Question 1

In a competitive labor market,with one variable factor,the supply of labor to the firm is

Accepted Answer

A) equal to the marginal expenditure curve. 
B) equal to the demand curve for labor. 
C) greater than the marginal expenditure curve. 
D) equal to the marginal revenue product curve. 
A) equal to the marginal expenditure curve. 
B) equal to the demand curve for labor. 
C) greater than the marginal expenditure curve. 
D) equal to the marginal revenue product curve.

Question 2

Let P be the output price for a particular good.Why is the value P*MPL greater than MRPL for a monopolist?

Accepted Answer

A) The monopolist is not as technically efficient as firms operating under perfect competition. 
B) The monopolist hires less labor,so MPL is higher under a monopoly than under perfect competition. 
C) The monopolist sets a price that is higher than MR. 
D) A and C are correct. 
E) B and C are correct. 
A) The monopolist is not as technically efficient as firms operating under perfect competition. 
B) The monopolist hires less labor,so MPL is higher under a monopoly than under perfect competition. 
C) The monopolist sets a price that is higher than MR. 
D) A and C are correct. 
E) B and C are correct.

Question 3

Other things being equal,the marginal revenue product (MRP)curve for a competitive seller

Accepted Answer

A) lies below the MRP curve for a monopolist. 
B) is identical to the MRP curve for a monopolist. 
C) lies above the MRP curve for a monopolist. 
D) is upward sloping whereas a monopolist has a downward sloping MRP curve. 
A) lies below the MRP curve for a monopolist. 
B) is identical to the MRP curve for a monopolist. 
C) lies above the MRP curve for a monopolist. 
D) is upward sloping whereas a monopolist has a downward sloping MRP curve.

Question 4

Why doesn't the marginal worker hired earn economic rent in a competitive labor market?

Accepted Answer

A) His reservation wage is less than the wage. 
B) His reservation wage is greater than the wage. 
C) His reservation wage is equal to the wage. 
D) He is paid a wage that is lower than the others. 
A) His reservation wage is less than the wage. 
B) His reservation wage is greater than the wage. 
C) His reservation wage is equal to the wage. 
D) He is paid a wage that is lower than the others.

Question 5

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 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 6

The Acme Company is a perfect competitor in its input markets and its output market.Its average product of labor is 30,the marginal product of labor is 20,the price of labor is $20,and the price of the output is $5.For Acme Company,the marginal revenue product of labor

Accepted Answer

A) is $100. 
B) is $150. 
C) is $400. 
D) is $600. 
E) cannot be determined with the information provided. 
A) is $100. 
B) is $150. 
C) is $400. 
D) is $600. 
E) cannot be determined with the information provided.

Question 7

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

Accepted Answer

A) W1. 
B) W2. 
C) W3. 
D) W4. 
E) Any of the above. 
A) W1. 
B) W2. 
C) W3. 
D) W4. 
E) Any of the above.

Question 8

Figure 14.3
A labor union is exercising monopoly power in the labor market.
-Refer to Figure 14.3.To maximize the number of workers hired,the labor union will agree to wage rate:

Accepted Answer

A) W0. 
B) W1. 
C) W2. 
D) W3. 
E) none of the above 
A) W0. 
B) W1. 
C) W2. 
D) W3. 
E) none of the above

Question 9

Figure 14.1
A consumer's original utility maximizing combination of income and leisure is shown in the diagram above as point A.After a wage increase,the consumer's utility maximizing combination changes to point C.
-Refer to Figure 14.1.The income effect of the wage increase on the amount of hours of leisure is:

Accepted Answer

A) L0 to L2. 
B) L0 to L1. 
C) L1 to L2. 
D) L2 to L1. 
E) none of the above 
A) L0 to L2. 
B) L0 to L1. 
C) L1 to L2. 
D) L2 to L1. 
E) none of the above

Question 10

In the situation involving a bilateral monopoly,a

Accepted Answer

A) single firm acts as both the monopsonist and the monopoly. 
B) single seller sells to a single buyer. 
C) monopsonist sells to a monopsonist. 
D) monopolist sells to a monopolist. 
A) single firm acts as both the monopsonist and the monopoly. 
B) single seller sells to a single buyer. 
C) monopsonist sells to a monopsonist. 
D) monopolist sells to a monopolist.

Question 11

An increase in technology in fabric design changes Trisha's marginal product of labor function from MPL(L)= 0.5 - 0.01L to MP'L (L)= 0.625 - 0.01L.If Trisha can sell all the output she desires at $120 and she must pay each unit of labor she employs $24,what effect does the change in technology have on labor employment?

Accepted Answer

Trisha's original marginal revenue of th

Question 12

Figure 14.3
A labor union is exercising monopoly power in the labor market.
-Refer to Figure 14.3.To maximize total wages paid to workers,the labor union will agree to wage rate:

Accepted Answer

A) W0. 
B) W1. 
C) W2. 
D) W3. 
E) none of the above 
A) W0. 
B) W1. 
C) W2. 
D) W3. 
E) none of the above

Question 13

The marginal expenditure curve for labor is based on the assumption that

Accepted Answer

A) the most productive workers are hired first. 
B) the wage rate is independent of the quantity of labor employed. 
C) the market supply curve for labor is infinitely elastic. 
D) all workers are paid the same wage rate. 
E) none of the above 
A) the most productive workers are hired first. 
B) the wage rate is independent of the quantity of labor employed. 
C) the market supply curve for labor is infinitely elastic. 
D) all workers are paid the same wage rate. 
E) none of the above

Question 14

Which of the following statements is TRUE when comparing monopsony and competitive labor markets?

