Question 1

According to the marginal productivity theory, a perfectly competitive firm that is a factor price taker pays its factors

Accepted Answer

A) their MRP = VMP. 
B) the product"s price. 
C) their MPP. 
D) the product's average total cost. 
A) their MRP = VMP. 
B) the product"s price. 
C) their MPP. 
D) the product's average total cost.

Question 2

Assume the following conditions hold: (1)the demand for every type of labor is the same, (2)there are no special nonpecuniary aspects to any job, (3)all labor is ultimately homogeneous and can costlessly be trained for different types of employment, (4)all labor is mobile at zero cost. Given these conditions,

Accepted Answer

A) wage rates will be the same in most labor markets. 
B) the demand for labor will be less in some labor markets than in others. 
C) wage rates will be the same in all labor markets. 
D) wage rates will be the same in very few labor markets. 
A) wage rates will be the same in most labor markets. 
B) the demand for labor will be less in some labor markets than in others. 
C) wage rates will be the same in all labor markets. 
D) wage rates will be the same in very few labor markets.

Question 3

A decrease in the wage rate

Accepted Answer

A) shifts the supply curve of labor rightward. 
B) increases the quantity supplied of labor. 
C) shifts the supply curve of labor leftward. 
D) decreases the quantity supplied of labor. 
A) shifts the supply curve of labor rightward. 
B) increases the quantity supplied of labor. 
C) shifts the supply curve of labor leftward. 
D) decreases the quantity supplied of labor.

Question 4

Exhibit 26-6 ​
 
Refer to Exhibit 26-6. 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) There is not enough information provided to answer this question. 
A) AA 
B) BB 
C) CC 
D) There is not enough information provided to answer this question.

Question 5

Which of the following assumptions is 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 not the same. 
C) All labor is homogeneous. 
D) All labor has zero costs of mobility. 
A) Demand for labor is identical in every labor market. 
B) Nonpecuniary factors in each job are not the same. 
C) All labor is homogeneous. 
D) All labor has zero costs of mobility.

Question 6

Exhibit 26-7 ​
 
           Market A                                Market B
Refer to Exhibit 26-7. The exhibit shows two markets in which labor of identical skills is employed. Assume that both markets are in equilibrium with Q1 and Q2 quantities of labor employed at the respective prices of $4 and $6 per unit. If labor is costlessly mobile between the markets, which of the following pairs of shifts of the respective labor supply curves is to be expected?

Accepted Answer

A) S1 to S5 and S2 to S6 
B) S1 to S5 and S2 to S4 
C) S1 to S3 and S2 to S6 
D) S1 to S3 and S2 to S4 
A) S1 to S5 and S2 to S6 
B) S1 to S5 and S2 to S4 
C) S1 to S3 and S2 to S6 
D) S1 to S3 and S2 to S4

Question 7

"Screening" is the process by which

Accepted Answer

A) wages tend to be equalized as workers move from one labor market to another. 
B) firms calculate the point of MRP = MFC. 
C) firms try to increase the probability of hiring good employees. 
D) discrimination is claimed to be an "information problem." 
A) wages tend to be equalized as workers move from one labor market to another. 
B) firms calculate the point of MRP = MFC. 
C) firms try to increase the probability of hiring good employees. 
D) discrimination is claimed to be an "information problem."

Question 8

The market demand curve for labor is

Accepted Answer

A) the horizontal summation of the firms' demand curves for labor, derived exactly the same way the product market demand curve is derived from the consumers' demand curves. 
B) the vertical summation of the firms' demand curves for labor. 
C) any one firm's demand curve labor multiplied horizontally by the number of firms in the labor market. 
D) not the horizontal summation of the firms' demand curves for labor because higher wage rates result in a higher price for the goods produced. 
A) the horizontal summation of the firms' demand curves for labor, derived exactly the same way the product market demand curve is derived from the consumers' demand curves. 
B) the vertical summation of the firms' demand curves for labor. 
C) any one firm's demand curve labor multiplied horizontally by the number of firms in the labor market. 
D) not the horizontal summation of the firms' demand curves for labor because higher wage rates result in a higher price for the goods produced.

Question 9

Consider two labor markets, A and B. Wages in labor market A rise. This could be due to

Accepted Answer

A) decreasing wages in labor market B. 
B) an increase in the negative nonpecuniary aspects of working in labor market A. 
C) an increase in the number of people who can do the work that is done in labor market A. 
D) a decrease in the demand for the product that employees in labor market A produce. 
A) decreasing wages in labor market B. 
B) an increase in the negative nonpecuniary aspects of working in labor market A. 
C) an increase in the number of people who can do the work that is done in labor market A. 
D) a decrease in the demand for the product that employees in labor market A produce.

Question 10

The MPP of labor divided by its (labor's)price is greater than the MPP of capital divided by its (capital's)price. Costs can be minimized by

Accepted Answer

A) buying more capital and less labor. 
B) buying more labor and less capital. 
C) maintaining the current MPP\P ratios. 
D) buying twice as much labor as capital. 
A) buying more capital and less labor. 
B) buying more labor and less capital. 
C) maintaining the current MPP\P ratios. 
D) buying twice as much labor as capital.

