Question 1

Marginal revenue product is equal to marginal revenue multiplied by

Accepted Answer

A) average physical product. 
B) marginal physical product. 
C) average total cost. 
D) marginal cost. 
A) average physical product. 
B) marginal physical product. 
C) average total cost. 
D) marginal cost.

Question 2

Situation 26-1
  
-Refer to Situation 26-1. If good X is produced in the U.S. the output per $1 of cost would be ___________________ than if good X were produced in Mexico, thus it would be best to produce good X in

Accepted Answer

A) higher; Mexico. 
B) lower; Mexico. 
C) higher; the United States. 
D) lower; the United States. 
A) higher; Mexico. 
B) lower; Mexico. 
C) higher; the United States. 
D) lower; the United States.

Question 3

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) workers' abilities and skills 
D) product demand 
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) workers' abilities and skills 
D) product demand 
E) none of the above; i.e., all of the factors affect wages

Question 4

Firm X is a monopolistic competitive firm and a factor price taker. For this firm at the profit-maximizing factor quantity,

Accepted Answer

A) VMP = MRP > MFC = factor price. B) VMP> MRP = MFC > factor price. C) VMP > MRP = MFC = factor price. D) VMP < MRP = MFC = factor price. A) VMP = MRP > MFC = factor price. B) VMP> MRP = MFC > factor price. C) VMP > MRP = MFC = factor price. D) VMP < MRP = MFC = factor price.

Question 5

Suppose a sailboat factory and a fishing boat factory exist in the same town. Employees at both factories have the same skills and are initially paid the same wage rate. If the sailboat manufacturer increases the hourly wage paid to his employees, then the

Accepted Answer

A) demand for sailboats will increase, and the supply will decrease. 
B) quantity supplied of labor at the sailboat factory will increase. 
C) supply of labor at the fishing boat factory will increase. 
D) b and c 
E) a and c 
A) demand for sailboats will increase, and the supply will decrease. 
B) quantity supplied of labor at the sailboat factory will increase. 
C) supply of labor at the fishing boat factory will increase. 
D) b and c 
E) a and c

Question 6

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 7

A factor price taker is a firm that

Accepted Answer

A) can sell as many units of its good as it wants without affecting price. 
B) sells fewer units of its good at higher prices than lower prices. 
C) can buy all of a factor it wants at the equilibrium price. 
D) drives up factor price if it buys an additional factor unit. 
E) none of the above 
A) can sell as many units of its good as it wants without affecting price. 
B) sells fewer units of its good at higher prices than lower prices. 
C) can buy all of a factor it wants at the equilibrium price. 
D) drives up factor price if it buys an additional factor unit. 
E) none of the above

Question 8

Exhibit 26-5
   ​
-Refer to Exhibit 26-5. The marginal revenue product of the fourth unit of labor is

Accepted Answer

A) $200. 
B) $1,800. 
C) $1,000. 
D) $5. 
A) $200. 
B) $1,800. 
C) $1,000. 
D) $5.

Question 9

Alex Rodriguez was the highest played baseball player in 2012, earning about $32 million playing for the New York Yankees. Explain the economic justification for the owners paying such a high salary; be sure to incorporate the concept of marginal revenue product (MRP) into your answer.

Accepted Answer

When a professional athlete is paid a ve

Question 10

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 11

Situation 26-1
  
-Refer to Situation 26-1. 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 12

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 13

The firm's factor demand curve is the

Accepted Answer

A) MRP curve if the firm is a price taker (perfectly competitive firm). 
B) MRP curve if the firm is a price searcher (monopolist, monopolistic competitor, oligopolist). 
C) VMP curve if the firm is a price taker (perfectly competitive firm). 
D) VMP curve if the firm is a price searcher (monopolist, monopolistic competitor, oligopolist). 
E) a, b, and c 
A) MRP curve if the firm is a price taker (perfectly competitive firm). 
B) MRP curve if the firm is a price searcher (monopolist, monopolistic competitor, oligopolist). 
C) VMP curve if the firm is a price taker (perfectly competitive firm). 
D) VMP curve if the firm is a price searcher (monopolist, monopolistic competitor, oligopolist). 
E) a, b, and c

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

To minimize cost, a firm should hire two factors, X and Y, until

Accepted Answer

A) MPPX/PX = MPPY/PY. 
B) MPPX = MPPY. 
C) MPPX x PX = MPPY x PY. 
D) MRPX/PX = MRPY/PY. 
E) MRPX x PX = MRPY x PY. 
A) MPPX/PX = MPPY/PY. 
B) MPPX = MPPY. 
C) MPPX x PX = MPPY x PY. 
D) MRPX/PX = MRPY/PY. 
E) MRPX x PX = MRPY x PY.

