Question 1

Which of the following will lead to a relatively inelastic industry demand for labor?

Accepted Answer

A) An increase in the use of the fixed input 
B) An increase in the wage rate 
C) A relatively inelastic demand for the output 
D) A reduction in the price of output 
A) An increase in the use of the fixed input 
B) An increase in the wage rate 
C) A relatively inelastic demand for the output 
D) A reduction in the price of output C

Question 2

Suppose several industries compete for the available supply of a particular input.In a multi-industry market like this,which of the following statements about the input supply curve facing a single industry will be true?

Accepted Answer

A) Each industry's input supply curve is an equal proportion of the total market supply of the input. 
B) The vertical summation of the industry input supply curves gives the market supply curve for the input. 
C) The smaller the share of the total input employed by the industry,the more elastic its input supply curve. 
D) The input supply curve for a single industry in a multi-industry input market is perfectly elastic over all levels of employment of the input. 
A) Each industry's input supply curve is an equal proportion of the total market supply of the input. 
B) The vertical summation of the industry input supply curves gives the market supply curve for the input. 
C) The smaller the share of the total input employed by the industry,the more elastic its input supply curve. 
D) The input supply curve for a single industry in a multi-industry input market is perfectly elastic over all levels of employment of the input. C

Question 3

Suppose the marginal value product curve of labor is drawn with wage on the vertical axis and quantity of labor on the horizontal axis.With an increase in the employment of other inputs,the marginal value product curve of labor will _____.

Accepted Answer

A) shift upward 
B) shift downward 
C) not change 
D) become horizontal 
A) shift upward 
B) shift downward 
C) not change 
D) become horizontal A

Question 4

Suppose a competitive firm produces 100 units of X for a price of $10 a unit.The firm employs labor such that the marginal product of labor is 20.The wage paid for one unit of labor is $60.Given that capital is kept fixed,the firm _____.

Accepted Answer

A) is in equilibrium 
B) is suffering an economic loss 
C) should increase production 
D) should reduce output 
A) is in equilibrium 
B) is suffering an economic loss 
C) should increase production 
D) should reduce output

Question 5

The following table shows the total number of pizzas produced by 7 workers.
Table 16-1 $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Number of } \
\text { workers }
\end{array} & \begin{array} { c } 
\text { Total number of pizzas } \
\text { produced per day }
\end{array} \
\hline 0 & 0 \
\hline 1 & 6 \
\hline 2 & 13 \
\hline 3 & 18 \
\hline 4 & 21 \
\hline 5 & 23 \
\hline 6 & 22 \
\hline 7 & 20 \
\hline
\end{array}$$
-Refer to Table 16-1.If the pizza industry is competitive and the price of a pizza is $10,then which of the following is true?

Accepted Answer

A) The marginal value product of the third worker is $50. 
B) The marginal value product of the fifth worker is $10. 
C) The marginal product of the fourth worker is 21 pizzas. 
D) The marginal product of the second worker is 6 pizzas. 
A) The marginal value product of the third worker is $50. 
B) The marginal value product of the fifth worker is $10. 
C) The marginal product of the fourth worker is 21 pizzas. 
D) The marginal product of the second worker is 6 pizzas.

Question 6

In Figure 16-1.The move from point A to point B represents the _____ of an input price change.

Accepted Answer

A) substitution effect 
B) output effect 
C) income effect 
D) effect of diminishing returns 
A) substitution effect 
B) output effect 
C) income effect 
D) effect of diminishing returns

Question 7

The monopsonist's marginal input cost is greater than its average input cost because:

Accepted Answer

A) the firm must increase the price it is willing to pay,to increase employment of an input. 
B) the monopsonist does not have discretion over the price of the input. 
C) the marginal revenue product of labor increases as the number of workers hired increases. 
D) the monopsonist faces a downward-sloping input demand curve. 
A) the firm must increase the price it is willing to pay,to increase employment of an input. 
B) the monopsonist does not have discretion over the price of the input. 
C) the marginal revenue product of labor increases as the number of workers hired increases. 
D) the monopsonist faces a downward-sloping input demand curve.

Question 8

Consider a firm's isocost line where labor is measured on the horizontal axis and capital on the vertical axis.If everything else is unchanged,an increase in the price of capital would:

Accepted Answer

A) decrease the horizontal intercept of the isocost line. 
B) shift the isocost line outward away from the origin. 
C) shift the isocost line inward toward the origin. 
D) decrease the vertical intercept of the isocost line. 
A) decrease the horizontal intercept of the isocost line. 
B) shift the isocost line outward away from the origin. 
C) shift the isocost line inward toward the origin. 
D) decrease the vertical intercept of the isocost line.

