Question 1

When the owners of a professional sports team pay their athletes very high salaries,it must be true that

Accepted Answer

A)  the nonpecuniary aspects of the job are very low. 
B)  the owners expect the MRP of that athlete to be greater than the amount the player is paid. 
C)  the owners expect the MFC of that athlete to be greater than the amount the player is paid. 
D)  b and c 
E)  all of the above 
A)  the nonpecuniary aspects of the job are very low. 
B)  the owners expect the MRP of that athlete to be greater than the amount the player is paid. 
C)  the owners expect the MFC of that athlete to be greater than the amount the player is paid. 
D)  b and c 
E)  all of the above

Question 2

The MPP of labor divided by its (labor's)price is greater than the MPP of capital divided by its (capital's)price.Costs can be minimized by

Accepted Answer

A)  buying more capital and less labor. 
B)  buying more labor and less capital. 
C)  maintaining the current MPP/P ratios. 
D)  buying twice as much labor as capital. 
E)  none of the above 
A)  buying more capital and less labor. 
B)  buying more labor and less capital. 
C)  maintaining the current MPP/P ratios. 
D)  buying twice as much labor as capital. 
E)  none of the above

Question 3

For a product price taker,VMP equals MR.

Accepted Answer

A) True 
 B)False

Question 4

Situation 27-1
  
-Refer to Situation 27-1.If good X is produced in the U.S.the output per $1 of cost would be ___________________ than if good X were produced in Mexico,thus it would be best to produce good X in

Accepted Answer

A)  higher; Mexico. 
B)  lower; Mexico. 
C)  higher; the United States. 
D)  lower; the United States. 
A)  higher; Mexico. 
B)  lower; Mexico. 
C)  higher; the United States. 
D)  lower; the United States.

Question 5

Alex Rodriguez was the highest played baseball player in 2012,earning about $32 million playing for the New York Yankees.Explain the economic justification for the owners paying such a high salary; be sure to incorporate the concept of marginal revenue product (MRP)into your answer.

Accepted Answer

When a professional athlete is paid a ve

Question 6

If MPPX/PX > MPPY/PY,the firm should buy

Accepted Answer

A)  more of factor X and less of factor Y. 
B)  less of factor X and more of factor Y. 
C)  more of factor Y and the same amount of factor X. 
D)  less of factor X and factor Y. 
E)  more of factor X and factor Y. 
A)  more of factor X and less of factor Y. 
B)  less of factor X and more of factor Y. 
C)  more of factor Y and the same amount of factor X. 
D)  less of factor X and factor Y. 
E)  more of factor X and factor Y.

Question 7

If,at a particular wage rate in a competitive market,the quantity demanded of labor exceeds the quantity supplied of labor,then

Accepted Answer

A)  the supply curve will shift to the left, the demand curve will shift to the right, and the surplus of labor will be eliminated. 
B)  since wages are so low, the quantity supplied of workers will decrease further, and the quantity demanded will increase further. 
C)  some workers will begin to demand higher wages, as a result, employers will begin to hire more workers. 
D)  the supply curve will shift to the right, the demand curve will shift to the left, and the shortage of labor will be eliminated. 
E)  none of the above 
A)  the supply curve will shift to the left, the demand curve will shift to the right, and the surplus of labor will be eliminated. 
B)  since wages are so low, the quantity supplied of workers will decrease further, and the quantity demanded will increase further. 
C)  some workers will begin to demand higher wages, as a result, employers will begin to hire more workers. 
D)  the supply curve will shift to the right, the demand curve will shift to the left, and the shortage of labor will be eliminated. 
E)  none of the above

Question 8

Situation 27-2
  
-Refer to Situation 27-2.The output produced per $1 of cost in the Mexico.is

Accepted Answer

A)  1.25 units of good Y. 
B)  0.80 units of good Y. 
C)  9.0 units of good Y. 
D)  1.0 units of good Y. 
A)  1.25 units of good Y. 
B)  0.80 units of good Y. 
C)  9.0 units of good Y. 
D)  1.0 units of good Y.

