Question 1

The marginal revenue product can be expressed as the

Accepted Answer

A) additional revenue received from selling one more unit of product. 
B) increment to revenue received from one additional unit of input hired. 
C) marginal physical product of an input times the average revenue received from the sale of the product. 
D) average physical product of the input times the marginal revenue received from the sale of the final product. 
A) additional revenue received from selling one more unit of product. 
B) increment to revenue received from one additional unit of input hired. 
C) marginal physical product of an input times the average revenue received from the sale of the product. 
D) average physical product of the input times the marginal revenue received from the sale of the final product. B

Question 2

Assume that as the wage rate rises a worker's substitution effect for leisure is larger than the income effect.We can conclude that in this region,the worker's

Accepted Answer

A) labor supply curve will be backward bending. 
B) labor supply curve will have the usual upward slope. 
C) labor supply curve will be completely inelastic. 
D) supply curve will be horizontal. 
A) labor supply curve will be backward bending. 
B) labor supply curve will have the usual upward slope. 
C) labor supply curve will be completely inelastic. 
D) supply curve will be horizontal. B

Question 3

Edna has a monopoly in the sale of engineering services in the local market.Also,Edna is the only employer of high skilled labor in the local market.The marginal product of labor is:
MPL(L)= 250.
The marginal revenue of engineering services is:
MR(L)= 12,000 - 0.25L
The local supply of high skilled labor is:
LS (w)= 200w - 10,000
Or equivalently
w = 50 + 0.005LS 
This implies Edna's marginal high-skill labor wage bill expenditures is:
ME(L)= 50 + 0.01L
Determine Edna's optimal level of employment.Also,what is the wage rate Edna pays for a unit of high skilled labor? What is the marginal revenue of the product of labor at the optimal employment level? Suppose Edna acted as a wage taker in determining high-skilled labor employment.How much labor would she hire and at what wage rate? At this level of employment,calculate the marginal revenue of the product of labor.

Accepted Answer

To determine Edna's optimal level of employment given she is a monopsonist,we need to set: MRP_L(L)= ME(L).Since Edna is a monopolist in the sale of engineering services, MRP_L(L)= MP_L(L)*MR(L)= 250(12,000 - 0.25L)= 3,000,000 - 62.5L. This information allows us to determine Edna's optimal employment of labor as: We now use the information from labor supply to determine the wage rate Edna will pay.This wage rate is: The marginal revenue of the product of labor at the optimal level of employment is: MRP_L(L = 47,991.521)= 3,000,000 - 62.5(47,991.521)= $530. If Edna acted as a wage taker in hiring labor,she would set: MRP_L(L)= w.In this case,Edna would employ At this level of employment,the wage rate is: The marginal revenue of the product of labor at this employment level is $289.98.

Question 4

For a monopsony buyer of an input,the marginal expenditure curve

Accepted Answer

A) lies above the average expenditure curve. 
B) lies below the average expenditure curve. 
C) is identical to the average expenditure curve. 
D) lies below the input demand curve. 
A) lies above the average expenditure curve. 
B) lies below the average expenditure curve. 
C) is identical to the average expenditure curve. 
D) lies below the input demand curve.

Question 5

Suppose the downward sloping labor demand curve shifts rightward in a labor market with a single employer (monopsony).What happens to the marginal expenditure curve?

Accepted Answer

A) Shifts left 
B) Shifts right 
C) Remains the same 
D) We do not have enough information to answer this question. 
A) Shifts left 
B) Shifts right 
C) Remains the same 
D) We do not have enough information to answer this question.

Question 6

Currently,One Guy's uses 4 ovens in the production of pizzas (K represents the number of ovens).One Guy's marginal product of labor function is   One Guy's can sell all the pizzas it produces for $12 per unit and hire all the labor units it desires at $8 per unit.What happens to One Guy's optimal labor employment if it increases the number of ovens to 5?

