long run, the supply of both human and physical resources is determined by:
11.Which of the following is true of human capital?
12.A wheat farm in Corinthia can produce 180 bushels of wheat when it employs 40 laborers. When another laborer is hired, the total output of the farm increases to 195 bushels. Suppose the market price for a bushel of wheat is $8. The marginal revenue product of the additional worker is:
13.Which of the following is true of physical capital?
14.A leftward shift of a resource’s demand curve will cause:
15.A decrease in the demand for a product will cause output of that product to
16.Identify the correct statement about the supply curve of a resource.
17.Which of the following is an example of derived demand?
18.Other things constant, as the price of a resource increases, the incentive of:
19.There will be an excess supply of resources in a market when:
20.The total demand for a resource is equal to the:
21.Which of the following statements is true of the derived demand for resources?
22.The derived demand curve for a resource is:
23.An increase in the demand for a good is likely to result in a(n):
24.Which of the following is demanded by firms in a factor market?
25.For a price-searcher firm, the:
26.There will be an excess demand for a resource in a market when:
27.Which of the following is true of derived demand?
28.The marginal revenue product of a resource is the:
29.Which of the following is true of the short-run supply curve?
30.A bolt manufacturing company in Vanadia produces 400 bolts in a day when it employs 4 workers. The total output of the company increases to 440 bolts when it hires an additional worker. The marginal productivity of the fifth worker is:
31.Which of the following is true of resource mobility?
32.Notions Co., a widgets manufacturing company, decides to sell half of its machines to minimize its cost. This will cause:
33.A resource’s value marginal product (VMP) is:
34.The mobility of workers:
35.The marginal product of a resource:
36.For a price-taker firm, the market price of a product is always equal to its:
37.If the marginal physical product (MPP) of labor is 60 and the price of labor per period is $20, the MPP of machinery is 75 and the price of the machinery per period is $25, in order to achieve optimal input proportions the firm should use
38.In the presence of multiple factors of production, factors will be employed up to the point where:
39.The derived demand curve for a resource:
40.Resource owners will supply their services to an employer only if the:
41.Suppose the equilibrium wage rate of construction workers is $15 per hour. Given the market conditions, firms in the construction sector are willing to pay a wage rate of $10 per hour. Which of the following is likely to happen?
42.The marginal revenue product (MRP) of an input is the product of:
43.A firm’s short-run demand curve for a resource is also the firm’s:

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