Question 1

If the MRP of land is greater than its price, a firm should

Accepted Answer

A)  use more land. 
B)  use less land. 
C)  try to increase the productivity of land. 
D)  decrease the price it is willing to pay for land. 
A)  use more land. 
B)  use less land. 
C)  try to increase the productivity of land. 
D)  decrease the price it is willing to pay for land.

Question 2

If the marginal revenue product of land is less than its price, a firm should

Accepted Answer

A)  use more land. 
B)  use less land. 
C)  try to increase the productivity of land. 
D)  increase the price it is willing to pay for land. 
A)  use more land. 
B)  use less land. 
C)  try to increase the productivity of land. 
D)  increase the price it is willing to pay for land.

Question 3

Refer to the information provided in Figure 10.3 below to answer the question(s) that follow.   Figure 10.3
-Refer to Figure 10.3. The market wage is initially W0 and the firm is initially at Point A. Labor supply decreases from S0 to S1. If the firm does not change the amount of capital it employs, the firm will move to Point ________ to maximize profits.

Accepted Answer

A)  B 
B)  C 
C)  E 
D)  F 
A)  B 
B)  C 
C)  E 
D)  F

Question 4

If the supply of labor decreases, which of the following events will occur?

Accepted Answer

A)  The wage rate will fall and firms will increase employment up until the point where MRP equals the new wage rate. 
B)  The wage rate will fall and firms will decrease employment to the point where MRP equals the new wage rate. 
C)  The wage rate will increase and firms will decrease employment to the point where MRP equals the new wage rate. 
D)  The wage rate will increase and firms will increase employment up until the point where MRP equals the new wage rate. 
A)  The wage rate will fall and firms will increase employment up until the point where MRP equals the new wage rate. 
B)  The wage rate will fall and firms will decrease employment to the point where MRP equals the new wage rate. 
C)  The wage rate will increase and firms will decrease employment to the point where MRP equals the new wage rate. 
D)  The wage rate will increase and firms will increase employment up until the point where MRP equals the new wage rate.

Question 5

Refer to the information provided in Figure 10.4 below to answer the question(s) that follow.   Figure 10.4
-Refer to Figure 10.4. At a market wage rate of $15, firms will hire ________ units of labor.

Accepted Answer

A)  175 
B)  100 
C)  between 0 and 99 
D)  0 
A)  175 
B)  100 
C)  between 0 and 99 
D)  0

Question 6

If the price of the product produced by labor increases, the marginal revenue product of labor curve will

Accepted Answer

A)  be unaffected because productivity of labor has not changed. 
B)  shift to the left. 
C)  shift to the right. 
D)  become more elastic. 
A)  be unaffected because productivity of labor has not changed. 
B)  shift to the left. 
C)  shift to the right. 
D)  become more elastic.

Question 7

The marginal revenue product curve for labor is the demand curve for labor.

Accepted Answer

A) True 
 B)False

Question 8

The marginal revenue product of labor curve will always shift to the right if

Accepted Answer

A)  the wage rate rises. 
B)  product demand decreases and product price decreases. 
C)  product demand increases and product price increases. 
D)  the price of capital rises. 
A)  the wage rate rises. 
B)  product demand decreases and product price decreases. 
C)  product demand increases and product price increases. 
D)  the price of capital rises.

Question 9

The price of a good will be demand determined if

Accepted Answer

A)  the demand for the good is unit elastic. 
B)  the demand for the good is perfectly inelastic. 
C)  the supply of the good is perfectly elastic. 
D)  the supply of the good is perfectly inelastic. 
A)  the demand for the good is unit elastic. 
B)  the demand for the good is perfectly inelastic. 
C)  the supply of the good is perfectly elastic. 
D)  the supply of the good is perfectly inelastic.

