Question 1

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 2

A competitive firm produces an output of 200 units for a price of $15 per unit.The extra output produced by one extra worker is 5 units.In order to maximize it profit,the firm should pay a wage equal to _____.

Accepted Answer

A) $20 
B) $75 
C) $15 
D) $10 
A) $20 
B) $75 
C) $15 
D) $10

Question 3

The long-run industry demand for labor is likely to be the most elastic when:

Accepted Answer

A) wages form a significant portion of total costs. 
B) firms in the industry face L-shaped isoquants. 
C) the supply of other inputs is elastic. 
D) the product demand curve is inelastic. 
A) wages form a significant portion of total costs. 
B) firms in the industry face L-shaped isoquants. 
C) the supply of other inputs is elastic. 
D) the product demand curve is inelastic.

Question 4

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 5

"The fact that a college professor who has a higher marginal product earns a lower wage than a football coach,is proof that sports is valued more than education." Assuming that the markets for professors and coaches are competitive,one can conclude that this conclusion is essentially:

Accepted Answer

A) accurate because the higher average wage shows that the demand for football coaches is higher than the demand for a faculty member. 
B) accurate because a higher marginal product indicates that college professors are more productive than football coaches and yet earn a lower wage. 
C) faulty because the number of professors employed is higher than the number of football coaches employed. 
D) faulty because wages depend not only on the marginal product of the worker but also on the price of the final product. 
A) accurate because the higher average wage shows that the demand for football coaches is higher than the demand for a faculty member. 
B) accurate because a higher marginal product indicates that college professors are more productive than football coaches and yet earn a lower wage. 
C) faulty because the number of professors employed is higher than the number of football coaches employed. 
D) faulty because wages depend not only on the marginal product of the worker but also on the price of the final product.

Question 6

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 7

Assume that there is an outward shift in the demand for chairs.Which of the following best describes the short-run response within the competitive market for chairs?

Accepted Answer

A) Existing firms and new firms will expand output by using more of all inputs. 
B) Existing firms will keep fixed inputs unchanged and expand output using the variable inputs. 
C) Existing firms will increase their profits by producing the same output at a higher price. 
D) Existing firms cannot increase production in the short-run so the price of chairs will increase. 
A) Existing firms and new firms will expand output by using more of all inputs. 
B) Existing firms will keep fixed inputs unchanged and expand output using the variable inputs. 
C) Existing firms will increase their profits by producing the same output at a higher price. 
D) Existing firms cannot increase production in the short-run so the price of chairs will increase.

Question 8

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 9

For a competitive firm,with a change in the price of labor,_____ demand curve for labor.

Accepted Answer

A) the substitution effect reinforces the output effect,leading to a downward-sloping 
B) the substitution effect reinforces the output effect,leading to an upward-sloping 
C) the substitution effect offsets the output effect,leading to a downward-sloping 
D) the output effect offsets the substitution effect,leading to an upward-sloping 
A) the substitution effect reinforces the output effect,leading to a downward-sloping 
B) the substitution effect reinforces the output effect,leading to an upward-sloping 
C) the substitution effect offsets the output effect,leading to a downward-sloping 
D) the output effect offsets the substitution effect,leading to an upward-sloping

Question 10

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

Accepted Answer

Profit is given by: @#IMG-DLM&_TB1826_11 
where TR

Question 11

Use the following figure to answer the question : Figure 16-1 :shows the isoquants,IQS1U1B11S1U1B0 and IQS1U1B12S1U1B0,for a competitive firm.
 
-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 12

Which of the following is true of the marginal value product curve (MVP)and the marginal revenue product curve (MRP)for an output market monopolist?

Accepted Answer

A) The MVP and the MRP are upward sloping curves that are parallel to each other. 
B) The MVP lies above the MRP and is downward-sloping. 
C) The MRP and the MVP coincide and are parallel to the horizontal axis. 
D) The MRP and the MVP intersect at the equilibrium wage rate. 
A) The MVP and the MRP are upward sloping curves that are parallel to each other. 
B) The MVP lies above the MRP and is downward-sloping. 
C) The MRP and the MVP coincide and are parallel to the horizontal axis. 
D) The MRP and the MVP intersect at the equilibrium wage rate.

Question 13

An output market monopoly:

Accepted Answer

A) pays a wage that is greater than marginal value product of labor. 
B) employs fewer workers than would be employed under competition. 
C) pays a wage greater than the marginal cost of labor. 
D) has an labor demand curve that lies above the marginal value product curve of labor. 
A) pays a wage that is greater than marginal value product of labor. 
B) employs fewer workers than would be employed under competition. 
C) pays a wage greater than the marginal cost of labor. 
D) has an labor demand curve that lies above the marginal value product curve of labor.

