Question 1. What is the significance of resource pricing?Explain the meaning and significance of the fact that the demandfor a resource is a derived demand. Why doresource demand curves slope downward? LO1
Question 2. What factors determine the elasticity of resourcedemand? What effect will each of the following have on theelasticity of the demand for resource C, which is being used toproduce commodity X? LO4
a. An increase in the demand for product X.
b. An increase in the price of substitute resource D.
c. An increase in the number of resources substitutable for C inproducing X.
d. A technological improvement in the capital equipment withwhich resource C is combined.
e. A fall in the price of complementary resource E.
f. A decline in the elasticity of demand for product X.
Question 3. Florida citrus growers say that the recent crackdownon illegal immigration is increasing the market wage ratesnecessary to get their oranges picked. Some are turning to $100,000to $300,000 mechanical harvesters known as “trunk, shake, andcatch” pickers, which vigorously shake oranges from the trees. Ifwidely adopted, what will be the effect on the demand for humanorange pickers? What does that imply about the relative strengthsof the substitution and output effects? LO5
Question 4. LAST WORD Explain the economics ofthe substitution of ATMs for human tellers. Some banks arebeginning to assess transaction fees when customers use humantellers rather than ATMs. What are these banks trying toaccomplish?
