Question 1

Exhibit 26-3
​
  
-Refer to Exhibit 26-3. The marginal factor cost (MFC) of the fourth unit of labor is

Accepted Answer

A) greater than $10 if the firm expects to hire the fourth worker. 
B) the same as the MFC of the first unit. 
C) less than the wage rate. 
D) equal to the wage rate. 
E) b and d 
A) greater than $10 if the firm expects to hire the fourth worker. 
B) the same as the MFC of the first unit. 
C) less than the wage rate. 
D) equal to the wage rate. 
E) b and d

Question 2

A price searcher (monopolist, monopolistic competitor, etc.) definitely faces

Accepted Answer

A) a perfectly elastic demand curve for the product it sells. 
B) a downward-sloping demand curve for the product it sells. 
C) a perfectly elastic supply curve of factors. 
D) an upward-sloping supply curve of factors. 
E) a perfectly inelastic demand curve for the product it sells. 
A) a perfectly elastic demand curve for the product it sells. 
B) a downward-sloping demand curve for the product it sells. 
C) a perfectly elastic supply curve of factors. 
D) an upward-sloping supply curve of factors. 
E) a perfectly inelastic demand curve for the product it sells.

Question 3

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 4

For a given firm, marginal factor cost is the same dollar amount no matter what quantity of a factor it purchases. For this firm,

Accepted Answer

A) VMP = MRP. 
B) VMP > MRP. 
C) MRP > VMP. 
D) MPP necessarily declines beginning with the first factor unit. 
E) none of the above 
A) VMP = MRP. 
B) VMP > MRP. 
C) MRP > VMP. 
D) MPP necessarily declines beginning with the first factor unit. 
E) none of the above

Question 5

The supply of labor in a particular labor market can change as a result of changes in wage rates in other labor markets.

Accepted Answer

A) True 
 B)False

Question 6

Applying the least-cost rule to two factors, a firm will

Accepted Answer

A) maximize profits at the output at which MRP = MFC. 
B) minimize costs when the MPP of factor A equals the MPP of factor B. 
C) minimize costs when the MRP of factor A equals the MRP of factor B. 
D) minimize costs when the MPP of factor A divided by the price of A equals the MPP of factor B divided by the price of B. 
A) maximize profits at the output at which MRP = MFC. 
B) minimize costs when the MPP of factor A equals the MPP of factor B. 
C) minimize costs when the MRP of factor A equals the MRP of factor B. 
D) minimize costs when the MPP of factor A divided by the price of A equals the MPP of factor B divided by the price of B.

Question 7

For a product price taker, VMP equals MR.

Accepted Answer

A) True 
 B)False

Question 8

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 9

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 10

The additional revenue generated by a firm by hiring one more unit of a factor of production is the

Accepted Answer

A) MFC. 
B) MC. 
C) MR. 
D) MRP. 
E) MPP. 
A) MFC. 
B) MC. 
C) MR. 
D) MRP. 
E) MPP.

Question 11

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 related 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 related labor market B. 
D) a and c 
E) a, b, and c

Question 12

A firm that is a price taker in a factor market faces a(n) __________ supply curve of factors.

Accepted Answer

A) upward-sloping 
B) horizontal 
C) downward-sloping 
D) vertical 
A) upward-sloping 
B) horizontal 
C) downward-sloping 
D) vertical

Question 13

Marginal productivity theory states that if a firm sells its product in a perfectly competitive product market it will necessarily pay its factors their VMP.

Accepted Answer

A) True 
 B)False

Question 14

Most economists believe that the supply curve of labor in the aggregate is extremely elastic.

Accepted Answer

A) True 
 B)False

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 for a given individual, between a wage rate of $30 and $35 the ____________________ effect outweighs the ________________ effect, the individual's supply curve of labor curve between those two wages will be _________________.

Accepted Answer

A) substitution; income; vertical 
B) substitution; income; downward sloping 
C) income; substitution; downward sloping 
D) income; substitution; vertical 
E) ​income; substitution; upward sloping 
A) substitution; income; vertical 
B) substitution; income; downward sloping 
C) income; substitution; downward sloping 
D) income; substitution; vertical 
E) ​income; substitution; upward sloping

Question 17

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 18

Exhibit 26-3
​
  
-Refer to Exhibit 26-3. 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 19

A firm obeys the least-cost rule for factors X and Y by equating

Accepted Answer

A) MRPx to MRPy. 
B) MPPx/Px to MPPy/Py. 
C) Px/MPPx to Py/MPPy. 
D) MFCx to MFCy. 
A) MRPx to MRPy. 
B) MPPx/Px to MPPy/Py. 
C) Px/MPPx to Py/MPPy. 
D) MFCx to MFCy.

Question 20

Elasticity of demand for labor is affected by the

Accepted Answer

A) price elasticity of demand for the product that labor produces. 
B) availability of substitute (nonlabor) factors. 
C) ratio of labor cost to total cost. 
D) all of the above 
A) price elasticity of demand for the product that labor produces. 
B) availability of substitute (nonlabor) factors. 
C) ratio of labor cost to total cost. 
D) all of the above

Exam 26: Factor Markets With Emphasis on the Labor Market

Exhibit 26-3 ​ -Refer to Exhibit 26-3. The marginal factor cost (MFC) of the fourth unit of labor is

A price searcher (monopolist, monopolistic competitor, etc.) definitely faces

Marginal revenue product is

For a given firm, marginal factor cost is the same dollar amount no matter what quantity of a factor it purchases. For this firm,

The supply of labor in a particular labor market can change as a result of changes in wage rates in other labor markets.

Applying the least-cost rule to two factors, a firm will

For a product price taker, VMP equals MR.

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

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

The additional revenue generated by a firm by hiring one more unit of a factor of production is the

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

A firm that is a price taker in a factor market faces a(n) __________ supply curve of factors.

Marginal productivity theory states that if a firm sells its product in a perfectly competitive product market it will necessarily pay its factors their VMP.

Most economists believe that the supply curve of labor in the aggregate is extremely elastic.

Value marginal product (VMP) equals

If for a given individual, between a wage rate of $30 and $35 the ____________________ effect outweighs the ________________ effect, the individual's supply curve of labor curve between those two wages will be _________________.

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

Exhibit 26-3 ​ -Refer to Exhibit 26-3. The firm must be a

A firm obeys the least-cost rule for factors X and Y by equating

Elasticity of demand for labor is affected by the

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand Theory

Prices Free Controlled and Relative

Supply Demand and Price Applications

Macroeconomic Measurements Part I Prices and Unemployment

Macroeconomic Measurements Part II 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

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice 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

The Economic Case for and Against Government Five Topics Considered

Stocks Bonds Futures and Options

Filters

Exhibit 26-3 -Refer to Exhibit 26-3. The marginal factor cost (MFC) of the fourth unit of labor is

If for a given individual, between a wage rate of $30 and $35 the ____ effect outweighs the effect, the individual's supply curve of labor curve between those two wages will be _.

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

Exhibit 26-3 -Refer to Exhibit 26-3. The firm must be a