Question 10

Refer to the information provided in Figure 10.2 below to answer the question(s) that follow.   Figure 10.2
-Refer to Figure 10.2. This firm's marginal cost curve has shifted from MC0 to MC1. A likely explanation for this is that

Accepted Answer

A)  the productivity of a variable input declined. 
B)  the price of a variable input decreased. 
C)  the demand for the firm's product decreased. 
D)  the supply of a variable input decreased. 
A)  the productivity of a variable input declined. 
B)  the price of a variable input decreased. 
C)  the demand for the firm's product decreased. 
D)  the supply of a variable input decreased.

Question 11

If a productʹs demand increases as its supply simultaneously decreases, the marginal revenue product curve will

Accepted Answer

A)  shift to the right. 
B)  shift to the left. 
C)  remain unchanged. 
D)  either shift to the left, shift to the right, or remain unchanged depending upon what happens to product price. 
A)  shift to the right. 
B)  shift to the left. 
C)  remain unchanged. 
D)  either shift to the left, shift to the right, or remain unchanged depending upon what happens to product price.

Question 12

A profit-maximizing firm will continue to employ land until

Accepted Answer

A)  MPLAND = PLAND. 
B)  MRPLAND = 0. 
C)  MRPLAND = MPLAND. 
D)  MRPLAND = PLAND. 
A)  MPLAND = PLAND. 
B)  MRPLAND = 0. 
C)  MRPLAND = MPLAND. 
D)  MRPLAND = PLAND.

Question 13

A technological change would cause movement along the demand curve for inputs.

Accepted Answer

A) True 
 B)False

Question 14

Firms will employ each input up to the point that its price equals its marginal revenue product.

Accepted Answer

A) True 
 B)False

Question 15

Refer to the information provided in Figure 10.3 below to answer the question(s) that follow.   Figure 10.3
-Refer to Figure 10.3. The market wage is initially W1 and the firm is initially at Point B. Labor supply increases from S1 to S0. The firmʹs MRPL curve will shift from MRPL at K2 to MRPL at K1 because

Accepted Answer

A)  the factor substitution effect will cause the firm to substitute capital for the lower-priced labor. 
B)  the supply of labor increased and therefore the productivity of labor increased. 
C)  the output effect led to ann increase in the demand for capital, which in turn increased the productivity of labor. 
D)  the firm is no longer maximizing profits. 
A)  the factor substitution effect will cause the firm to substitute capital for the lower-priced labor. 
B)  the supply of labor increased and therefore the productivity of labor increased. 
C)  the output effect led to ann increase in the demand for capital, which in turn increased the productivity of labor. 
D)  the firm is no longer maximizing profits.

Question 16

Because marginal revenue product reflects productivity, increases in productivity directly shift

Accepted Answer

A)  input supply curves to the left. 
B)  input demand curves to the left. 
C)  input supply curves to the right. 
D)  input demand curves to the right. 
A)  input supply curves to the left. 
B)  input demand curves to the left. 
C)  input supply curves to the right. 
D)  input demand curves to the right.

Question 17

An deterioration in technology will cause a marginal revenue product of labor curve to

Accepted Answer

A)  be unaffected because the productivity of labor has not changed. 
B)  shift to the left. 
C)  shift to the right 
D)  become more elastic. 
A)  be unaffected because the productivity of labor has not changed. 
B)  shift to the left. 
C)  shift to the right 
D)  become more elastic.

Question 18

Refer to the information provided in Figure 10.3 below to answer the question(s) that follow.   Figure 10.3
-Refer to Figure 10.3. If labor supply is given by S1 and the firm is using K1 units of capital, this firm should hire ________ units of labor to maximize profit.

Accepted Answer

A)  I0 
B)  I1 
C)  I2  
D)  I3  
A)  I0 
B)  I1 
C)  I2  
D)  I3

Question 19

The ________ is the additional revenue a firm earns by employing one additional unit of labor.

Accepted Answer

A)  marginal revenue product of labor 
B)  marginal labor cost 
C)  average labor revenue 
D)  per-worker net profit 
A)  marginal revenue product of labor 
B)  marginal labor cost 
C)  average labor revenue 
D)  per-worker net profit

Question 20

A firm will reduce its quantity of labor as long as the MRP of labor ________ the market wage rate.

