3. suppose land suitable for wheat production is highly inelastic. an increase i

Question

3. suppose land suitable for wheat production is highly inelastic. an increase in the demand for wheat bread will most likely

a. cause the prices of bread and wheat to increase but not affect the incomes paid to owners for wheat-growing land

b. shift the demand curve for bread to the right and the supply curve for wheat to the left

c. raise the price of land suitable for wheat production

d. depress the incomes of owners of wheat growing land.

3. the demand for a factor of production will be more inelastic

a. when the cost of the factor is small relative to the total cost of the product

b. the more elastic the demand for the final product

c. the easier it is to substitute other resources for the factor

d. the more elastic the supply of products produced with the resource

5. an increase in the demand for automobiles will increase the demand for labor used to produce the automobiles due to

a. an increase in the marginal revenue product of labor

b. a decrease in the marginal revenue product of labor.  

c. an increase in the marginal revenue product of automobiles

d. a decrease in the marginal revenue product of automobiles

e. a decrease in the price of automobiles

14. other things constant, if the demand for a final product is quite elastic, the demand for a resource used to produce that product will tend to be

a. highly inelastic

b. of unitary elasticity

c. a curve sloping upward to the right

d. quite elastic as well

Explanation / Answer

3. If land suitable for wheat production is highly inelastic, an increase in demand for wheat bread will most likely cause the price of the bread and wheat.

OPTION A

4. The demand for a factor of production will be more elastic when the cost of the factor is small relative to the total cost of the product.

OPTION A

5. An increase in demand for automobiles will lead to increase in the marginal revenue product of labor which will lead to increase in the demand for labor used to produce the automobiles.

OPTION A

14. if demand for the final product is elastic, demand for the resource used to produce the product will also tend to be elastic. OPTION D

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