Question 1

A product price searcher (monopolist, oligopolist, or monopolistic competitive firm)will hire more factor units as long as

Accepted Answer

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

Question 2

A perfectly competitive firm will continue to hire more factor units as long as

Accepted Answer

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

Question 3

The percentage change in the quantity demanded of labor divided by the percentage change in the wage rate is called the

Accepted Answer

A) marginal revenue product of labor. 
B) elasticity of demand for labor. 
C) elasticity of supply of labor. 
D) marginal factor cost of labor. 
A) marginal revenue product of labor. 
B) elasticity of demand for labor. 
C) elasticity of supply of labor. 
D) marginal factor cost of labor.

Question 4

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

Question 5

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.). 
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.).

Question 6

When deciding whether a person is "worth" a certain salary, economists will want to compare a person's __________ with his or her wage or salary.

Accepted Answer

A) marginal physical product 
B) marginal revenue product 
C) marginal factor cost 
D) derived demand 
A) marginal physical product 
B) marginal revenue product 
C) marginal factor cost 
D) derived demand

Question 7

Marginal productivity theory implies that a worker will be paid a wage (W)such that

Accepted Answer

A) W = MRP, but W < VMP. 
B) W < MRP, but W = VMP. 
C) W = MRP and W = VMP. 
D) W = MFC, but W < MRP. 
E) W < MRP, but W < VMP. 
A) W = MRP, but W < VMP. 
B) W < MRP, but W = VMP. 
C) W = MRP and W = VMP. 
D) W = MFC, but W < MRP. 
E) W < MRP, but W < VMP.

Question 8

Suppose it has just been discovered that working for long periods of time at a computer terminal causes eye strain, poor posture, and stress. We would expect, ceteris paribus , that the supply curve of computer programmers would shift __________ and the wage rate paid to programmers would __________.

Accepted Answer

A) rightward; decrease 
B) rightward; increase 
C) leftward; decrease 
D) leftward; increase 
A) rightward; decrease 
B) rightward; increase 
C) leftward; decrease 
D) leftward; increase

Question 9

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 this equilibrium persists in the long run, an economist would suspect that

Accepted Answer

A) nonpecuniary benefits are higher in market A. 
B) nonpecuniary benefits are higher in market B. 
C) there is discrimination in market A. 
D) there is no cost of moving across markets. 
A) nonpecuniary benefits are higher in market A. 
B) nonpecuniary benefits are higher in market B. 
C) there is discrimination in market A. 
D) there is no cost of moving across markets.

Question 10

Which of the following was not  included in the list of determinants of elasticity of demand for labor presented in the textbook?

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) price elasticity of supply for capital. 
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) price elasticity of supply for capital.

Question 11

One way to calculate marginal revenue product is

Accepted Answer

A) MR x MPP. 
B) MPP\MR. 
C) MR + MPP. 
D) MPP - MR. 
A) MR x MPP. 
B) MPP\MR. 
C) MR + MPP. 
D) MPP - MR.

Question 12

If for a firm MRP > MFC, then the firm

Accepted Answer

A) is maximizing profits and should continue producing its current output. 
B) is minimizing factor costs and therefore is maximizing profits. 
C) should produce more output by increasing the quantity of factors employed. 
D) should produce less output by decreasing the quantity of factors employed. 
A) is maximizing profits and should continue producing its current output. 
B) is minimizing factor costs and therefore is maximizing profits. 
C) should produce more output by increasing the quantity of factors employed. 
D) should produce less output by decreasing the quantity of factors employed.

Question 13

Given a 10 percent increase in wages, firm A cuts back on labor more than firm B. It follows that, ceteris paribus ,

Accepted Answer

A) firm A likely has a higher labor cost-total cost ratio than firm B. 
B) firm B likely has a higher labor cost-total cost ratio than firm A. 
C) the elasticity of demand for labor is likely higher for firm B than firm A. 
D) firm B likely has higher fixed costs than firm A. 
E) firm A likely has higher per-unit costs than firm B. 
A) firm A likely has a higher labor cost-total cost ratio than firm B. 
B) firm B likely has a higher labor cost-total cost ratio than firm A. 
C) the elasticity of demand for labor is likely higher for firm B than firm A. 
D) firm B likely has higher fixed costs than firm A. 
E) firm A likely has higher per-unit costs than firm B.

