Question 1

The following figure shows the isoquants,IQS1U1B11S1U1B0 and IQS1U1B12S1U1B0,for a competitive firm.
Figure 16-1  
-Refer to Figure 16-1.Which of the following is true at point C?

Accepted Answer

A) At point C,the marginal product of labor and capital is maximized. 
B) Point C identifies the level of output that gives the firm the highest marginal revenue. 
C) Point C identifies the least cost method of producing output Q1. 
D) Point C shows that the firm operates with constant returns to scale. 
A) At point C,the marginal product of labor and capital is maximized. 
B) Point C identifies the level of output that gives the firm the highest marginal revenue. 
C) Point C identifies the least cost method of producing output Q1. 
D) Point C shows that the firm operates with constant returns to scale.

Question 2

Which of the following statements is true of the industry demand for labor?

Accepted Answer

A) The lesser the elasticity of the final product,the higher the elasticity of the industry labor demand curve. 
B) The longer the time period allowed for adjustment,the lesser the elasticity of the industry labor demand curve. 
C) The lower the substitutability of inputs,the higher the elasticity of the industry labor demand curve. 
D) The lower the supply elasticity of other inputs,the lesser the elasticity of the industry labor demand curve. 
A) The lesser the elasticity of the final product,the higher the elasticity of the industry labor demand curve. 
B) The longer the time period allowed for adjustment,the lesser the elasticity of the industry labor demand curve. 
C) The lower the substitutability of inputs,the higher the elasticity of the industry labor demand curve. 
D) The lower the supply elasticity of other inputs,the lesser the elasticity of the industry labor demand curve.

Question 3

When all inputs are variable,a competitive firm's labor demand curve is:

Accepted Answer

A) more inelastic than the short-run input demand curve. 
B) a vertical line with a zero slope. 
C) derived keeping the prices of other inputs constant. 
D) the same as the marginal value product curve. 
A) more inelastic than the short-run input demand curve. 
B) a vertical line with a zero slope. 
C) derived keeping the prices of other inputs constant. 
D) the same as the marginal value product curve.

Question 4

Using calculus,show the profit-maximizing employment of inputs for an output market monopoly.

Accepted Answer

Profit is given by: @#LAT-DLM& where TR = total re

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,the price of a pizza is $10,and the daily wage of a worker $30,then the pizza shop will hire _____ workers to maximize profits.

Accepted Answer

A) 2 
B) 3 
C) 4 
D) 5 
A) 2 
B) 3 
C) 4 
D) 5

Question 6

Assume that a competitive firm sells its product for $5 per unit.The firm wants to increase the number of workers employed from 100 to 101 and expects output to rise from 400 units to 410 units.The firm pays a constant wage of $8 per hour to all of its workers.Based on the given information,the marginal value product of the 101st worker is _____.

Accepted Answer

A) $5 
B) $10 
C) $50 
D) $80 
A) $5 
B) $10 
C) $50 
D) $80

Question 7

The input supply curve facing a competitive firm is most likely to:

Accepted Answer

A) be a downward-sloping curve. 
B) be more elastic than the industry supply curve. 
C) have a zero slope. 
D) be unit-elastic over all levels of employment. 
A) be a downward-sloping curve. 
B) be more elastic than the industry supply curve. 
C) have a zero slope. 
D) be unit-elastic over all levels of employment.

Question 8

The marginal value product of labor is equal to:

Accepted Answer

A) the marginal product of labor multiplied by the per-unit price of labor. 
B) the marginal product of labor multiplied by the per-unit price of output. 
C) the average product of labor multiplied by the per-unit price of capital. 
D) the average product of labor multiplied by the per-unit price of output. 
A) the marginal product of labor multiplied by the per-unit price of labor. 
B) the marginal product of labor multiplied by the per-unit price of output. 
C) the average product of labor multiplied by the per-unit price of capital. 
D) the average product of labor multiplied by the per-unit price of output.

Question 9

Given that the rental rate of capital is $4,000 per month and the wage rate is $8,000 per month,what is the slope of the isocost line when labor is measured on the horizontal axis and capital on the vertical axis?

Accepted Answer

A) 4 
B) 2 
C) 0.5 
D) 0.8 
A) 4 
B) 2 
C) 0.5 
D) 0.8

Question 10

Which of the following correctly describes a monopsony?