Question 14

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

Accepted Answer

Profit is given by: @#IMG-DLM&_TB1826_11 
where TR

Question 15

The input demand curve of an industry is relatively inelastic when:

Accepted Answer

A) the demand for the final product is relatively elastic. 
B) the marginal rate of technical substitution is lower. 
C) the supply curves of other inputs is relatively inelastic. 
D) price of the input is higher than the price of other inputs. 
A) the demand for the final product is relatively elastic. 
B) the marginal rate of technical substitution is lower. 
C) the supply curves of other inputs is relatively inelastic. 
D) price of the input is higher than the price of other inputs.

Question 16

Which of the following will lead to an upward shift of a competitive firm's marginal value product curve for labor?

Accepted Answer

A) A decrease in the price of the final product 
B) An increase in the wage rate 
C) An increase in the amount of other inputs used 
D) A decrease in the demand for the final product 
A) A decrease in the price of the final product 
B) An increase in the wage rate 
C) An increase in the amount of other inputs used 
D) A decrease in the demand for the final product

Question 17

In order to maximize profits,an output market monopoly will:

Accepted Answer

A) pay less than the going wage rate. 
B) pay a wage equal to the marginal value product of labor. 
C) pay a wage that is less than marginal value product of labor. 
D) pay workers a higher-than-competitive wage rate. 
A) pay less than the going wage rate. 
B) pay a wage equal to the marginal value product of labor. 
C) pay a wage that is less than marginal value product of labor. 
D) pay workers a higher-than-competitive wage rate.

Question 18

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 19

Explain the shapes of the supply curve of labor for all industries together and the labor supply curve for a particular industry.

Accepted Answer

The supply curve of labor for all indust

Question 20

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

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

A competitive firm produces an output of 200 units for a price of $15 per unit.The extra output produced by one extra worker is 5 units.In order to maximize it profit,the firm should pay a wage equal to _____.

The long-run industry demand for labor is likely to be the most elastic when:

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

"The fact that a college professor who has a higher marginal product earns a lower wage than a football coach,is proof that sports is valued more than education." Assuming that the markets for professors and coaches are competitive,one can conclude that this conclusion is essentially:

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

Assume that there is an outward shift in the demand for chairs.Which of the following best describes the short-run response within the competitive market for chairs?

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

For a competitive firm,with a change in the price of labor,_____ demand curve for labor.

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

Use the following figure to answer the question : Figure 16-1 :shows the isoquants,IQ₁ and IQ₂,for a competitive firm. -In Figure 16-1.The move from point A to point B represents the _____ of an input price change.

Which of the following is true of the marginal value product curve (MVP)and the marginal revenue product curve (MRP)for an output market monopolist?

An output market monopoly:

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

The input demand curve of an industry is relatively inelastic when:

Which of the following will lead to an upward shift of a competitive firm's marginal value product curve for labor?

In order to maximize profits,an output market monopoly will:

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

Explain the shapes of the supply curve of labor for all industries together and the labor supply curve for a particular industry.

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

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

A competitive firm produces an output of 200 units for a price of $15 per unit.The extra output produced by one extra worker is 5 units.In order to maximize it profit,the firm should pay a wage equal to _____.

The long-run industry demand for labor is likely to be the most elastic when:

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

"The fact that a college professor who has a higher marginal product earns a lower wage than a football coach,is proof that sports is valued more than education." Assuming that the markets for professors and coaches are competitive,one can conclude that this conclusion is essentially:

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

Assume that there is an outward shift in the demand for chairs.Which of the following best describes the short-run response within the competitive market for chairs?

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

For a competitive firm,with a change in the price of labor,_____ demand curve for labor.

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

Use the following figure to answer the question : Figure 16-1 :shows the isoquants,IQ1 and IQ2,for a competitive firm. -In Figure 16-1.The move from point A to point B represents the _____ of an input price change.

Which of the following is true of the marginal value product curve (MVP)and the marginal revenue product curve (MRP)for an output market monopolist?

An output market monopoly:

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

The input demand curve of an industry is relatively inelastic when:

Which of the following will lead to an upward shift of a competitive firm's marginal value product curve for labor?

In order to maximize profits,an output market monopoly will:

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

Explain the shapes of the supply curve of labor for all industries together and the labor supply curve for a particular industry.

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

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

Use the following figure to answer the question : Figure 16-1 :shows the isoquants,IQ₁ and IQ₂,for a competitive firm. -In Figure 16-1.The move from point A to point B represents the _____ of an input price change.