Question 9

A firm's factor demand curve is also its _______________________ curve.

Accepted Answer

A)  average physical product 
B)  marginal physical product 
C)  average revenue product 
D)  marginal revenue product 
A)  average physical product 
B)  marginal physical product 
C)  average revenue product 
D)  marginal revenue product

Question 10

Which of the following can cause an increase in real wages?

Accepted Answer

A)  a technological advance that increases the quality of the capital goods used by labor. 
B)  higher demand for labor. 
C)  an increase in the price level. 
D)  a and b 
E)  all of the above 
A)  a technological advance that increases the quality of the capital goods used by labor. 
B)  higher demand for labor. 
C)  an increase in the price level. 
D)  a and b 
E)  all of the above

Question 11

"Screening" is the process by which

Accepted Answer

A)  wages tend to be equalized as workers move from one labor market to another. 
B)  firms calculate the point of MRP = MFC. 
C)  firms try to increase the probability of hiring good employees. 
D)  discrimination is claimed to be an "information problem." 
A)  wages tend to be equalized as workers move from one labor market to another. 
B)  firms calculate the point of MRP = MFC. 
C)  firms try to increase the probability of hiring good employees. 
D)  discrimination is claimed to be an "information problem."

Question 12

"Screening" is the process used by

Accepted Answer

A)  employers to increase the probability of choosing good employees based on certain criteria. 
B)  tax evaluators to make sure that business firms pay the amount of taxes they owe. 
C)  employees to try to get their wages up. 
D)  employers to spy on their competitors. 
E)  none of the above 
A)  employers to increase the probability of choosing good employees based on certain criteria. 
B)  tax evaluators to make sure that business firms pay the amount of taxes they owe. 
C)  employees to try to get their wages up. 
D)  employers to spy on their competitors. 
E)  none of the above

Question 13

If the demand for a product that labor produces is highly elastic,a small percentage increase in price will __________ quantity demanded of the product by a relatively __________ percentage,which,in turn,will __________ the demand for the labor that produces the product.

Accepted Answer

A)  increase; small; slightly reduce 
B)  decrease; small; greatly increase 
C)  decrease; large; greatly increase 
D)  decrease; large; greatly reduce 
E)  increase; large; greatly reduce 
A)  increase; small; slightly reduce 
B)  decrease; small; greatly increase 
C)  decrease; large; greatly increase 
D)  decrease; large; greatly reduce 
E)  increase; large; greatly reduce

Question 14

For a product price searcher (such as a monopolist),

Accepted Answer

A) P > MR, therefore VMP MR, therefore VMP > MRP. D) P < MR, therefore VMP < MRP. A) P > MR, therefore VMP MR, therefore VMP > MRP. D) P < MR, therefore VMP < MRP.

Question 15

The firm's factor demand curve is the

Accepted Answer

A)  MRP curve if the firm is a price taker (perfectly competitive firm). 
B)  MFC curve if the firm is a price taker (perfectly competitive firm). 
C)  VMP curve if the firm is a price searcher (monopolist, monopolistic competitor, oligopolist). 
D)  MFC curve if the firm is a price searcher (monopolist, monopolistic competitor, oligopolist). 
A)  MRP curve if the firm is a price taker (perfectly competitive firm). 
B)  MFC curve if the firm is a price taker (perfectly competitive firm). 
C)  VMP curve if the firm is a price searcher (monopolist, monopolistic competitor, oligopolist). 
D)  MFC curve if the firm is a price searcher (monopolist, monopolistic competitor, oligopolist).

Question 16

Elasticity of demand for labor is affected by the

Accepted Answer

A)  price elasticity of demand for the product that labor produces. 
B)  availability of substitute (nonlabor) factors. 
C)  ratio of labor cost to total cost. 
D)  all of the above 
A)  price elasticity of demand for the product that labor produces. 
B)  availability of substitute (nonlabor) factors. 
C)  ratio of labor cost to total cost. 
D)  all of the above

Question 17

The marginal factor cost (MFC)curve for a factor price taker is

Accepted Answer

A)  vertical. 
B)  horizontal. 
C)  downward sloping. 
D)  upward sloping. 
A)  vertical. 
B)  horizontal. 
C)  downward sloping. 
D)  upward sloping.

