Question 1

Exhibit 27-5
  
-Refer to Exhibit 27-5.The marginal revenue product of the fourth unit of labor is

Accepted Answer

A)  $60. 
B)  $180. 
C)  $360. 
D)  $6. 
A)  $60. 
B)  $180. 
C)  $360. 
D)  $6.

Question 2

A market demand curve for labor shows the quantities of labor demanded by

Accepted Answer

A)  a particular firm in a specific labor market. 
B)  all the firms in a specific labor market. 
C)  a particular firm in various labor markets. 
D)  all the firms in various labor markets. 
A)  a particular firm in a specific labor market. 
B)  all the firms in a specific labor market. 
C)  a particular firm in various labor markets. 
D)  all the firms in various labor markets.

Question 3

Describe how the substitution effect and the income effect influence the slope of an individual's supply curve of labor.

Accepted Answer

According to the substitution effect,as

Question 4

What is the relationship between the elasticity of demand for a product and the elasticity of demand for labor (that is used in producing the product)?

Accepted Answer

A)  The higher the price of the product, the higher the elasticity of demand for labor. 
B)  The higher the price of the product, the lower the elasticity of demand for labor. 
C)  The higher the elasticity of demand for the product, the lower the elasticity of demand for the product. 
D)  The lower the elasticity of demand for the product, the lower the elasticity of demand for the product. 
E)  There is not enough information to answer the question. 
A)  The higher the price of the product, the higher the elasticity of demand for labor. 
B)  The higher the price of the product, the lower the elasticity of demand for labor. 
C)  The higher the elasticity of demand for the product, the lower the elasticity of demand for the product. 
D)  The lower the elasticity of demand for the product, the lower the elasticity of demand for the product. 
E)  There is not enough information to answer the question.

Question 5

Value marginal product (VMP)is

Accepted Answer

A)  a measure of additional revenue minus additional cost as a result of additional output. 
B)  the price of the product multiplied by the additional output resulting from an additional factor unit employed. 
C)  the marginal revenue of the product divided by the additional output resulting from an additional factor unit employed. 
D)  the value of an additional unit of product as measured in terms of additional factor cost. 
E)  the total value of the total output of a firm divided by the total quantity of output. 
A)  a measure of additional revenue minus additional cost as a result of additional output. 
B)  the price of the product multiplied by the additional output resulting from an additional factor unit employed. 
C)  the marginal revenue of the product divided by the additional output resulting from an additional factor unit employed. 
D)  the value of an additional unit of product as measured in terms of additional factor cost. 
E)  the total value of the total output of a firm divided by the total quantity of output.

Question 6

If MPPX/PX Y/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

Consider two labor markets,C and D.Wages in labor market D fall.This could be due to

Accepted Answer

A)  the marginal revenue curve in the product market (that employees in labor market D supply with goods) shifts to the left. 
B)  increase in the marginal physical product of the employees in labor market D. 
C)  increase in the price and marginal revenue of the product that employees in labor market D produce. 
D)  b and c 
E)  a, b, and c 
A)  the marginal revenue curve in the product market (that employees in labor market D supply with goods) shifts to the left. 
B)  increase in the marginal physical product of the employees in labor market D. 
C)  increase in the price and marginal revenue of the product that employees in labor market D produce. 
D)  b and c 
E)  a, b, and c

Question 8

When a prospective employer asks a graduating college senior for evidence of his grade point average (GPA),the employer is

Accepted Answer

A)  discriminating against the graduating senior. 
B)  screening the graduating senior. 
C)  probably just trying to intimidate the graduating senior. 
D)  b and c 
A)  discriminating against the graduating senior. 
B)  screening the graduating senior. 
C)  probably just trying to intimidate the graduating senior. 
D)  b and c

Question 9

Marginal revenue product is

Accepted Answer

A)  the additional cost of employing a factor. 
B)  the additional revenue generated by employing an additional factor unit. 
C)  marginal revenue multiplied by price of the factor unit. 
D)  price of the good that is sold multiplied by unit cost. 
E)  none of the above 
A)  the additional cost of employing a factor. 
B)  the additional revenue generated by employing an additional factor unit. 
C)  marginal revenue multiplied by price of the factor unit. 
D)  price of the good that is sold multiplied by unit cost. 
E)  none of the above

Question 10

Exhibit 27-5
  
-Refer to Exhibit 27-5.Marginal physical product of the fourth unit of labor

Accepted Answer

A)  equals 60. 
B)  equals 40. 
C)  equals 24. 
D)  equals 310. 
E)  cannot be determined. 
A)  equals 60. 
B)  equals 40. 
C)  equals 24. 
D)  equals 310. 
E)  cannot be determined.

Question 11

Exhibit 27-5
  
-Refer to Exhibit 27-5.Assume that the firm is a factor price taker and that the price of a unit of labor is constant at $480.The firm should hire __________ of labor.

Accepted Answer

A)  one unit 
B)  two units 
C)  three units 
D)  four units 
E)  five units 
A)  one unit 
B)  two units 
C)  three units 
D)  four units 
E)  five units

Question 12

The supply of labor in labor market X is a function of (or depends upon)

Accepted Answer

A)  wage rates in other labor markets. 
B)  the marginal physical product of workers in any labor market. 
C)  the price of the product that is produced by workers in labor market X. 
D)  a and c 
A)  wage rates in other labor markets. 
B)  the marginal physical product of workers in any labor market. 
C)  the price of the product that is produced by workers in labor market X. 
D)  a and c

Question 13

Promoting from within should __________ be regarded as an act of discrimination because the information costs of inside versus outside employees are __________.