Question 16

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 17

If a perfectly competitive firm is a factor price taker, at the profit- maximizing factor quantity

Accepted Answer

A) VMP = MRP. 
B) MRP = MFC. 
C) MFC = factor price. 
D) both a and b 
E) all of the above 
A) VMP = MRP. 
B) MRP = MFC. 
C) MFC = factor price. 
D) both a and b 
E) all of the above

Question 18

Exhibit 26-2
​
  
-Refer to Exhibit 26-2. What factor quantity should the firm purchase?

Accepted Answer

A) Q1 
B) Q2 
C) Q1 + Q2 
D) Q3 
E) Q3 - Q1 
A) Q1 
B) Q2 
C) Q1 + Q2 
D) Q3 
E) Q3 - Q1

Question 19

Exhibit 26-1
   ​
-Refer to Exhibit 26-1. The data show that marginal revenue is __________ price, thus we are dealing with a(n) __________ competitive firm.

Accepted Answer

A) greater than; perfectly 
B) equal to; imperfectly 
C) equal to; perfectly 
D) less than; perfectly 
A) greater than; perfectly 
B) equal to; imperfectly 
C) equal to; perfectly 
D) less than; perfectly

Question 20

One way to calculate marginal revenue product is

Accepted Answer

A) MR x MPP. 
B) MPP/MR. 
C) MR + MPP. 
D) MPP - MR. 
E) none of the above 
A) MR x MPP. 
B) MPP/MR. 
C) MR + MPP. 
D) MPP - MR. 
E) none of the above

Exam 26: Factor Markets With Emphasis on the Labor Market

Marginal revenue product is equal to marginal revenue multiplied by

Situation 26-1 -Refer to Situation 26-1. If good X is produced in the U.S. the output per $1 of cost would be ___________________ than if good X were produced in Mexico, thus it would be best to produce good X in

Which of the following does not affect wages?

Firm X is a monopolistic competitive firm and a factor price taker. For this firm at the profit-maximizing factor quantity,

Suppose a sailboat factory and a fishing boat factory exist in the same town. Employees at both factories have the same skills and are initially paid the same wage rate. If the sailboat manufacturer increases the hourly wage paid to his employees, then the

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.

A factor price taker is a firm that

Exhibit 26-5 ​ -Refer to Exhibit 26-5. The marginal revenue product of the fourth unit of labor is

Alex Rodriguez was the highest played baseball player in 2012, earning about $32 million playing for the New York Yankees. Explain the economic justification for the owners paying such a high salary; be sure to incorporate the concept of marginal revenue product (MRP) into your answer.

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

Situation 26-1 -Refer to Situation 26-1. The output produced per $1 of cost in the U.S. is

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

The firm's factor demand curve is the

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

To minimize cost, a firm should hire two factors, X and Y, until

For a perfectly competitive firm,

If a perfectly competitive firm is a factor price taker, at the profit- maximizing factor quantity

Exhibit 26-2 ​ -Refer to Exhibit 26-2. What factor quantity should the firm purchase?

Exhibit 26-1 ​ -Refer to Exhibit 26-1. The data show that marginal revenue is __________ price, thus we are dealing with a(n) __________ competitive firm.

One way to calculate marginal revenue product is

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Exhibit 26-5 -Refer to Exhibit 26-5. The marginal revenue product of the fourth unit of labor is

Exhibit 26-2 -Refer to Exhibit 26-2. What factor quantity should the firm purchase?

Exhibit 26-1 -Refer to Exhibit 26-1. The data show that marginal revenue is price, thus we are dealing with a(n) competitive firm.