Accepted Answer

A) A monopsony firm is the sole supplier of an input. 
B) In a monopsony market,two or more firms set output assuming the other's output is constant. 
C) A monopsony firm is the sole buyer in an input market. 
D) In a monopsony market,a group of firms collude to set prices. 
A) A monopsony firm is the sole supplier of an input. 
B) In a monopsony market,two or more firms set output assuming the other's output is constant. 
C) A monopsony firm is the sole buyer in an input market. 
D) In a monopsony market,a group of firms collude to set prices.

Question 11

Which of the following is true for a firm that has a monopoly in the output market?

Accepted Answer

A) The marginal revenue product and marginal value product for the monopolist are equal. 
B) The demand curve for an input is the same as the marginal value product curve. 
C) The slope of the input demand curve is the same for a monopolist and a competitive firm. 
D) Employment of an input is lower under monopoly than under perfect competition. 
A) The marginal revenue product and marginal value product for the monopolist are equal. 
B) The demand curve for an input is the same as the marginal value product curve. 
C) The slope of the input demand curve is the same for a monopolist and a competitive firm. 
D) Employment of an input is lower under monopoly than under perfect competition.

Question 12

Suppose that a monopsonist is able to perfectly discriminate among workers and pay each her reservation wage.Graphically illustrate equilibrium employment and wages for a perfectly-discriminating monopsonist.How do they compare to a firm which hires labor in a perfectly competitive market? Assume the firm has no monopoly power and sells output in a competitive market.

Accepted Answer

If a monopsonist can practice perfect pr

Question 13

Two inputs,labor and capital,are considered substitutes if:

Accepted Answer

A) a fall in the price of labor leads to no change in the price of capital 
B) the marginal rate of technical substitution of labor for capital is less than one. 
C) a fall in the price of labor leads to an increase in the price of capital 
D) increasing the quantity of labor decreases the marginal product of capital 
A) a fall in the price of labor leads to no change in the price of capital 
B) the marginal rate of technical substitution of labor for capital is less than one. 
C) a fall in the price of labor leads to an increase in the price of capital 
D) increasing the quantity of labor decreases the marginal product of capital

Question 14

The law of diminishing marginal returns,when applied to labor,states that:

Accepted Answer

A) each worker makes a very small contribution to the total output. 
B) each worker adds more to total output than the previous worker. 
C) each additional worker contributes a smaller increase to total output. 
D) each additional worker causes average output to rise at an increasing rate. 
A) each worker makes a very small contribution to the total output. 
B) each worker adds more to total output than the previous worker. 
C) each additional worker contributes a smaller increase to total output. 
D) each additional worker causes average output to rise at an increasing rate.

Question 15

Which of the following is true of an input that is hired by firms in several industries in the long run?

Accepted Answer

A) The price of the input is higher in the industry where demand for the input is higher. 
B) The price of the input is higher in the industry where the elasticity of demand for the input is higher. 
C) The price of the input will remain the same across all the industries. 
D) The price of the input will be higher in the industry that has a large number of firms. 
A) The price of the input is higher in the industry where demand for the input is higher. 
B) The price of the input is higher in the industry where the elasticity of demand for the input is higher. 
C) The price of the input will remain the same across all the industries. 
D) The price of the input will be higher in the industry that has a large number of firms.

Question 16

Electricians are employed in multiple industries in an economy.Given other things unchanged,an increase in the demand for electricians in the construction industry will lead to:

Accepted Answer

A) a reduction in the employment of electricians in other industries. 
B) a reduction in the employment of plumbers and architects in the construction industry. 
C) a downward sloping labor supply curve in the construction industry. 
D) an decrease in the total number of electricians in the economy. 
A) a reduction in the employment of electricians in other industries. 
B) a reduction in the employment of plumbers and architects in the construction industry. 
C) a downward sloping labor supply curve in the construction industry. 
D) an decrease in the total number of electricians in the economy.

Question 17

If a competitive firm hires workers to a point where the wage exceeds the MVPL:

Accepted Answer

A) reducing the level of employment will increase profits. 
B) the wage rate needs to be increased to maximize profits. 
C) the total cost must be greater than total revenue. 
D) the firm is maximizing its profits. 
A) reducing the level of employment will increase profits. 
B) the wage rate needs to be increased to maximize profits. 
C) the total cost must be greater than total revenue. 
D) the firm is maximizing its profits.