Question 9

The following table shows the number of bread loaves that can be produced per hour at various levels of labor use.The bakery is a perfectly competitive firm.
Table 16-2
 $$\begin{array} { | c | c | } 
\hline \text { Labor } & \text { Total output } \
\hline 1 & 5 \
\hline 2 & 16 \
\hline 3 & 30 \
\hline 4 & 40 \
\hline 5 & 45 \
\hline 6 & 48 \
\hline 7 & 49 \
\hline
\end{array}$$
-Refer to Table 16-2.If the price of bread is $2 per loaf and the wage rate is $20 per hour,how many workers will the profit maximizing firm hire?

Accepted Answer

A) 3 
B) 4 
C) 5 
D) 6 
A) 3 
B) 4 
C) 5 
D) 6

Question 10

Consider a firm's isocost line where labor is measured on the horizontal axis and capital on the vertical axis.If everything else is unchanged,a fall in the price of labor would:

Accepted Answer

A) increase the horizontal intercept of the isocost line. 
B) shift the isocost line outward away from the origin. 
C) shift the isocost line inward toward the origin. 
D) increase the vertical intercept of the isocost line. 
A) increase the horizontal intercept of the isocost line. 
B) shift the isocost line outward away from the origin. 
C) shift the isocost line inward toward the origin. 
D) increase the vertical intercept of the isocost line.

Question 11

When other inputs are held fixed,the output market monopolist's demand curve for an input:

Accepted Answer

A) is parallel to the marginal value product curve for that input. 
B) is obtained by multiplying the marginal product of that input by marginal revenue. 
C) is the same as the demand curve for an input by a competitive firm. 
D) equals the marginal value product curve for that input. 
A) is parallel to the marginal value product curve for that input. 
B) is obtained by multiplying the marginal product of that input by marginal revenue. 
C) is the same as the demand curve for an input by a competitive firm. 
D) equals the marginal value product curve for that input.

Question 12

Given the law of diminishing marginal returns,the marginal value product of labor curve for a competitive firm _____,when other inputs are fixed.

Accepted Answer

A) will be upward-sloping 
B) coincides with the firm's average revenue curve 
C) is horizontal at the price level 
D) is the same as the firm's demand curve for labor 
A) will be upward-sloping 
B) coincides with the firm's average revenue curve 
C) is horizontal at the price level 
D) is the same as the firm's demand curve for labor

Question 13

Which of the following would be a consequence of a fall in the price of the final product in a competitive industry?

Accepted Answer

A) Each firm's labor demand curve will shift downward. 
B) The marginal value product of labor is higher for each firm. 
C) The marginal cost curve for each firm will shift outward away from the origin. 
D) The employment of labor in the industry will increase. 
A) Each firm's labor demand curve will shift downward. 
B) The marginal value product of labor is higher for each firm. 
C) The marginal cost curve for each firm will shift outward away from the origin. 
D) The employment of labor in the industry will increase.

Question 14

The industry demand for an input is called derived demand because:

Accepted Answer

A) the demand for the input is derived from the demand for the final product. 
B) the industry's input demand curve is the same as the firm's input demand curve. 
C) the demand for the input is derived from the supply of other inputs. 
D) the industry's input demand curve coincides with the marginal product curve of the input. 
A) the demand for the input is derived from the demand for the final product. 
B) the industry's input demand curve is the same as the firm's input demand curve. 
C) the demand for the input is derived from the supply of other inputs. 
D) the industry's input demand curve coincides with the marginal product curve of the input.

Question 15

Suppose that a firm that produces widgets employs welders as the labor input for production.The demand for welders is:

Accepted Answer

A) derived from the total industry output of widgets. 
B) represented by the marginal value product curve if the firm is monopolist in the output market. 
C) derived from the demand curve for widgets faced by the firm. 
D) represented by the marginal revenue product curve if the firm is competitive. 
A) derived from the total industry output of widgets. 
B) represented by the marginal value product curve if the firm is monopolist in the output market. 
C) derived from the demand curve for widgets faced by the firm. 
D) represented by the marginal revenue product curve if the firm is competitive.

Question 16

For a competitive industry,the market input demand curve for labor is:

Accepted Answer

A) the same as the individual firm's input demand curve. 
B) obtained by vertically aggregating the individual firms' input demand curves. 
C) the horizontal summation of the various industry demand curves for the input. 
D) more inelastic the higher the substitutability between inputs. 
A) the same as the individual firm's input demand curve. 
B) obtained by vertically aggregating the individual firms' input demand curves. 
C) the horizontal summation of the various industry demand curves for the input. 
D) more inelastic the higher the substitutability between inputs.

Question 17

When the input supply curve confronting an individual firm is the same as the market supply of the input,one can conclude that:

Accepted Answer

A) the firm is a monopsony in the input market. 
B) the firm is one of many buyers of the input. 
C) the firm does not have any monopoly power in the input market. 
D) the input is used in many different industries. 
A) the firm is a monopsony in the input market. 
B) the firm is one of many buyers of the input. 
C) the firm does not have any monopoly power in the input market. 
D) the input is used in many different industries.