Question 18

Which of the following statements is false?

Accepted Answer

A)  There are no special nonpecuniary aspects to any job. 
B)  Nonpecuniary aspects of a job refer to the nonmoney aspects of a job. 
C)  A change in the wage rate can change the quantity demanded and quantity supplied of labor. 
D)  A change in the supply of labor can affect the wage rate. 
A)  There are no special nonpecuniary aspects to any job. 
B)  Nonpecuniary aspects of a job refer to the nonmoney aspects of a job. 
C)  A change in the wage rate can change the quantity demanded and quantity supplied of labor. 
D)  A change in the supply of labor can affect the wage rate.

Question 19

List and describe the four conditions necessary for everyone to receive equal pay in the long run.

Accepted Answer

Given the following conditions,there wou

Question 20

Marginal factor cost (MFC)is

Accepted Answer

A)  the additional cost generated by producing an additional unit of output. 
B)  the additional revenue generated by employing an additional factor unit. 
C)  the additional cost generated by employing an additional factor unit. 
D)  total cost from the production of a product divided by the total number of factor units used. 
A)  the additional cost generated by producing an additional unit of output. 
B)  the additional revenue generated by employing an additional factor unit. 
C)  the additional cost generated by employing an additional factor unit. 
D)  total cost from the production of a product divided by the total number of factor units used.

Exam 27: Factor Markets: With Emphasis on the Labor Market

When the owners of a professional sports team pay their athletes very high salaries,it must be true that

The MPP of labor divided by its (labor's)price is greater than the MPP of capital divided by its (capital's)price.Costs can be minimized by

For a product price taker,VMP equals MR.

Situation 27-1 -Refer to Situation 27-1.If good X is produced in the U.S.the output per $1 of cost would be ___________________ than if good X were produced in Mexico,thus it would be best to produce good X in

Alex Rodriguez was the highest played baseball player in 2012,earning about $32 million playing for the New York Yankees.Explain the economic justification for the owners paying such a high salary; be sure to incorporate the concept of marginal revenue product (MRP)into your answer.

If MPPX/PX > MPPY/PY,the firm should buy

If,at a particular wage rate in a competitive market,the quantity demanded of labor exceeds the quantity supplied of labor,then

Situation 27-2 -Refer to Situation 27-2.The output produced per $1 of cost in the Mexico.is

A firm's factor demand curve is also its _______________________ curve.

Which of the following can cause an increase in real wages?

"Screening" is the process by which

"Screening" is the process used by

If the demand for a product that labor produces is highly elastic,a small percentage increase in price will __________ quantity demanded of the product by a relatively __________ percentage,which,in turn,will __________ the demand for the labor that produces the product.

For a product price searcher (such as a monopolist),

The firm's factor demand curve is the

Elasticity of demand for labor is affected by the

The marginal factor cost (MFC)curve for a factor price taker is

Which of the following statements is false?

List and describe the four conditions necessary for everyone to receive equal pay in the long run.

Marginal factor cost (MFC)is

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, Controlled, and Relative

Supply, Demand, and Price: Applications

Macroeconomic Measurements: Prices and Unemployment

Macroeconomic Measurements: GDP and Real GDP

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability: A Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money, Banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, Technology, Ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, Oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Wages,Unions,and Labor

The Distribution of Income and Poverty

Interest, Rent, and Profit

Market Failure: Externalities, Public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case For and Against Government: Five Topics Considered

Stocks, Bonds, Futures, and Options

Agriculture: Problems, Policies, and Unintended Effects

Filters

If MPP_X/P_X > MPP_Y/P_Y,the firm should buy

If the demand for a product that labor produces is highly elastic,a small percentage increase in price will quantity demanded of the product by a relatively percentage,which,in turn,will __ the demand for the labor that produces the product.