Question 1

Which of the following is true for a firm that is an input market monopsony?

Accepted Answer

A) In order to increase employment of the input,the firm must lower the wage rate. 
B) The price that the monopsonist pays for the input is determined by the height of the input demand curve. 
C) The marginal cost of the input exceeds the average cost of the input. 
D) The wage paid will equal the marginal cost of the labor input. 
A) In order to increase employment of the input,the firm must lower the wage rate. 
B) The price that the monopsonist pays for the input is determined by the height of the input demand curve. 
C) The marginal cost of the input exceeds the average cost of the input. 
D) The wage paid will equal the marginal cost of the labor input.

Question 2

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.Marginal product becomes negative from the _____ worker.

Accepted Answer

A) third 
B) fourth 
C) sixth 
D) seventh 
A) third 
B) fourth 
C) sixth 
D) seventh

Question 3

Which of the following is least likely to influence the price elasticity of demand for an input?

Accepted Answer

A) The input price ratio 
B) The price elasticity of demand for the output 
C) The rate of substitution of one input for the other 
D) The elasticity of supply of other inputs 
A) The input price ratio 
B) The price elasticity of demand for the output 
C) The rate of substitution of one input for the other 
D) The elasticity of supply of other inputs

Question 4

Define monopsony in an input market and graphically illustrate equilibrium employment and wages under a monopsony.

Accepted Answer

A firm has a monopsony in an input marke

Question 5

Suppose that computer programmers work in two industries,X and Y.Both industries are in equilibrium and have identical labor supply and demand curves.Given that other things are unchanged,if the demand for programmers in industry X increases,then:

Accepted Answer

A) wages will rise in both industries and in the long run total employment will increase. 
B) wages will rise in both industries while employment increases in X and decreases in Y. 
C) wages will rise in both industries while employment decreases in X and increases in Y. 
D) wages will rise more in industry X than industry Y and employment will remain unchanged in both industries. 
A) wages will rise in both industries and in the long run total employment will increase. 
B) wages will rise in both industries while employment increases in X and decreases in Y. 
C) wages will rise in both industries while employment decreases in X and increases in Y. 
D) wages will rise more in industry X than industry Y and employment will remain unchanged in both industries.

Question 6

The following figure shows the isoquants,IQS1U1B11S1U1B0 and IQS1U1B12S1U1B0,for a competitive firm.
Figure 16-1  
-Refer to Figure 16-1.As compared to point B,the firm uses _____ at point A.

Accepted Answer

A) less labor and more capital 
B) more labor and less capital 
C) less capital and labor 
D) more capital and labor 
A) less labor and more capital 
B) more labor and less capital 
C) less capital and labor 
D) more capital and labor

Question 7

The input demand curve is likely to be relatively more elastic when:

Accepted Answer

A) the demand for the final product is relatively elastic. 
B) it is difficult to substitute the input for another input in production. 
C) the supply of other inputs is relatively inelastic. 
D) demand for the input is measured over a short time period. 
A) the demand for the final product is relatively elastic. 
B) it is difficult to substitute the input for another input in production. 
C) the supply of other inputs is relatively inelastic. 
D) demand for the input is measured over a short time period.

Question 8

Assume that labor and capital are the only two inputs used in production.Given that both inputs are variable,which of the following would lead to a movement along the labor demand curve?

Accepted Answer

A) A change in the wage rate 
B) A change in the productivity of labor 
C) An increase in the price of the final product 
D) A decrease in the employment of capital 
A) A change in the wage rate 
B) A change in the productivity of labor 
C) An increase in the price of the final product 
D) A decrease in the employment of capital

Question 9

The marginal product of labor shows:

Accepted Answer

A) the total productivity of all the labor employed. 
B) the average output produced by the labor employed. 
C) the extra revenue from the output produced by the last worker. 
D) the extra output produced by the last worker hired. 
A) the total productivity of all the labor employed. 
B) the average output produced by the labor employed. 
C) the extra revenue from the output produced by the last worker. 
D) the extra output produced by the last worker hired.

Question 10

Which of the following conditions would be associated with a more elastic input demand curve?

