Question 1

The market demand curve for labor is the horizontal summation of the firms' demand curves (MRP curves)for labor.

Accepted Answer

A) True 
 B)False

Question 2

For wage rates to be the same in various labor markets,four conditions must exist: (1)demand for every type of labor must be __________; (2)no special __________ aspects to any job; (3)all labor is ultimately __________ and can __________ be trained for different types of employment; and (4)all labor is mobile at __________.

Accepted Answer

A)  heterogeneous; money; homogeneous; costlessly; minimum cost 
B)  the same; nonpecuniary; homogeneous; costlessly; zero cost 
C)  high; training; homogeneous; costlessly; zero cost 
D)  high; nonpecuniary; heterogeneous; costlessly; minimum cost 
E)  none of the above 
A)  heterogeneous; money; homogeneous; costlessly; minimum cost 
B)  the same; nonpecuniary; homogeneous; costlessly; zero cost 
C)  high; training; homogeneous; costlessly; zero cost 
D)  high; nonpecuniary; heterogeneous; costlessly; minimum cost 
E)  none of the above

Question 3

Exhibit 27-l
  
-Refer to Exhibit 27-1.For this firm,the demand curve for factor X is

Accepted Answer

A)  downward-sloping. 
B)  upward-sloping. 
C)  vertical. 
D)  horizontal. 
E)  There is not enough information given to determine the shape of the factor X demand curve. 
A)  downward-sloping. 
B)  upward-sloping. 
C)  vertical. 
D)  horizontal. 
E)  There is not enough information given to determine the shape of the factor X demand curve.

Question 4

When a firm decides whether or not to relocate its production to another country,they must consider both the pay of the workers and the marginal productivity of the workers.

Accepted Answer

A) True 
 B)False

Question 5

Marginal revenue product (MRP)is the

Accepted Answer

A)  additional output generated by employing an additional factor unit. 
B)  additional profit generated by employing an additional factor unit. 
C)  additional revenue generated by employing an additional factor unit minus the additional cost. 
D)  additional revenue generated by employing an additional factor unit. 
E)  total revenue from the sale of a product divided by the total output of the product. 
A)  additional output generated by employing an additional factor unit. 
B)  additional profit generated by employing an additional factor unit. 
C)  additional revenue generated by employing an additional factor unit minus the additional cost. 
D)  additional revenue generated by employing an additional factor unit. 
E)  total revenue from the sale of a product divided by the total output of the product.

Question 6

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

Accepted Answer

A)  $12 
B)  $62.50 
C)  $144 
D)  $96 
A)  $12 
B)  $62.50 
C)  $144 
D)  $96

Question 7

Which of the following can change the wage rate in labor market A?

Accepted Answer

A)  An increase in the price of the product that employees in labor market A produce. 
B)  A negative change in the working conditions in labor market A. 
C)  A rise in the wage rate in labor market B. 
D)  a and c 
E)  a, b, and c 
A)  An increase in the price of the product that employees in labor market A produce. 
B)  A negative change in the working conditions in labor market A. 
C)  A rise in the wage rate in labor market B. 
D)  a and c 
E)  a, b, and c

Question 8

The elasticity of demand for a factor is lower,

Accepted Answer

A)  the higher the elasticity of demand for the product the factor helps to produce. 
B)  the higher the factor cost-total cost ratio. 
C)  the fewer substitutes for the factor. 
D)  a and c 
E)  all of the above 
A)  the higher the elasticity of demand for the product the factor helps to produce. 
B)  the higher the factor cost-total cost ratio. 
C)  the fewer substitutes for the factor. 
D)  a and c 
E)  all of the above

Question 9

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

Accepted Answer

A)  $270. 
B)  $20. 
C)  $330. 
D)  $120. 
A)  $270. 
B)  $20. 
C)  $330. 
D)  $120.

Question 10

For a factor price taker,the marginal factor cost curve

Accepted Answer

A)  and the factor supply curve both slope upward, but are not identical. 
B)  and the factor supply curve are identical and horizontal. 
C)  is horizontal, but the factor supply curve slopes upward. 
D)  slopes upward, but the factor supply curve is horizontal. 
E)  and the factor supply curve are identical and slope upward. 
A)  and the factor supply curve both slope upward, but are not identical. 
B)  and the factor supply curve are identical and horizontal. 
C)  is horizontal, but the factor supply curve slopes upward. 
D)  slopes upward, but the factor supply curve is horizontal. 
E)  and the factor supply curve are identical and slope upward.

Question 11

For a factor price taker,the demand for labor curve is horizontal at the going market wage.

Accepted Answer

A) True 
 B)False

Question 12

Exhibit 27-8
  
-Refer to Exhibit 27-8.The dollar amounts that go in blanks (C)and (D)are,respectively,

Accepted Answer

A)  $192 and $144. 
B)  $8 and $8. 
C)  $190 and $270. 
D)  $90 and $80. 
E)  There is not enough information to answer the question. 
A)  $192 and $144. 
B)  $8 and $8. 
C)  $190 and $270. 
D)  $90 and $80. 
E)  There is not enough information to answer the question.