Accepted Answer

One Guy's marginal revenue of the produc

Question 7

Use the following statements to answer this question: I.Under profit maximization,the quantity of labor used in production is optimal if MR = w/MPL.
II.The expression MR = w/MPL implies that the revenue earned from the last unit of output produced equals the marginal cost of the last unit of output.

Accepted Answer

A) I and II are true. 
B) I is true and II is false. 
C) II is true and I is false. 
D) I and II are false. 
A) I and II are true. 
B) I is true and II is false. 
C) II is true and I is false. 
D) I and II are false.

Question 8

Figure 14.4
-Given the information in Figure 14.4,the competitive wage rate is:

Accepted Answer

A) W1. 
B) W2. 
C) W3. 
D) W4. 
E) none of the above 
A) W1. 
B) W2. 
C) W3. 
D) W4. 
E) none of the above

Question 9

Suppose the upward sloping labor supply curve shifts leftward in a labor market with a single employer (monopsony).What happens to the marginal expenditure curve?

Accepted Answer

A) Shifts left 
B) Shifts right 
C) Remains the same 
D) We do not have enough information to answer this question. 
A) Shifts left 
B) Shifts right 
C) Remains the same 
D) We do not have enough information to answer this question.

Question 10

The Acme Company is a perfect competitor in its input markets and its output market.Its average product of labor is at its maximum and equals 30.The marginal revenue product of labor is $300.The price of its output

Accepted Answer

A) is $0.10. 
B) is $10. 
C) is $9,000. 
D) cannot be determined without more information. 
A) is $0.10. 
B) is $10. 
C) is $9,000. 
D) cannot be determined without more information.

Question 11

Suppose a firm has one variable input,labor.Why is the MRPL curve for a competitive firm above the MRPL curve for a monopolist?

Accepted Answer

A) Without competition from other firms,monopolies are less efficient and the marginal product of labor is lower at each level of output. 
B) Although the marginal product of labor may be the same under both market structures,the marginal revenue of the monopoly declines with output. 
C) Monopolists have less incentive to invest in worker training and other methods for improving labor productivity,so the marginal product of labor is lower in the monopoly case. 
D) none of the above 
A) Without competition from other firms,monopolies are less efficient and the marginal product of labor is lower at each level of output. 
B) Although the marginal product of labor may be the same under both market structures,the marginal revenue of the monopoly declines with output. 
C) Monopolists have less incentive to invest in worker training and other methods for improving labor productivity,so the marginal product of labor is lower in the monopoly case. 
D) none of the above

Question 12

Use the following statements to answer this question: I.A positive deadweight loss necessarily occurs in labor markets that have one seller (e.g.,labor union).
II.The deadweight loss in a labor market with one seller (e.g.,labor union)is smaller if the union maximizes the total wages earned by union members than if the union maximizes total economic rents.

Accepted Answer

A) I and II are true. 
B) I is true and II is false. 
C) II is true and I is false. 
D) I and II are false. 
A) I and II are true. 
B) I is true and II is false. 
C) II is true and I is false. 
D) I and II are false.

Question 13

Currently,Ronald's Outboard Motor Manufacturing uses 100 power drills in the production of motors (K represents the number of power drills).Ronald's marginal product of labor function is   Ronald can sell all the motors he produces for $100 per unit and hire all the labor units he desire at $10 per unit.What happens to Ronald's optimal labor employment if he decreases the number of power drills to 90?

Accepted Answer

Ronald's marginal revenue of the product

Question 14

A major computer software company maintains a technical support center in a rural area and is the only employer in this region.Suppose the firm develops a new software system for managing technical support calls,and the marginal product of labor increases.What happens to the equilibrium outcome in this labor market?