Question 18

Refer to Figure 16-1.The move from point B to point C represents the _____ of an input price change.

Accepted Answer

A) substitution effect 
B) output effect 
C) income effect 
D) effect of diminishing returns 
A) substitution effect 
B) output effect 
C) income effect 
D) effect of diminishing returns

Question 19

Given the same demand and cost functions,which of the following is true of a monopsony input market as compared to a competitive input market?

Accepted Answer

A) The employment of inputs is lower in a monopsony market 
B) The employment of inputs is the same in both markets. 
C) The price paid for inputs is higher in a monopsony market. 
D) The price paid for inputs is the same in both markets. 
A) The employment of inputs is lower in a monopsony market 
B) The employment of inputs is the same in both markets. 
C) The price paid for inputs is higher in a monopsony market. 
D) The price paid for inputs is the same in both markets.

Question 20

For which of the following is the supply curve of labor likely to be the most inelastic?

Accepted Answer

A) All industries in the economy 
B) A single industry 
C) An individual firm 
D) A monopolist 
A) All industries in the economy 
B) A single industry 
C) An individual firm 
D) A monopolist

Which of the following will lead to a relatively inelastic industry demand for labor?

Suppose several industries compete for the available supply of a particular input.In a multi-industry market like this,which of the following statements about the input supply curve facing a single industry will be true?

Suppose the marginal value product curve of labor is drawn with wage on the vertical axis and quantity of labor on the horizontal axis.With an increase in the employment of other inputs,the marginal value product curve of labor will _____.

Suppose a competitive firm produces 100 units of X for a price of $10 a unit.The firm employs labor such that the marginal product of labor is 20.The wage paid for one unit of labor is $60.Given that capital is kept fixed,the firm _____.

In Figure 16-1.The move from point A to point B represents the _____ of an input price change.

The monopsonist's marginal input cost is greater than its average input cost because:

Consider a firm's isocost line where labor is measured on the horizontal axis and capital on the vertical axis.If everything else is unchanged,an increase in the price of capital would:

Consider a firm's isocost line where labor is measured on the horizontal axis and capital on the vertical axis.If everything else is unchanged,a fall in the price of labor would:

When other inputs are held fixed,the output market monopolist's demand curve for an input:

Given the law of diminishing marginal returns,the marginal value product of labor curve for a competitive firm _____,when other inputs are fixed.

Which of the following would be a consequence of a fall in the price of the final product in a competitive industry?

The industry demand for an input is called derived demand because:

Suppose that a firm that produces widgets employs welders as the labor input for production.The demand for welders is:

For a competitive industry,the market input demand curve for labor is:

When the input supply curve confronting an individual firm is the same as the market supply of the input,one can conclude that:

Refer to Figure 16-1.The move from point B to point C represents the _____ of an input price change.

Given the same demand and cost functions,which of the following is true of a monopsony input market as compared to a competitive input market?

For which of the following is the supply curve of labor likely to be the most inelastic?

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters

Exam 16: Employment and Pricing of Inputs

Which of the following will lead to a relatively inelastic industry demand for labor?

Suppose several industries compete for the available supply of a particular input.In a multi-industry market like this,which of the following statements about the input supply curve facing a single industry will be true?

Suppose the marginal value product curve of labor is drawn with wage on the vertical axis and quantity of labor on the horizontal axis.With an increase in the employment of other inputs,the marginal value product curve of labor will _____.

Suppose a competitive firm produces 100 units of X for a price of $10 a unit.The firm employs labor such that the marginal product of labor is 20.The wage paid for one unit of labor is $60.Given that capital is kept fixed,the firm _____.

In Figure 16-1.The move from point A to point B represents the _____ of an input price change.

The monopsonist's marginal input cost is greater than its average input cost because:

Consider a firm's isocost line where labor is measured on the horizontal axis and capital on the vertical axis.If everything else is unchanged,an increase in the price of capital would:

Consider a firm's isocost line where labor is measured on the horizontal axis and capital on the vertical axis.If everything else is unchanged,a fall in the price of labor would:

When other inputs are held fixed,the output market monopolist's demand curve for an input:

Given the law of diminishing marginal returns,the marginal value product of labor curve for a competitive firm _____,when other inputs are fixed.

Which of the following would be a consequence of a fall in the price of the final product in a competitive industry?

The industry demand for an input is called derived demand because:

Suppose that a firm that produces widgets employs welders as the labor input for production.The demand for welders is:

For a competitive industry,the market input demand curve for labor is:

When the input supply curve confronting an individual firm is the same as the market supply of the input,one can conclude that:

Refer to Figure 16-1.The move from point B to point C represents the _____ of an input price change.

Given the same demand and cost functions,which of the following is true of a monopsony input market as compared to a competitive input market?

For which of the following is the supply curve of labor likely to be the most inelastic?

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters