Question 1

If,at a particular wage rate in a competitive market,the quantity supplied of labor exceeds the quantity demanded 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 high, the quantity supplied of workers will increase further, and the quantity demanded will decrease further. 
C)  some workers will begin to accept lower wages and, 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. 
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 high, the quantity supplied of workers will increase further, and the quantity demanded will decrease further. 
C)  some workers will begin to accept lower wages and, 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.

Question 2

Given an 8 percent increase in wages,firm A cuts back on labor more than firm B.It follows that,ceteris paribus,

Accepted Answer

A)  there are fewer substitutes for labor in firm B than A. 
B)  there are fewer substitutes for labor in firm A than B. 
C)  sunk costs are greater for firm A than B. 
D)  the demand for the product that firm A produces is less elastic than the product that firm B produces. 
E)  a and d 
A)  there are fewer substitutes for labor in firm B than A. 
B)  there are fewer substitutes for labor in firm A than B. 
C)  sunk costs are greater for firm A than B. 
D)  the demand for the product that firm A produces is less elastic than the product that firm B produces. 
E)  a and d

Question 3

According to the marginal productivity theory,a perfectly competitive firm that is a factor price taker pays its factors their

Accepted Answer

A)  MRP. 
B)  VMP. 
C)  MPP. 
D)  a and b 
E)  all of the above 
A)  MRP. 
B)  VMP. 
C)  MPP. 
D)  a and b 
E)  all of the above

Question 4

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

Accepted Answer

A)  0.80 units of good X. 
B)  1.25 units of good X. 
C)  180 units of good X. 
D)  3 units of good X. 
A)  0.80 units of good X. 
B)  1.25 units of good X. 
C)  180 units of good X. 
D)  3 units of good X.

Question 5

The term "derived demand" refers to the idea that a change in the

Accepted Answer

A)  demand for one good, say, tennis racquets, will affect the demand for related goods, say, tennis balls. 
B)  demand for a good is affected by the supply of that good. 
C)  demand for a good will affect the demand for the factors used to produce that good. 
D)  supply of a factor will affect the demand for that factor. 
A)  demand for one good, say, tennis racquets, will affect the demand for related goods, say, tennis balls. 
B)  demand for a good is affected by the supply of that good. 
C)  demand for a good will affect the demand for the factors used to produce that good. 
D)  supply of a factor will affect the demand for that factor.

Question 6

For a factor price taker,the factor supply curve is __________,whereas the market factor supply curve is __________.

Accepted Answer

A)  horizontal; vertical 
B)  vertical; horizontal 
C)  upward sloping; horizontal 
D)  horizontal; upward sloping 
E)  upward sloping; upward sloping 
A)  horizontal; vertical 
B)  vertical; horizontal 
C)  upward sloping; horizontal 
D)  horizontal; upward sloping 
E)  upward sloping; upward sloping

Question 7

A profit maximizing firm that is a price taker in both product and factor markets will hire a factor up to the point at which

Accepted Answer

A)  the last unit of the factor hired adds as much to costs as it does to revenues. 
B)  the value of marginal product equals the wage rate. 
C)  the marginal revenue product equals the wage rate. 
D)  all of the above 
E)  a and b 
A)  the last unit of the factor hired adds as much to costs as it does to revenues. 
B)  the value of marginal product equals the wage rate. 
C)  the marginal revenue product equals the wage rate. 
D)  all of the above 
E)  a and b

Question 8

For a given firm,marginal factor cost is the same dollar amount no matter what quantity of a factor it purchases.For this firm,

Accepted Answer

A)  VMP = MRP. 
B)  VMP > MRP. 
C)  MRP > VMP. 
D)  MPP necessarily declines beginning with the first factor unit. 
E)  none of the above 
A)  VMP = MRP. 
B)  VMP > MRP. 
C)  MRP > VMP. 
D)  MPP necessarily declines beginning with the first factor unit. 
E)  none of the above

Question 9

Firm A has a higher labor cost-total cost ratio than Firm B.If both firms employ the same type of labor,and the wage rate rises $1,then Firm A's product price will most likely ____________ than Firm B's product price.

Accepted Answer

A)  rise by more 
B)  fall by more 
C)  fall by less 
D)  rise by less 
A)  rise by more 
B)  fall by more 
C)  fall by less 
D)  rise by less

Question 10

The wage rate increases 15 percent,and the quantity demanded of labor falls by 25 percent.The absolute value of the elasticity of demand for labor is

Accepted Answer

A)  0.60. 
B)  1.67. 
C)  0.25. 
D)  5.00. 
E)  none of the above 
A)  0.60. 
B)  1.67. 
C)  0.25. 
D)  5.00. 
E)  none of the above

Question 11

The percentage change in the quantity demanded of labor divided by the percentage change in the wage rate is called the

Accepted Answer

A)  marginal revenue product of labor. 
B)  elasticity of demand for labor. 
C)  elasticity of supply of labor. 
D)  marginal factor cost of labor. 
A)  marginal revenue product of labor. 
B)  elasticity of demand for labor. 
C)  elasticity of supply of labor. 
D)  marginal factor cost of labor.

Question 12

Suppose a factor price taker purchases one unit of factor X for $10.At what price would it purchase the second unit,and what would marginal factor cost (MFC)equal?