Question 13

For a given labor market,an increase in the MPP of labor will shift the demand curve for labor rightward.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements is true?

Accepted Answer

A)  The higher the labor cost-total cost ratio, the lower the elasticity of demand for labor. 
B)  The lower the labor cost-total cost ratio, the higher the elasticity of demand for labor. 
C)  The more substitutes for labor, the higher the elasticity of demand for labor. 
D)  The fewer substitutes for labor, the higher the elasticity of demand for labor. 
E)  b and c 
A)  The higher the labor cost-total cost ratio, the lower the elasticity of demand for labor. 
B)  The lower the labor cost-total cost ratio, the higher the elasticity of demand for labor. 
C)  The more substitutes for labor, the higher the elasticity of demand for labor. 
D)  The fewer substitutes for labor, the higher the elasticity of demand for labor. 
E)  b and c

Question 15

A firm will maximize its profits by hiring factors up to the point at which

Accepted Answer

A)  MR = MC, if the firm is a monopolist, monopolistic competitor, or oligopolist. 
B)  P = MC, if the firm is a perfect competitor. 
C)  MRP = MFC. 
D)  VMP = MFC, if the firm is a price searcher (monopolist, etc.). 
E)  a and b 
A)  MR = MC, if the firm is a monopolist, monopolistic competitor, or oligopolist. 
B)  P = MC, if the firm is a perfect competitor. 
C)  MRP = MFC. 
D)  VMP = MFC, if the firm is a price searcher (monopolist, etc.). 
E)  a and b

Question 16

Which of the following will cause a firm's factor demand curve to shift to the left?

Accepted Answer

A)  a decrease in factor costs 
B)  an increase in factor costs 
C)  a decrease in marginal physical product 
D)  an increase in marginal physical product 
A)  a decrease in factor costs 
B)  an increase in factor costs 
C)  a decrease in marginal physical product 
D)  an increase in marginal physical product

Question 17

A perfectly competitive firm will maximize its profits by hiring factors up to the point at which

Accepted Answer

A)  MRP > MFC. 
B)  VMP > MFC. 
C)  MRP = MFC. 
D)  VMP = MFC. 
E)  c and d 
A)  MRP > MFC. 
B)  VMP > MFC. 
C)  MRP = MFC. 
D)  VMP = MFC. 
E)  c and d

Question 18

The lower the elasticity of demand for a product,

Accepted Answer

A)  the higher the ratio of labor costs to total costs. 
B)  the lower the ratio of labor costs to total costs. 
C)  the lower the elasticity of demand for the labor that produces the product. 
D)  the higher the elasticity of demand for the labor that produces the product. 
E)  none of the above 
A)  the higher the ratio of labor costs to total costs. 
B)  the lower the ratio of labor costs to total costs. 
C)  the lower the elasticity of demand for the labor that produces the product. 
D)  the higher the elasticity of demand for the labor that produces the product. 
E)  none of the above

Question 19

Which of the following assumptions is not likely to be met in the real world?

Accepted Answer

A)  Demand for labor is identical in every labor market. 
B)  Nonpecuniary factors in each job are the same. 
C)  All labor is homogeneous. 
D)  All labor has zero costs of mobility. 
E)  all of the above 
A)  Demand for labor is identical in every labor market. 
B)  Nonpecuniary factors in each job are the same. 
C)  All labor is homogeneous. 
D)  All labor has zero costs of mobility. 
E)  all of the above

Question 20

Exhibit 27-6
  
-Refer to Exhibit 27-6.Let AA represent the value marginal product curve of an oligopolist.Which of the following could represent his marginal revenue product curve?

Accepted Answer

A)  AA 
B)  BB 
C)  CC 
D)  any of the above 
A)  AA 
B)  BB 
C)  CC 
D)  any of the above

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

The market demand curve for labor is the horizontal summation of the firms' demand curves (MRP curves)for labor.

Exhibit 27-l -Refer to Exhibit 27-1.For this firm,the demand curve for factor X is

When a firm decides whether or not to relocate its production to another country,they must consider both the pay of the workers and the marginal productivity of the workers.

Marginal revenue product (MRP)is the

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

Which of the following can change the wage rate in labor market A?

The elasticity of demand for a factor is lower,

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

For a factor price taker,the marginal factor cost curve

For a factor price taker,the demand for labor curve is horizontal at the going market wage.

Exhibit 27-8 -Refer to Exhibit 27-8.The dollar amounts that go in blanks (C)and (D)are,respectively,

For a given labor market,an increase in the MPP of labor will shift the demand curve for labor rightward.

Which of the following statements is true?

A firm will maximize its profits by hiring factors up to the point at which

Which of the following will cause a firm's factor demand curve to shift to the left?

A perfectly competitive firm will maximize its profits by hiring factors up to the point at which

The lower the elasticity of demand for a product,

Which of the following assumptions is not likely to be met in the real world?

Exhibit 27-6 -Refer to Exhibit 27-6.Let AA represent the value marginal product curve of an oligopolist.Which of the following could represent his marginal revenue product curve?

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

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