Accepted Answer

A) Labor demand shifts rightward,equilibrium wage and employment levels decline 
B) Labor demand shifts rightward,equilibrium wage and employment levels increase 
C) Labor demand curve remains the same,equilibrium wage and employment levels increase 
D) Labor demand curve remains the same,equilibrium wage and employment do not change 
E) none of the above 
A) Labor demand shifts rightward,equilibrium wage and employment levels decline 
B) Labor demand shifts rightward,equilibrium wage and employment levels increase 
C) Labor demand curve remains the same,equilibrium wage and employment levels increase 
D) Labor demand curve remains the same,equilibrium wage and employment do not change 
E) none of the above

Question 15

Suppose the federal government allows labor unions to act as the sole seller in labor markets,but the government collects an annual $10,000,000 "administrative fee" from each union in this situation.Assuming this fee is not so large that it forces the unions to disband,what is the impact of this fee on the equilibrium wage and employment level in the monopolized labor market?

Accepted Answer

A) Wages and employment decline. 
B) Wages increase and employment declines. 
C) Employment increases and wages decline. 
D) No change in wages or employment levels. 
A) Wages and employment decline. 
B) Wages increase and employment declines. 
C) Employment increases and wages decline. 
D) No change in wages or employment levels.

Question 16

If only one firm in an industry could take advantage of a reduced wage and all other firms continue paying the old wage,how would one best describe the one firm's reaction to this reduced wage assuming labor is the only variable input? The marginal revenue product of labor curve

Accepted Answer

A) would remain unchanged,and the firm would hire more labor at the lower wage. 
B) shifts to the left,and the firm hires more labor at the lower wage on the new curve. 
C) shifts to the right,and the firm hires more labor at the lower wage on the new curve. 
D) shifts to the left,and the firm hires less labor at the lower wage on the new curve. 
E) shifts to the right,and the firm hires less labor at the lower wage on the new curve. 
A) would remain unchanged,and the firm would hire more labor at the lower wage. 
B) shifts to the left,and the firm hires more labor at the lower wage on the new curve. 
C) shifts to the right,and the firm hires more labor at the lower wage on the new curve. 
D) shifts to the left,and the firm hires less labor at the lower wage on the new curve. 
E) shifts to the right,and the firm hires less labor at the lower wage on the new curve.

Question 17

Figure 14.4
-Suppose a labor market has perfectly inelastic supply that is composed of union and non-union workers,and both groups of workers earn the perfectly competitive wage.What happens to the equilibrium employment level and wage for non-union workers?

Accepted Answer

A) Both increase. 
B) Employment increases and wage declines. 
C) Wage increases and employment declines. 
D) Both decline. 
A) Both increase. 
B) Employment increases and wage declines. 
C) Wage increases and employment declines. 
D) Both decline.

Question 18

If the market for labor is perfectly competitive,the profit maximizing level of labor occurs where

Accepted Answer

A) MRPL L = P (the output price). 
C) MRPL just exceeds W. 
D) MRPL = W. 
E) none of the above 
A) MRPL L = P (the output price). 
C) MRPL just exceeds W. 
D) MRPL = W. 
E) none of the above

Question 19

In the competitive output market for good Q,the marginal revenue product for an input X can be expressed as

Accepted Answer

A) MPX / TRQ. 
B) MPQ MRX. 
C) APX MRQ. 
D) MPX *PQ  
A) MPX / TRQ. 
B) MPQ MRX. 
C) APX MRQ. 
D) MPX *PQ

Question 20

In some markets plumbers have a choice of joining unions or working as nonunion plumbers.The total short-run supply of plumbers is perfectly inelastic at 500 workers per day.The demands for nonunionized and unionized plumbers,respectively,are:
WNU = 30 - 0.04L WU = 30 - 0.10L.
The wage rate is W in $/hr.and the number of workers per day is L.
a.Determine the total demand for plumbers.
b.Calculate the total market wage rate of plumbers assuming that unionized and nonunionized plumbers get the same wage rate.
c.If the unionized workers succeeded in getting their wage increased to $20.00 per hour,how many unionized workers would lose their jobs?
d.If the unionized workers in (c)who lost their jobs take jobs as non-unionized workers,how much and in what direction would non-unionized wages change?