Accepted Answer

A)  It would purchase the second unit for $10, and MFC equals $10. 
B)  There is not enough information to know what it would purchase the second unit for, and thus we do not know what MFC equals. 
C)  It would purchase the second unit for $10, but there is not enough information to know what MFC equals. 
D)  There is not enough information to know what it would purchase the second unit for, but MFC equals $10. 
A)  It would purchase the second unit for $10, and MFC equals $10. 
B)  There is not enough information to know what it would purchase the second unit for, and thus we do not know what MFC equals. 
C)  It would purchase the second unit for $10, but there is not enough information to know what MFC equals. 
D)  There is not enough information to know what it would purchase the second unit for, but MFC equals $10.

Question 13

Which of the following can change the supply of labor in,say,labor market A?

Accepted Answer

A)  a change in the wage rate in labor market A. 
B)  a change in the wage rate in, say, labor markets B or C. 
C)  a positive change in the overall pleasantness of working in labor market A. 
D)  a negative change in the working conditions in labor market A. 
E)  b, c, and d 
A)  a change in the wage rate in labor market A. 
B)  a change in the wage rate in, say, labor markets B or C. 
C)  a positive change in the overall pleasantness of working in labor market A. 
D)  a negative change in the working conditions in labor market A. 
E)  b, c, and d

Question 14

For a given firm,marginal factor cost is the same dollar amount no matter what quantity of a factor it purchases.This firm is a

Accepted Answer

A)  product price taker. 
B)  product price searcher. 
C)  factor price taker. 
D)  factor price searcher. 
E)  none of the above 
A)  product price taker. 
B)  product price searcher. 
C)  factor price taker. 
D)  factor price searcher. 
E)  none of the above

Question 15

A firm that is a price taker in a factor market faces a(n)__________ supply curve of factors.

Accepted Answer

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

Question 16

Why does the marginal revenue product (MRP)curve slope downward for a perfectly competitive firm?

Accepted Answer

A)  Because MRP = MR x MPP. After some point, as more of a factor is employed, the lower its MPP is; thus MRP declines. 
B)  Because MRP = MFC x MPP. After some point, as more of a factor is employed, the lower its MFC is; thus MRP declines. 
C)  Because MRP = MR x MPP. After some point, MR declines for a product price taker; thus, MRP declines. 
D)  Because MRP = MFC x MR. After some point, MFC and MR decline; thus, MRP declines. 
A)  Because MRP = MR x MPP. After some point, as more of a factor is employed, the lower its MPP is; thus MRP declines. 
B)  Because MRP = MFC x MPP. After some point, as more of a factor is employed, the lower its MFC is; thus MRP declines. 
C)  Because MRP = MR x MPP. After some point, MR declines for a product price taker; thus, MRP declines. 
D)  Because MRP = MFC x MR. After some point, MFC and MR decline; thus, MRP declines.

Question 17

Exhibit 27-4
  
-Refer to Exhibit 27-4.How many units of labor should this firm employ?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 18

Exhibit 27-5
  
-Refer to Exhibit 27-5.The data illustrate that the firm in question is a

Accepted Answer

A)  price searcher (monopolist, oligopolist, etc.). 
B)  price taker (perfectly competitive firm). 
C)  factor price searcher. 
D)  factor price taker. 
A)  price searcher (monopolist, oligopolist, etc.). 
B)  price taker (perfectly competitive firm). 
C)  factor price searcher. 
D)  factor price taker.

Question 19

The supply of labor in a particular labor market can change as a result of changes in wage rates in other labor markets.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is a reason why wage rates differ?

Accepted Answer

A)  In the short run, demand conditions are not the same in all labor markets. 
B)  Some jobs have special nonpecuniary aspects. 
C)  Labor is not homogeneous. 
D)  b and c 
E)  a, b, and c 
A)  In the short run, demand conditions are not the same in all labor markets. 
B)  Some jobs have special nonpecuniary aspects. 
C)  Labor is not homogeneous. 
D)  b and c 
E)  a, b, and c

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

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

Given an 8 percent increase in wages,firm A cuts back on labor more than firm B.It follows that,ceteris paribus,

According to the marginal productivity theory,a perfectly competitive firm that is a factor price taker pays its factors their

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

The term "derived demand" refers to the idea that a change in the

For a factor price taker,the factor supply curve is __________,whereas the market factor supply curve is __________.

A profit maximizing firm that is a price taker in both product and factor markets will hire a factor up to the point at which

For a given firm,marginal factor cost is the same dollar amount no matter what quantity of a factor it purchases.For this firm,

Firm A has a higher labor cost-total cost ratio than Firm B.If both firms employ the same type of labor,and the wage rate rises $1,then Firm A's product price will most likely ____________ than Firm B's product price.

The wage rate increases 15 percent,and the quantity demanded of labor falls by 25 percent.The absolute value of the elasticity of demand for labor is

The percentage change in the quantity demanded of labor divided by the percentage change in the wage rate is called the

Suppose a factor price taker purchases one unit of factor X for $10.At what price would it purchase the second unit,and what would marginal factor cost (MFC)equal?

Which of the following can change the supply of labor in,say,labor market A?

For a given firm,marginal factor cost is the same dollar amount no matter what quantity of a factor it purchases.This firm is a

A firm that is a price taker in a factor market faces a(n)__________ supply curve of factors.

Why does the marginal revenue product (MRP)curve slope downward for a perfectly competitive firm?

Exhibit 27-4 -Refer to Exhibit 27-4.How many units of labor should this firm employ?

Exhibit 27-5 -Refer to Exhibit 27-5.The data illustrate that the firm in question is a

The supply of labor in a particular labor market can change as a result of changes in wage rates in other labor markets.

Which of the following is a reason why wage rates differ?

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

For a factor price taker,the factor supply curve is ,whereas the market factor supply curve is .