Accepted Answer

A) The monopsony hires more workers but pays a lower wage. 
B) The monopsony hires more workers at a higher wage. 
C) The monopsonist's wage is lower and quantity of labor higher than would prevail under competition. 
D) The monopsonist's wage and quantity of labor are lower than would prevail under perfect competition. 
A) The monopsony hires more workers but pays a lower wage. 
B) The monopsony hires more workers at a higher wage. 
C) The monopsonist's wage is lower and quantity of labor higher than would prevail under competition. 
D) The monopsonist's wage and quantity of labor are lower than would prevail under perfect competition.

Question 15

Figure 14.4
-Given the information in Figure 14.4,the monopsony 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 16

Under what circumstances are the marginal expenditure for an input and the average expenditure always equal? Where there is a

Accepted Answer

A) competitive buyer. 
B) competitive seller. 
C) monopoly buyer. 
D) monopoly seller. 
A) competitive buyer. 
B) competitive seller. 
C) monopoly buyer. 
D) monopoly seller.

Question 17

What happens to the marginal revenue product curve of a factor as more of a complementary factor is hired?

Accepted Answer

A) It shifts to the left,because its marginal product decreases. 
B) It shifts to the left,because its marginal product increases. 
C) It shifts to the right,because its marginal product decreases. 
D) It shifts to the right,because its marginal product increases. 
A) It shifts to the left,because its marginal product decreases. 
B) It shifts to the left,because its marginal product increases. 
C) It shifts to the right,because its marginal product decreases. 
D) It shifts to the right,because its marginal product increases.

Question 18

Suppose the labor market and all output markets are perfectly competitive.When the labor market is in equilibrium,the wage rate will:

Accepted Answer

A) be less than the marginal revenue product of labor. 
B) equal the marginal revenue product of labor. 
C) be greater than the marginal revenue product of labor. 
D) None of the above is necessarily correct. 
A) be less than the marginal revenue product of labor. 
B) equal the marginal revenue product of labor. 
C) be greater than the marginal revenue product of labor. 
D) None of the above is necessarily correct.

In a competitive labor market,with one variable factor,the supply of labor to the firm is

Let P be the output price for a particular good.Why is the value P*MP_L greater than MRP_L for a monopolist?

Other things being equal,the marginal revenue product (MRP)curve for a competitive seller

Why doesn't the marginal worker hired earn economic rent in a competitive labor market?

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 union workers?

The Acme Company is a perfect competitor in its input markets and its output market.Its average product of labor is 30,the marginal product of labor is 20,the price of labor is $20,and the price of the output is $5.For Acme Company,the marginal revenue product of labor

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

Figure 14.3 A labor union is exercising monopoly power in the labor market. -Refer to Figure 14.3.To maximize the number of workers hired,the labor union will agree to wage rate:

In the situation involving a bilateral monopoly,a

Figure 14.3 A labor union is exercising monopoly power in the labor market. -Refer to Figure 14.3.To maximize total wages paid to workers,the labor union will agree to wage rate:

The marginal expenditure curve for labor is based on the assumption that

Which of the following statements is TRUE when comparing monopsony and competitive labor markets?

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

Under what circumstances are the marginal expenditure for an input and the average expenditure always equal? Where there is a

What happens to the marginal revenue product curve of a factor as more of a complementary factor is hired?

Suppose the labor market and all output markets are perfectly competitive.When the labor market is in equilibrium,the wage rate will:

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

In a competitive labor market,with one variable factor,the supply of labor to the firm is

Let P be the output price for a particular good.Why is the value P*MPL greater than MRPL for a monopolist?

Other things being equal,the marginal revenue product (MRP)curve for a competitive seller

Why doesn't the marginal worker hired earn economic rent in a competitive labor market?

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 union workers?

The Acme Company is a perfect competitor in its input markets and its output market.Its average product of labor is 30,the marginal product of labor is 20,the price of labor is $20,and the price of the output is $5.For Acme Company,the marginal revenue product of labor

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

Figure 14.3 A labor union is exercising monopoly power in the labor market. -Refer to Figure 14.3.To maximize the number of workers hired,the labor union will agree to wage rate:

In the situation involving a bilateral monopoly,a

Figure 14.3 A labor union is exercising monopoly power in the labor market. -Refer to Figure 14.3.To maximize total wages paid to workers,the labor union will agree to wage rate:

The marginal expenditure curve for labor is based on the assumption that

Which of the following statements is TRUE when comparing monopsony and competitive labor markets?

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

Under what circumstances are the marginal expenditure for an input and the average expenditure always equal? Where there is a

What happens to the marginal revenue product curve of a factor as more of a complementary factor is hired?

Suppose the labor market and all output markets are perfectly competitive.When the labor market is in equilibrium,the wage rate will:

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

Let P be the output price for a particular good.Why is the value P*MP_L greater than MRP_L for a monopolist?