Question 14

Exhibit 26-1   Refer to Exhibit 26-l. What dollar value goes in blank (B)?

Accepted Answer

A) $36 
B) $17 
C) $144 
D) $136 
A) $36 
B) $17 
C) $144 
D) $136

Question 15

Exhibit 26-4 ​
 
Refer to Exhibit 26-4. How many units of labor should this firm employ?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 16

Exhibit 26-5   Refer to Exhibit 26-5. Assume the firm is a factor price taker and that the price of a unit of labor is constant at $1,200. The firm should hire __________ of labor.

Accepted Answer

A) one unit 
B) two units 
C) three units 
D) four units 
E) five units 
A) one unit 
B) two units 
C) three units 
D) four units 
E) five units

Question 17

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 18

The MPP\Price ratio for labor is 25\$5 and the MPP\Price ratio for capital is 30\$6. A firm that employs both labor and capital will likely

Accepted Answer

A) buy more labor and less capital because labor is cheaper. 
B) buy more capital and less labor because capital is more productive. 
C) maintain the current combination of capital and labor. 
D) buy more capital and less labor because capital is cheaper. 
E) There is not enough information to answer the question. 
A) buy more labor and less capital because labor is cheaper. 
B) buy more capital and less labor because capital is more productive. 
C) maintain the current combination of capital and labor. 
D) buy more capital and less labor because capital is cheaper. 
E) There is not enough information to answer the question.

Question 19

Exhibit 26-1   Refer to Exhibit 26-1. What dollar value goes in blank (D)?

Accepted Answer

A) $6 
B) $28 
C) $46 
D) $18 
A) $6 
B) $28 
C) $46 
D) $18

Question 20

Which of the following is a reason why wage rates differ?

Accepted Answer

A) In the short run, demand conditions are the same in all labor markets. 
B) Some jobs have special nonpecuniary aspects. 
C) Labor is homogeneous. 
D) Products are homogeneous. 
A) In the short run, demand conditions are the same in all labor markets. 
B) Some jobs have special nonpecuniary aspects. 
C) Labor is homogeneous. 
D) Products are homogeneous.

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

A product price searcher (monopolist, oligopolist, or monopolistic competitive firm)will hire more factor units as long as

A perfectly competitive firm will continue to hire more factor units as long as

The percentage change in the quantity demanded of labor divided by the percentage change in the wage rate is called the

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

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

When deciding whether a person is "worth" a certain salary, economists will want to compare a person's __________ with his or her wage or salary.

Marginal productivity theory implies that a worker will be paid a wage (W)such that

Which of the following was not included in the list of determinants of elasticity of demand for labor presented in the textbook?

One way to calculate marginal revenue product is

If for a firm MRP > MFC, then the firm

Given a 10 percent increase in wages, firm A cuts back on labor more than firm B. It follows that, ceteris paribus ,

Exhibit 26-1 Refer to Exhibit 26-l. What dollar value goes in blank (B)?

Exhibit 26-4 ​ Refer to Exhibit 26-4. How many units of labor should this firm employ?

Exhibit 26-5 Refer to Exhibit 26-5. Assume the firm is a factor price taker and that the price of a unit of labor is constant at $1,200. The firm should hire __________ of labor.

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

The MPP\Price ratio for labor is 25\$5 and the MPP\Price ratio for capital is 30\$6. A firm that employs both labor and capital will likely

Exhibit 26-1 Refer to Exhibit 26-1. What dollar value goes in blank (D)?

Which of the following is a reason why wage rates differ?

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 26-4 Refer to Exhibit 26-4. How many units of labor should this firm employ?