Question 1

Which of the following does not affect wages?

Accepted Answer

A)  number of persons who can do a particular job 
B)  degree of effort employees exert while on the job 
C)  own abilities and skills 
D)  product price 
E)  none of the above; i.e., all of the factors affect wages 
A)  number of persons who can do a particular job 
B)  degree of effort employees exert while on the job 
C)  own abilities and skills 
D)  product price 
E)  none of the above; i.e., all of the factors affect wages

Question 2

Exhibit 27-3
  
-Refer to Exhibit 27-3.The firm must be a

Accepted Answer

A)  price taker in the product market. 
B)  price searcher in the product market. 
C)  price taker in the factor market. 
D)  price searcher in the factor market. 
E)  a and c 
A)  price taker in the product market. 
B)  price searcher in the product market. 
C)  price taker in the factor market. 
D)  price searcher in the factor market. 
E)  a and c

Question 3

Exhibit 27-5
  
-Refer to Exhibit 27-5.The value of marginal product (VMP)of the third unit of labor equals

Accepted Answer

A)  $70. 
B)  $420. 
C)  $300. 
D)  $700. 
E)  $105. 
A)  $70. 
B)  $420. 
C)  $300. 
D)  $700. 
E)  $105.

Question 4

Which of the following is false?

Accepted Answer

A)  The value marginal product is a measure of the value that each factor unit adds to the firm's product. 
B)  For a monopolist, value marginal product equals marginal revenue product. 
C)  A change in the price of the product labor produces or a change in the marginal physical product of labor (reflect in a shift in the MPP curve) will shift the demand curve for labor. 
D)  For a perfectly competitive firm, value marginal product equals marginal revenue product. 
A)  The value marginal product is a measure of the value that each factor unit adds to the firm's product. 
B)  For a monopolist, value marginal product equals marginal revenue product. 
C)  A change in the price of the product labor produces or a change in the marginal physical product of labor (reflect in a shift in the MPP curve) will shift the demand curve for labor. 
D)  For a perfectly competitive firm, value marginal product equals marginal revenue product.

Question 5

Exhibit 27-2
  
-Refer to Exhibit 27-2.What type of firm are we dealing with?

Accepted Answer

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

Question 6

Which of the following is false?

Accepted Answer

A)  A firm minimizes costs by buying factors in the combination at which the MPP-to-price ratio for each is the same. 
B)  Marginal productivity theory states that firms in competitive or perfect product and factor markets pay factors their marginal revenue products. 
C)  Marginal factor cost equals the wage rate for a factor price taker. 
D)  The lower the elasticity of demand for the product labor produces, the higher the elasticity of demand for labor. 
A)  A firm minimizes costs by buying factors in the combination at which the MPP-to-price ratio for each is the same. 
B)  Marginal productivity theory states that firms in competitive or perfect product and factor markets pay factors their marginal revenue products. 
C)  Marginal factor cost equals the wage rate for a factor price taker. 
D)  The lower the elasticity of demand for the product labor produces, the higher the elasticity of demand for labor.

Question 7

Exhibit 27-8
  
-Refer to Exhibit 27-8.The marginal physical product of the second and third units of factor X,respectively [blanks (A)and (B)],are,

Accepted Answer

A)  19 and 20. 
B)  4.58 and 4.07. 
C)  10 and 11. 
D)  6 and 3. 
E)  none of the above 
A)  19 and 20. 
B)  4.58 and 4.07. 
C)  10 and 11. 
D)  6 and 3. 
E)  none of the above

Question 8

Marginal revenue product is equal to marginal revenue multiplied by

Accepted Answer

A)  average fixed cost. 
B)  marginal physical cost. 
C)  marginal physical revenue. 
D)  average total cost. 
E)  none of the above 
A)  average fixed cost. 
B)  marginal physical cost. 
C)  marginal physical revenue. 
D)  average total cost. 
E)  none of the above

Question 9

When a perfectly competitive firm (that sells its good for $18 per unit)hires 1 unit of factor X it produces 35 units of output and when it hires 2 units of factor X it produces 55 units of output.Marginal revenue product of the second unit of factor X is equal to

Accepted Answer

A)  $20. 
B)  $530. 
C)  $265. 
D)  $360. 
E)  none of the above 
A)  $20. 
B)  $530. 
C)  $265. 
D)  $360. 
E)  none of the above

Question 10

Which of the following statements is true?