Question 11

If a monopolist is a factor price taker, at the profit-maximizing factor quantity

Accepted Answer

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

Question 12

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

Question 13

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

Question 14

The addition to total cost that results from employing one additional unit of a resource is called

Accepted Answer

A) average factor cost. 
B) marginal factor cost. 
C) average total cost. 
D) marginal cost. 
A) average factor cost. 
B) marginal factor cost. 
C) average total cost. 
D) marginal cost.

Question 15

The supply of labor in labor market X is a function of (or depends upon)

Accepted Answer

A) wage rates in other labor markets. 
B) the marginal physical product of workers in all other labor markets. 
C) the price of the product that is produced by workers in labor market X. 
D) the marginal physical product of workers in labor market X. 
A) wage rates in other labor markets. 
B) the marginal physical product of workers in all other labor markets. 
C) the price of the product that is produced by workers in labor market X. 
D) the marginal physical product of workers in labor market X.

Question 16

If MRP = VMP = MFC = wages, then the firm is

Accepted Answer

A) selling its product in a perfectly competitive market and is hiring its labor in a perfectly competitive labor market. 
B) selling its product in a perfectly competitive market but is not hiring its labor in a perfectly competitive labor market. 
C) not selling its product in a perfectly competitive market but is hiring its labor in a perfectly competitive labor market. 
D) neither selling its product in a perfectly competitive market nor hiring its labor in a perfectly competitive labor market. 
A) selling its product in a perfectly competitive market and is hiring its labor in a perfectly competitive labor market. 
B) selling its product in a perfectly competitive market but is not hiring its labor in a perfectly competitive labor market. 
C) not selling its product in a perfectly competitive market but is hiring its labor in a perfectly competitive labor market. 
D) neither selling its product in a perfectly competitive market nor hiring its labor in a perfectly competitive labor market.

Question 17

The marginal productivity theory states that

Accepted Answer

A) as variable inputs are added to a fixed quantity of other inputs eventually the additional output produced by each additional variable input will decrease. 
B) inputs will be used most efficiently when the additional output gained from each type of input is exactly the same. 
C) firms in perfectly competitive product and factor markets will pay factors their marginal revenue products. 
D) marginally productive inputs (that is, inputs that are not particularly productive)will not be heavily utilized. 
A) as variable inputs are added to a fixed quantity of other inputs eventually the additional output produced by each additional variable input will decrease. 
B) inputs will be used most efficiently when the additional output gained from each type of input is exactly the same. 
C) firms in perfectly competitive product and factor markets will pay factors their marginal revenue products. 
D) marginally productive inputs (that is, inputs that are not particularly productive)will not be heavily utilized.

Question 18

Which of the following statements is false ?

Accepted Answer

A) There are no special nonpecuniary aspects to any job. 
B) Nonpecuniary aspects of a job refer to the nonmoney aspects of a job. 
C) A change in the wage rate can change the quantity demanded and quantity supplied of labor. 
D) A change in the supply of labor can affect the wage rate. 
A) There are no special nonpecuniary aspects to any job. 
B) Nonpecuniary aspects of a job refer to the nonmoney aspects of a job. 
C) A change in the wage rate can change the quantity demanded and quantity supplied of labor. 
D) A change in the supply of labor can affect the wage rate.

Question 19

Exhibit 26-5   Refer to Exhibit 26-5. The data illustrate that the firm in question is a

Accepted Answer

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

Question 20

If for a given individual, between a wage rate of $20 and $25 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; upward sloping 
C) substitution; income; downward sloping 
D) income; substitution; vertical 
E) ​income; substitution; upward sloping 
A) substitution; income; vertical 
B) substitution; income; upward sloping 
C) substitution; income; downward sloping 
D) income; substitution; vertical 
E) ​income; substitution; upward sloping

Exam 13: Factor Markets: With Emphasis on the Labor Market

According to the marginal productivity theory, a perfectly competitive firm that is a factor price taker pays its factors

A decrease in the wage rate

Exhibit 26-6 ​ Refer to Exhibit 26-6. Let AA represent the value marginal product curve of an oligopolist. Which of the following could represent his marginal revenue product curve?

Which of the following assumptions is likely to be met in the real world?

"Screening" is the process by which

The market demand curve for labor is

Consider two labor markets, A and B. Wages in labor market A rise. This could be due to

The MPP of labor divided by its (labor's)price is greater than the MPP of capital divided by its (capital's)price. Costs can be minimized by

If a monopolist is a factor price taker, at the profit-maximizing factor quantity

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

Marginal revenue product is equal to marginal revenue multiplied by

The addition to total cost that results from employing one additional unit of a resource is called

The supply of labor in labor market X is a function of (or depends upon)

If MRP = VMP = MFC = wages, then the firm is

The marginal productivity theory states that

Which of the following statements is false ?

Exhibit 26-5 Refer to Exhibit 26-5. The data illustrate that the firm in question is a

If for a given individual, between a wage rate of $20 and $25 the ____________________ effect outweighs the ________________ effect, the individual's supply curve of labor curve between those two wages will be _________________.

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, Controlled, and Relative

Supply, Demand, and Price: Applications

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, Union, 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 26-6 Refer to Exhibit 26-6. Let AA represent the value marginal product curve of an oligopolist. Which of the following could represent his marginal revenue product curve?

If for a given individual, between a wage rate of $20 and $25 the ____ effect outweighs the effect, the individual's supply curve of labor curve between those two wages will be _.