Accepted Answer

A) A less elastic demand for the final product 
B) A higher ease of input substitution in the production process 
C) A less elastic supply curve for other inputs 
D) A shorter time period 
A) A less elastic demand for the final product 
B) A higher ease of input substitution in the production process 
C) A less elastic supply curve for other inputs 
D) A shorter time period

Question 11

The marginal value product of labor measures:

Accepted Answer

A) the profit that a firm receives by selling the extra output made by an extra worker. 
B) the addition made to total output by an additional worker. 
C) the revenue a firm receives by selling the total output made by all workers. 
D) the extra revenue earned by a firm selling the extra output made by an extra worker. 
A) the profit that a firm receives by selling the extra output made by an extra worker. 
B) the addition made to total output by an additional worker. 
C) the revenue a firm receives by selling the total output made by all workers. 
D) the extra revenue earned by a firm selling the extra output made by an extra worker.

Question 12

The supply curve of labor to a competitive firm is:

Accepted Answer

A) upward-sloping because of the law of diminishing marginal returns. 
B) downward-sloping because the supply of labor increases as wages increase. 
C) perfectly inelastic because the stock of labor is fixed in the long run. 
D) horizontal because the firm can hire as many workers as it wants at the market wage. 
A) upward-sloping because of the law of diminishing marginal returns. 
B) downward-sloping because the supply of labor increases as wages increase. 
C) perfectly inelastic because the stock of labor is fixed in the long run. 
D) horizontal because the firm can hire as many workers as it wants at the market wage.

Question 13

The following figure shows the marginal cost [MC],average cost [AC],and demand [D] curves for a monopsonist in the labor market.
Figure 16-2  
-Refer to Figure 16-2.When the monopsonist is in equilibrium,the wage rate paid to labor is _____.

Accepted Answer

A) P1 
B) P2 
C) P3 
D) 0 
A) P1 
B) P2 
C) P3 
D) 0

Question 14

For a firm that is perfectly competitive in the output market but a monopsonist in a particular input market:

Accepted Answer

A) the price of the final output will exceed the firm's marginal cost of producing output. 
B) the price of the final output will be lower than the wage rate. 
C) the wage rate will be less than the average cost of labor. 
D) the wage rate will be less than the marginal cost of labor. 
A) the price of the final output will exceed the firm's marginal cost of producing output. 
B) the price of the final output will be lower than the wage rate. 
C) the wage rate will be less than the average cost of labor. 
D) the wage rate will be less than the marginal cost of labor.

Question 15

For a perfectly competitive firm,the marginal revenue product of an input will be:

Accepted Answer

A) represented by a horizontal line at the input price. 
B) represented by an upward-sloping curve. 
C) the product of the marginal product and marginal cost. 
D) the same as the marginal value product. 
A) represented by a horizontal line at the input price. 
B) represented by an upward-sloping curve. 
C) the product of the marginal product and marginal cost. 
D) the same as the marginal value product.

Question 16

The shape of a competitive firm's input demand curve when all inputs are variable implies that:

Accepted Answer

A) the output effect of an input price change outweighs the substitution effect of an input price change leading to lower employment at a lower price. 
B) the substitution effect of an input price change outweighs the output effect leading to a lower employment at a lower price. 
C) the substitution and output effect of an input price change both lead to higher employment at a lower price. 
D) the substitution and output effect of an input price change both lead to higher employment at a higher price. 
A) the output effect of an input price change outweighs the substitution effect of an input price change leading to lower employment at a lower price. 
B) the substitution effect of an input price change outweighs the output effect leading to a lower employment at a lower price. 
C) the substitution and output effect of an input price change both lead to higher employment at a lower price. 
D) the substitution and output effect of an input price change both lead to higher employment at a higher price.

Question 17

Compared to a competitive labor market,in a monopsony labor market:

Accepted Answer

A) the level of employment is lower but the wage rate is the same. 
B) the level of employment and the wage rate are both lower. 
C) the level of employment is the same but the wage rate is lower. 
D) the level of employment and the wage rate are both higher. 
A) the level of employment is lower but the wage rate is the same. 
B) the level of employment and the wage rate are both lower. 
C) the level of employment is the same but the wage rate is lower. 
D) the level of employment and the wage rate are both higher.

Question 18

Using calculus,show the profit-maximizing employment of inputs for a perfectly competitive firm.

Accepted Answer

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

Question 19

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 $4 per loaf and the hourly wage rate is $12 per hour,how many workers will the profit-maximizing bakery hire?