Accepted Answer

A)  A person who chooses to work at a job that pays $40,000 a year instead of a job that pays $80,000 a year is considered (by economists) to be irrational. 
B)  The wage rate paid in one labor market can affect the supply of labor in another labor market. 
C)  The wage rate paid in one labor market can affect (albeit indirectly) the wage rate paid in another labor market. 
D)  The demand for every type of labor is always the same. 
E)  b and c 
A)  A person who chooses to work at a job that pays $40,000 a year instead of a job that pays $80,000 a year is considered (by economists) to be irrational. 
B)  The wage rate paid in one labor market can affect the supply of labor in another labor market. 
C)  The wage rate paid in one labor market can affect (albeit indirectly) the wage rate paid in another labor market. 
D)  The demand for every type of labor is always the same. 
E)  b and c

Question 11

Exhibit 27-l
  
-Refer to Exhibit 27-l.What dollar value goes in blank (A)?

Accepted Answer

A)  $120 
B)  $96 
C)  $48 
D)  $35 
A)  $120 
B)  $96 
C)  $48 
D)  $35

Question 12

If there are two factors used in producing a good,the least-cost rule specifies that costs have been minimized when

Accepted Answer

A)  the MPP of the first factor divided by its price is equal to the MPP of the second factor divided by its price. 
B)  the MPP of the first factor multiplied by its price is equal to the MPP of the second factor minus its price. 
C)  the MPP of the first factor divided by the price of the second factor is equal to the MPP of the second factor divided by the price of the first factor. 
D)  the MPP of the second factor minus the MPP of the first factor is equal to the price of the second factor minus the price of the first factor. 
E)  none of the above 
A)  the MPP of the first factor divided by its price is equal to the MPP of the second factor divided by its price. 
B)  the MPP of the first factor multiplied by its price is equal to the MPP of the second factor minus its price. 
C)  the MPP of the first factor divided by the price of the second factor is equal to the MPP of the second factor divided by the price of the first factor. 
D)  the MPP of the second factor minus the MPP of the first factor is equal to the price of the second factor minus the price of the first factor. 
E)  none of the above

Question 13

A measure of the value that one unit of a factor adds to the firm's output is value __________ product.

Accepted Answer

A)  average 
B)  marginal 
C)  variable 
D)  fixed 
A)  average 
B)  marginal 
C)  variable 
D)  fixed

Question 14

For a perfectly competitive firm,

Accepted Answer

A) VMP > MRP. B) VMP < MRP. C) VMP = MRP. D) There is not enough information to answer the question. A) VMP > MRP. B) VMP < MRP. C) VMP = MRP. D) There is not enough information to answer the question.

Question 15

Value marginal product (VMP)equals

Accepted Answer

A)  P x MPP. 
B)  P/MPP. 
C)  P x MFC. 
D)  b and c 
E)  none of the above 
A)  P x MPP. 
B)  P/MPP. 
C)  P x MFC. 
D)  b and c 
E)  none of the above

Question 16

If the MPP of the last unit of labor hired equals 6 and the MPP of the last unit of capital hired equals 8,and the price of labor is $4 per unit and the price of capital is $4 per unit,then the firm

Accepted Answer

A)  is minimizing its costs with this combination of factors. 
B)  is maximizing its profits with this combination of factors. 
C)  should hire more labor and less capital in order to minimize its costs. 
D)  should hire more capital and less labor in order to minimize its costs. 
E)  a and b 
A)  is minimizing its costs with this combination of factors. 
B)  is maximizing its profits with this combination of factors. 
C)  should hire more labor and less capital in order to minimize its costs. 
D)  should hire more capital and less labor in order to minimize its costs. 
E)  a and b