Accepted Answer

a. The total demand for workers is the h

The marginal revenue product can be expressed as the

Assume that as the wage rate rises a worker's substitution effect for leisure is larger than the income effect.We can conclude that in this region,the worker's

For a monopsony buyer of an input,the marginal expenditure curve

Suppose the downward sloping labor demand curve shifts rightward in a labor market with a single employer (monopsony).What happens to the marginal expenditure curve?

Figure 14.4 -Given the information in Figure 14.4,the competitive wage rate is:

Suppose the upward sloping labor supply curve shifts leftward in a labor market with a single employer (monopsony).What happens to the marginal expenditure curve?

The Acme Company is a perfect competitor in its input markets and its output market.Its average product of labor is at its maximum and equals 30.The marginal revenue product of labor is $300.The price of its output

Suppose a firm has one variable input,labor.Why is the MRP_L curve for a competitive firm above the MRP_L curve for a monopolist?

If only one firm in an industry could take advantage of a reduced wage and all other firms continue paying the old wage,how would one best describe the one firm's reaction to this reduced wage assuming labor is the only variable input? The marginal revenue product of labor curve

Figure 14.4 -Suppose a labor market has perfectly inelastic supply that is composed of union and non-union workers,and both groups of workers earn the perfectly competitive wage.What happens to the equilibrium employment level and wage for non-union workers?

If the market for labor is perfectly competitive,the profit maximizing level of labor occurs where

In the competitive output market for good Q,the marginal revenue product for an input X can be expressed as

Preliminaries

The Basics of Supply and Demand

Consumer Behavior

Individual and Market Demand

Uncertainty and Consumer Behavior

Production

The Cost of Production

Profit Maximization and Competitive Supply

The Analysis of Competitive Markets

Market Power: Monopoly and Monopsony

Pricing With Market Power

Monopolistic Competition and Oligopoly

Game Theory and Competitive Strategy

Investment,time and Capital Markets

General Equilibrium and Economic Efficiency 1-83

Markets With Asymmetric Information

Externalities and Public Goods

Filters

Exam 14: Markets for Factor Inputs

The marginal revenue product can be expressed as the

Assume that as the wage rate rises a worker's substitution effect for leisure is larger than the income effect.We can conclude that in this region,the worker's

For a monopsony buyer of an input,the marginal expenditure curve

Suppose the downward sloping labor demand curve shifts rightward in a labor market with a single employer (monopsony).What happens to the marginal expenditure curve?

Figure 14.4 -Given the information in Figure 14.4,the competitive wage rate is:

Suppose the upward sloping labor supply curve shifts leftward in a labor market with a single employer (monopsony).What happens to the marginal expenditure curve?

The Acme Company is a perfect competitor in its input markets and its output market.Its average product of labor is at its maximum and equals 30.The marginal revenue product of labor is $300.The price of its output

Suppose a firm has one variable input,labor.Why is the MRPL curve for a competitive firm above the MRPL curve for a monopolist?

If only one firm in an industry could take advantage of a reduced wage and all other firms continue paying the old wage,how would one best describe the one firm's reaction to this reduced wage assuming labor is the only variable input? The marginal revenue product of labor curve

Figure 14.4 -Suppose a labor market has perfectly inelastic supply that is composed of union and non-union workers,and both groups of workers earn the perfectly competitive wage.What happens to the equilibrium employment level and wage for non-union workers?

If the market for labor is perfectly competitive,the profit maximizing level of labor occurs where

In the competitive output market for good Q,the marginal revenue product for an input X can be expressed as

Preliminaries

The Basics of Supply and Demand

Consumer Behavior

Individual and Market Demand

Uncertainty and Consumer Behavior

Production

The Cost of Production

Profit Maximization and Competitive Supply

The Analysis of Competitive Markets

Market Power: Monopoly and Monopsony

Pricing With Market Power

Monopolistic Competition and Oligopoly

Game Theory and Competitive Strategy

Investment,time and Capital Markets

General Equilibrium and Economic Efficiency 1-83

Markets With Asymmetric Information

Externalities and Public Goods

Filters

Suppose a firm has one variable input,labor.Why is the MRP_L curve for a competitive firm above the MRP_L curve for a monopolist?