Accepted Answer

A)  is greater than or equal to 
B)  is less than 
C)  is equal to 
D)  determines 
A)  is greater than or equal to 
B)  is less than 
C)  is equal to 
D)  determines

If the MRP of land is greater than its price, a firm should

If the marginal revenue product of land is less than its price, a firm should

If the supply of labor decreases, which of the following events will occur?

Refer to the information provided in Figure 10.4 below to answer the question(s) that follow. Figure 10.4 -Refer to Figure 10.4. At a market wage rate of $15, firms will hire ________ units of labor.

If the price of the product produced by labor increases, the marginal revenue product of labor curve will

The marginal revenue product curve for labor is the demand curve for labor.

The marginal revenue product of labor curve will always shift to the right if

The price of a good will be demand determined if

Refer to the information provided in Figure 10.2 below to answer the question(s) that follow. Figure 10.2 -Refer to Figure 10.2. This firm's marginal cost curve has shifted from MC₀ to MC₁. A likely explanation for this is that

If a productʹs demand increases as its supply simultaneously decreases, the marginal revenue product curve will

A profit-maximizing firm will continue to employ land until

A technological change would cause movement along the demand curve for inputs.

Firms will employ each input up to the point that its price equals its marginal revenue product.

Because marginal revenue product reflects productivity, increases in productivity directly shift

An deterioration in technology will cause a marginal revenue product of labor curve to

Refer to the information provided in Figure 10.3 below to answer the question(s) that follow. Figure 10.3 -Refer to Figure 10.3. If labor supply is given by S₁ and the firm is using K₁ units of capital, this firm should hire ________ units of labor to maximize profit.

The ________ is the additional revenue a firm earns by employing one additional unit of labor.

A firm will reduce its quantity of labor as long as the MRP of labor ________ the market wage rate.

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

Exam 10: Input Demand: the Labor and Land Markets

If the MRP of land is greater than its price, a firm should

If the marginal revenue product of land is less than its price, a firm should

If the supply of labor decreases, which of the following events will occur?

Refer to the information provided in Figure 10.4 below to answer the question(s) that follow. Figure 10.4 -Refer to Figure 10.4. At a market wage rate of $15, firms will hire ________ units of labor.

If the price of the product produced by labor increases, the marginal revenue product of labor curve will

The marginal revenue product curve for labor is the demand curve for labor.

The marginal revenue product of labor curve will always shift to the right if

The price of a good will be demand determined if

Refer to the information provided in Figure 10.2 below to answer the question(s) that follow. Figure 10.2 -Refer to Figure 10.2. This firm's marginal cost curve has shifted from MC0 to MC1. A likely explanation for this is that

If a productʹs demand increases as its supply simultaneously decreases, the marginal revenue product curve will

A profit-maximizing firm will continue to employ land until

A technological change would cause movement along the demand curve for inputs.

Firms will employ each input up to the point that its price equals its marginal revenue product.

Because marginal revenue product reflects productivity, increases in productivity directly shift

An deterioration in technology will cause a marginal revenue product of labor curve to

Refer to the information provided in Figure 10.3 below to answer the question(s) that follow. Figure 10.3 -Refer to Figure 10.3. If labor supply is given by S1 and the firm is using K1 units of capital, this firm should hire ________ units of labor to maximize profit.

The ________ is the additional revenue a firm earns by employing one additional unit of labor.

A firm will reduce its quantity of labor as long as the MRP of labor ________ the market wage rate.

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

Refer to the information provided in Figure 10.2 below to answer the question(s) that follow. Figure 10.2 -Refer to Figure 10.2. This firm's marginal cost curve has shifted from MC₀ to MC₁. A likely explanation for this is that

Refer to the information provided in Figure 10.3 below to answer the question(s) that follow. Figure 10.3 -Refer to Figure 10.3. If labor supply is given by S₁ and the firm is using K₁ units of capital, this firm should hire ________ units of labor to maximize profit.