Question 17

If all the individuals had the same innate and learned skills and abilities,applied the same degree of effort on the job,and worked with the same amount and quality of other factors of production,

Accepted Answer

A)  all labor supply curves would be horizontal. 
B)  all labor demand curves would be horizontal. 
C)  wages in different markets would differ less than they currently do. 
D)  the quantity of labor supplied would decrease in all markets. 
E)  the demand curve for capital would be upward sloping. 
A)  all labor supply curves would be horizontal. 
B)  all labor demand curves would be horizontal. 
C)  wages in different markets would differ less than they currently do. 
D)  the quantity of labor supplied would decrease in all markets. 
E)  the demand curve for capital would be upward sloping.

Question 18

Marginal factor cost (MFC)is

Accepted Answer

A)  the additional cost incurred by employing an additional factor unit. 
B)  the additional output generated by employing an additional factor unit. 
C)  equal to factor price for a factor price taker. 
D)  a and c 
E)  b and c 
A)  the additional cost incurred by employing an additional factor unit. 
B)  the additional output generated by employing an additional factor unit. 
C)  equal to factor price for a factor price taker. 
D)  a and c 
E)  b and c

Question 19

Which of the following statements is true?

Accepted Answer

A)  Employers are not concerned with determining a potential employee's productivity because they know that with experience the employee's output will increase. 
B)  Employers are not concerned with determining a potential employee's productivity because they realize that they cannot accurately determine it beforehand. 
C)  Employers are not concerned with determining a potential employee's productivity because they know that they can train the employee after he's hired. 
D)  Employers are concerned with determining a potential employee's productivity due to the high costs of training new employees. 
E)  a, b, and c 
A)  Employers are not concerned with determining a potential employee's productivity because they know that with experience the employee's output will increase. 
B)  Employers are not concerned with determining a potential employee's productivity because they realize that they cannot accurately determine it beforehand. 
C)  Employers are not concerned with determining a potential employee's productivity because they know that they can train the employee after he's hired. 
D)  Employers are concerned with determining a potential employee's productivity due to the high costs of training new employees. 
E)  a, b, and c

Question 20

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

Accepted Answer

A)  $600. 
B)  $60. 
C)  $100. 
D)  $9. 
A)  $600. 
B)  $60. 
C)  $100. 
D)  $9.

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

Which of the following does not affect wages?

Exhibit 27-3 -Refer to Exhibit 27-3.The firm must be a

Exhibit 27-5 -Refer to Exhibit 27-5.The value of marginal product (VMP)of the third unit of labor equals

Which of the following is false?

Exhibit 27-2 -Refer to Exhibit 27-2.What type of firm are we dealing with?

Which of the following is false?

Exhibit 27-8 -Refer to Exhibit 27-8.The marginal physical product of the second and third units of factor X,respectively [blanks (A)and (B)],are,

Marginal revenue product is equal to marginal revenue multiplied by

When a perfectly competitive firm (that sells its good for $18 per unit)hires 1 unit of factor X it produces 35 units of output and when it hires 2 units of factor X it produces 55 units of output.Marginal revenue product of the second unit of factor X is equal to

Which of the following statements is true?

Exhibit 27-l -Refer to Exhibit 27-l.What dollar value goes in blank (A)?

If there are two factors used in producing a good,the least-cost rule specifies that costs have been minimized when

A measure of the value that one unit of a factor adds to the firm's output is value __________ product.

For a perfectly competitive firm,

Value marginal product (VMP)equals

If the MPP of the last unit of labor hired equals 6 and the MPP of the last unit of capital hired equals 8,and the price of labor is $4 per unit and the price of capital is $4 per unit,then the firm

If all the individuals had the same innate and learned skills and abilities,applied the same degree of effort on the job,and worked with the same amount and quality of other factors of production,

Marginal factor cost (MFC)is

Which of the following statements is true?

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

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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

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Globalization and International Impacts on the Economy

The Economic Case For and Against Government: Five Topics Considered

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Agriculture: Problems, Policies, and Unintended Effects

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