Accepted Answer

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

Question 20

Assume that a car manufacturing plant in a small town in Michigan in the U.S.is a monopsonist employer of heavy machinery operators.The marginal value product of labor is given by w = 1100 - 20Q where w is the wage rate and Q is the number of heavy machinery operators.The supply of heavy machinery operators is given by w = 200 + 5Q.What is the profit-maximizing level of employment and wage for the car manufacturer? Assume that the plant is perfectly competitive in the output market.

Accepted Answer

The labor supply curve is the same as th

Which of the following is true for a firm that is an input market monopsony?

The following table shows the total number of pizzas produced by 7 workers. Table 16-1 Number of workers Total number of pizzas produced per day 0 0 1 6 2 13 3 18 4 21 5 23 6 22 7 20 -Refer to Table 16-1.Marginal product becomes negative from the _____ worker.

Which of the following is least likely to influence the price elasticity of demand for an input?

Define monopsony in an input market and graphically illustrate equilibrium employment and wages under a monopsony.

Suppose that computer programmers work in two industries,X and Y.Both industries are in equilibrium and have identical labor supply and demand curves.Given that other things are unchanged,if the demand for programmers in industry X increases,then:

The following figure shows the isoquants,IQ₁ and IQ₂,for a competitive firm. Figure 16-1 -Refer to Figure 16-1.As compared to point B,the firm uses _____ at point A.

The input demand curve is likely to be relatively more elastic when:

Assume that labor and capital are the only two inputs used in production.Given that both inputs are variable,which of the following would lead to a movement along the labor demand curve?

The marginal product of labor shows:

Which of the following conditions would be associated with a more elastic input demand curve?

The marginal value product of labor measures:

The supply curve of labor to a competitive firm is:

The following figure shows the marginal cost [MC],average cost [AC],and demand [D] curves for a monopsonist in the labor market. Figure 16-2 -Refer to Figure 16-2.When the monopsonist is in equilibrium,the wage rate paid to labor is _____.

For a firm that is perfectly competitive in the output market but a monopsonist in a particular input market:

For a perfectly competitive firm,the marginal revenue product of an input will be:

The shape of a competitive firm's input demand curve when all inputs are variable implies that:

Compared to a competitive labor market,in a monopsony labor market:

Using calculus,show the profit-maximizing employment of inputs for a perfectly competitive firm.

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 is true for a firm that is an input market monopsony?

The following table shows the total number of pizzas produced by 7 workers. Table 16-1 Number of workers Total number of pizzas produced per day 0 0 1 6 2 13 3 18 4 21 5 23 6 22 7 20 -Refer to Table 16-1.Marginal product becomes negative from the _____ worker.

Which of the following is least likely to influence the price elasticity of demand for an input?

Define monopsony in an input market and graphically illustrate equilibrium employment and wages under a monopsony.

Suppose that computer programmers work in two industries,X and Y.Both industries are in equilibrium and have identical labor supply and demand curves.Given that other things are unchanged,if the demand for programmers in industry X increases,then:

The following figure shows the isoquants,IQ1 and IQ2,for a competitive firm. Figure 16-1 -Refer to Figure 16-1.As compared to point B,the firm uses _____ at point A.

The input demand curve is likely to be relatively more elastic when:

Assume that labor and capital are the only two inputs used in production.Given that both inputs are variable,which of the following would lead to a movement along the labor demand curve?

The marginal product of labor shows:

Which of the following conditions would be associated with a more elastic input demand curve?

The marginal value product of labor measures:

The supply curve of labor to a competitive firm is:

The following figure shows the marginal cost [MC],average cost [AC],and demand [D] curves for a monopsonist in the labor market. Figure 16-2 -Refer to Figure 16-2.When the monopsonist is in equilibrium,the wage rate paid to labor is _____.

For a firm that is perfectly competitive in the output market but a monopsonist in a particular input market:

For a perfectly competitive firm,the marginal revenue product of an input will be:

The shape of a competitive firm's input demand curve when all inputs are variable implies that:

Compared to a competitive labor market,in a monopsony labor market:

Using calculus,show the profit-maximizing employment of inputs for a perfectly competitive firm.

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.As compared to point B,the firm uses _____ at point A.