Accepted Answer

A)  always; the same 
B)  always; higher for the insiders 
C)  sometimes not; the same 
D)  sometimes not; higher for the outsiders 
A)  always; the same 
B)  always; higher for the insiders 
C)  sometimes not; the same 
D)  sometimes not; higher for the outsiders

Question 14

Exhibit 27-5
  
-Refer to Exhibit 27-5.Assume the firm is a factor price taker and that the price of a unit of labor is constant at $360.The firm should hire __________ of labor.

Accepted Answer

A)  one unit 
B)  two units 
C)  three units 
D)  four units 
E)  five units 
A)  one unit 
B)  two units 
C)  three units 
D)  four units 
E)  five units

Question 15

Exhibit 27-7
  
-Refer to Exhibit 27-7.The exhibit shows two markets in which labor of identical skills is employed.Assume that both markets are in equilibrium with Q1 and Q2 quantities of labor employed at the respective prices of $4 and $6 per unit.If labor is costlessly mobile between the markets,which of the following pairs of shifts of the respective labor supply curves is to be expected?

Accepted Answer

A)  S1 to S5 and S2 to S6 
B)  S1 to S5 and S2 to S4 
C)  S1 to S3 and S2 to S6 
D)  S1 to S3 and S2 to S4 
A)  S1 to S5 and S2 to S6 
B)  S1 to S5 and S2 to S4 
C)  S1 to S3 and S2 to S6 
D)  S1 to S3 and S2 to S4

Question 16

Marginal revenue product (MRP)is

Accepted Answer

A)  equal to marginal revenue multiplied by marginal physical product. 
B)  the additional revenue generated by employing an additional factor unit. 
C)  the additional output generated by employing an additional factor unit. 
D)  a and b 
E)  a and c 
A)  equal to marginal revenue multiplied by marginal physical product. 
B)  the additional revenue generated by employing an additional factor unit. 
C)  the additional output generated by employing an additional factor unit. 
D)  a and b 
E)  a and c

Question 17

According to the substitution effect,as the wage rate rises the monetary reward from working increases and workers will want to work more.

Accepted Answer

A) True 
 B)False

Question 18

The MPP/Price ratio for labor is 25/$5 and the MPP/Price ratio for capital is 30/$6.A firm that employs both labor and capital will likely

Accepted Answer

A)  buy more labor and less capital because labor is cheaper. 
B)  buy more capital and less labor because capital is more productive. 
C)  maintain the current combination of capital and labor. 
D)  buy more capital and less labor because capital is cheaper. 
E)  There is not enough information to answer the question. 
A)  buy more labor and less capital because labor is cheaper. 
B)  buy more capital and less labor because capital is more productive. 
C)  maintain the current combination of capital and labor. 
D)  buy more capital and less labor because capital is cheaper. 
E)  There is not enough information to answer the question.

Question 19

Which of the following is true?

Accepted Answer

A)  The market demand for labor is the horizontal "addition" of the firms' demand curves for labor. 
B)  The elasticity of demand for labor is the percentage change in quantity demanded of labor divided by the percentage change in wage rate. 
C)  The factor demand curve will shift to the right if the price rises for the good the factor goes to produce. 
D)  b and c 
E)  a, b, and c 
A)  The market demand for labor is the horizontal "addition" of the firms' demand curves for labor. 
B)  The elasticity of demand for labor is the percentage change in quantity demanded of labor divided by the percentage change in wage rate. 
C)  The factor demand curve will shift to the right if the price rises for the good the factor goes to produce. 
D)  b and c 
E)  a, b, and c

Question 20

Which of the following can bring about an increase in the demand for labor?

Accepted Answer

A)  an increase in the demand for the product that labor produces 
B)  an increase in the marginal physical product of labor 
C)  a decrease in the price of labor (wage rate) 
D)  a and b 
E)  a, b, and c 
A)  an increase in the demand for the product that labor produces 
B)  an increase in the marginal physical product of labor 
C)  a decrease in the price of labor (wage rate) 
D)  a and b 
E)  a, b, and c

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

Exhibit 27-5 -Refer to Exhibit 27-5.The marginal revenue product of the fourth unit of labor is

A market demand curve for labor shows the quantities of labor demanded by

Describe how the substitution effect and the income effect influence the slope of an individual's supply curve of labor.

What is the relationship between the elasticity of demand for a product and the elasticity of demand for labor (that is used in producing the product)?

Value marginal product (VMP)is

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

Consider two labor markets,C and D.Wages in labor market D fall.This could be due to

When a prospective employer asks a graduating college senior for evidence of his grade point average (GPA),the employer is

Marginal revenue product is

Exhibit 27-5 -Refer to Exhibit 27-5.Marginal physical product of the fourth unit of labor

Exhibit 27-5 -Refer to Exhibit 27-5.Assume that the firm is a factor price taker and that the price of a unit of labor is constant at $480.The firm should hire __________ of labor.

The supply of labor in labor market X is a function of (or depends upon)

Promoting from within should __________ be regarded as an act of discrimination because the information costs of inside versus outside employees are __________.

Exhibit 27-5 -Refer to Exhibit 27-5.Assume the firm is a factor price taker and that the price of a unit of labor is constant at $360.The firm should hire __________ of labor.

Marginal revenue product (MRP)is

According to the substitution effect,as the wage rate rises the monetary reward from working increases and workers will want to work more.

The MPP/Price ratio for labor is 25/$5 and the MPP/Price ratio for capital is 30/$6.A firm that employs both labor and capital will likely

Which of the following is true?

Which of the following can bring about an increase in the demand for labor?

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

Promoting from within should be regarded as an act of discrimination because the information costs of inside versus outside employees are .