Question 18

When a competitive labor market is in equilibrium:

Accepted Answer

A) the marginal product of labor equals the wage rate paid to labor. 
B) workers are paid their marginal value product. 
C) the labor employed by each firm is equal. 
D) the marginal revenue is equal to the wage rate. 
A) the marginal product of labor equals the wage rate paid to labor. 
B) workers are paid their marginal value product. 
C) the labor employed by each firm is equal. 
D) the marginal revenue is equal to the wage rate.

Question 19

(
A)A backhoe,a piece of excavating equipment which is mounted on a tractor,acts as both a complement and as a substitute to labor.Explain how it could be used as a complement or a substitute to labor.

Accepted Answer

First,for those who remain in business d

Question 20

Given that labor is on the vertical axis,_____ represents the output effect of an increase in the wage rate.

Accepted Answer

A) an upward movement along an isoquant 
B) a downward movement along an isoquant 
C) a downward movement along an expansion path 
D) an upward shift of the expansion path 
A) an upward movement along an isoquant 
B) a downward movement along an isoquant 
C) a downward movement along an expansion path 
D) an upward shift of the expansion path

The following figure shows the isoquants,IQ₁ and IQ₂,for a competitive firm. Figure 16-1 -Refer to Figure 16-1.Which of the following is true at point C?

Which of the following statements is true of the industry demand for labor?

When all inputs are variable,a competitive firm's labor demand curve is:

Using calculus,show the profit-maximizing employment of inputs for an output market monopoly.

The input supply curve facing a competitive firm is most likely to:

The marginal value product of labor is equal to:

Given that the rental rate of capital is $4,000 per month and the wage rate is $8,000 per month,what is the slope of the isocost line when labor is measured on the horizontal axis and capital on the vertical axis?

Which of the following correctly describes a monopsony?

Which of the following is true for a firm that has a monopoly in the output market?

Two inputs,labor and capital,are considered substitutes if:

The law of diminishing marginal returns,when applied to labor,states that:

Which of the following is true of an input that is hired by firms in several industries in the long run?

Electricians are employed in multiple industries in an economy.Given other things unchanged,an increase in the demand for electricians in the construction industry will lead to:

If a competitive firm hires workers to a point where the wage exceeds the MVP_L:

When a competitive labor market is in equilibrium:

( A)A backhoe,a piece of excavating equipment which is mounted on a tractor,acts as both a complement and as a substitute to labor.Explain how it could be used as a complement or a substitute to labor.

Given that labor is on the vertical axis,_____ represents the output effect of an increase in the wage rate.

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

The following figure shows the isoquants,IQ1 and IQ2,for a competitive firm. Figure 16-1 -Refer to Figure 16-1.Which of the following is true at point C?

Which of the following statements is true of the industry demand for labor?

When all inputs are variable,a competitive firm's labor demand curve is:

Using calculus,show the profit-maximizing employment of inputs for an output market monopoly.

The input supply curve facing a competitive firm is most likely to:

The marginal value product of labor is equal to:

Given that the rental rate of capital is $4,000 per month and the wage rate is $8,000 per month,what is the slope of the isocost line when labor is measured on the horizontal axis and capital on the vertical axis?

Which of the following correctly describes a monopsony?

Which of the following is true for a firm that has a monopoly in the output market?

Two inputs,labor and capital,are considered substitutes if:

The law of diminishing marginal returns,when applied to labor,states that:

Which of the following is true of an input that is hired by firms in several industries in the long run?

Electricians are employed in multiple industries in an economy.Given other things unchanged,an increase in the demand for electricians in the construction industry will lead to:

If a competitive firm hires workers to a point where the wage exceeds the MVPL:

When a competitive labor market is in equilibrium:

( A)A backhoe,a piece of excavating equipment which is mounted on a tractor,acts as both a complement and as a substitute to labor.Explain how it could be used as a complement or a substitute to labor.

Given that labor is on the vertical axis,_____ represents the output effect of an increase in the wage rate.

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

The following figure shows the isoquants,IQ₁ and IQ₂,for a competitive firm. Figure 16-1 -Refer to Figure 16-1.Which of the following is true at point C?

If a competitive firm hires workers to a point where the wage exceeds the MVP_L: