Question 1

If a profit-maximizing firm is a price taker in the input market but not in the output market,its marginal value product of labor

Accepted Answer

A) exceeds the marginal revenue product of labor. 
B) equals its marginal revenue product of labor. 
C) is less than the marginal revenue product of labor. 
D) equals the marginal physical product of labor. 
A) exceeds the marginal revenue product of labor. 
B) equals its marginal revenue product of labor. 
C) is less than the marginal revenue product of labor. 
D) equals the marginal physical product of labor.

Question 2

Suppose the market for labor is perfectly competitive and the demand for labor is $L = 100 - 10 w$ and market supply is $L = - 20 + 10 w$ .The equilibrium number of workers hired will be

Accepted Answer

A) 30 
B) 40 
C) 50 
D) 60 
A) 30 
B) 40 
C) 50 
D) 60

Question 3

When an individual's wage rises,the income effect tends to

Accepted Answer

A) increase hours worked. 
B) decrease hours worked. 
C) leave hours worked unchanged. 
D) it is impossible to predict what will happen to hours worked. 
A) increase hours worked. 
B) decrease hours worked. 
C) leave hours worked unchanged. 
D) it is impossible to predict what will happen to hours worked.

Question 4

For a monopsonistic hirer of labor the gap between labor's marginal value product and its wage rate will be greater

Accepted Answer

A) the more elastic the supply curve for labor. 
B) the more inelastic the supply curve for labor. 
C) the more elastic the firm's demand for labor. 
D) the more inelastic the firm's demand for labor. 
A) the more elastic the supply curve for labor. 
B) the more inelastic the supply curve for labor. 
C) the more elastic the firm's demand for labor. 
D) the more inelastic the firm's demand for labor.

Question 5

The notion that when the price of an input falls,a firm's marginal cost curve shifts down and overall production increases so that more of every input is employed is known as

Accepted Answer

A) the output effect. 
B) the substitution effect. 
C) the input effect. 
D) the cost effect. 
A) the output effect. 
B) the substitution effect. 
C) the input effect. 
D) the cost effect.

Question 6

A profit-maximizing firm will never hire that quantity of a factor of production for which that factor has an increasing marginal productivity because

Accepted Answer

A) it would not be maximizing output. 
B) it would not be maximizing the productivity of labor. 
C) it would not be minimizing costs. 
D) it would not be maximizing profits. 
A) it would not be maximizing output. 
B) it would not be maximizing the productivity of labor. 
C) it would not be minimizing costs. 
D) it would not be maximizing profits.

Question 7

If a profit-maximizing firm is a price taker in both the input and output markets,its marginal revenue product of labor is given by

Accepted Answer

A) the price of its output times labor's marginal physical productivity. 
B) the marginal value product of labor. 
C) the marginal revenue product of capital times the ratio of the wage rate to the rental rate on capital. 
D) all of the above. 
A) the price of its output times labor's marginal physical productivity. 
B) the marginal value product of labor. 
C) the marginal revenue product of capital times the ratio of the wage rate to the rental rate on capital. 
D) all of the above.

Question 8

A firm will hire additional units of any input up to the point where

Accepted Answer

A) the marginal productivity of the input is maximized. 
B) the marginal cost of employing the input is minimized. 
C) the expense of employing the last unit is equal to the revenue brought in by the last unit. 
D) the revenue brought in by the input is maximized. 
A) the marginal productivity of the input is maximized. 
B) the marginal cost of employing the input is minimized. 
C) the expense of employing the last unit is equal to the revenue brought in by the last unit. 
D) the revenue brought in by the input is maximized.

Question 9

Suppose the market for labor is perfectly competitive and the demand for labor is $L = 100 - 10 w$ and market supply is $L = - 20 + 10 w$ .The equilibrium wage will be

Accepted Answer

A) 5 
B) 6 
C) 7 
D) 8 
A) 5 
B) 6 
C) 7 
D) 8

Question 10

A monopsonist will hire labor up to the point where

Accepted Answer

A) the marginal expense of labor is minimized. 
B) the marginal physical productivity of labor is maximized. 
C) the marginal expense of labor is equal to marginal revenue. 
D) the marginal expense of labor is equal to the marginal value product of labor. 
A) the marginal expense of labor is minimized. 
B) the marginal physical productivity of labor is maximized. 
C) the marginal expense of labor is equal to marginal revenue. 
D) the marginal expense of labor is equal to the marginal value product of labor.

Question 11

Consider two situations: In situation A the production of widgets is monopolized by a single firm.In situation B the production of widgets is perfectly competitive.In both situations the supply of labor to widget makers is infinitely elastic at a wage of w.Which of the following statements is true?

Accepted Answer

A) The marginal value product of labor will be the same in the two cases. 
B) The marginal value product of labor is higher in case B than in case A. 
C) The marginal value product of labor is higher in case A than in case B. 
D) From the information given it is not possible to make a definite statement about the marginal value product of labor. 
A) The marginal value product of labor will be the same in the two cases. 
B) The marginal value product of labor is higher in case B than in case A. 
C) The marginal value product of labor is higher in case A than in case B. 
D) From the information given it is not possible to make a definite statement about the marginal value product of labor.

Question 12

The size of the reduction in quantity of labor hired by a firm due to an increase in the wage rate depends upon all of the following except

Accepted Answer

A) what percentage of total costs are made up of labor costs. 
B) how much quantity demanded in the output market will be reduced by a higher price. 
C) the capital to labor ratio before the wage increase. 
D) how easily other inputs can be substituted for labor. 
A) what percentage of total costs are made up of labor costs. 
B) how much quantity demanded in the output market will be reduced by a higher price. 
C) the capital to labor ratio before the wage increase. 
D) how easily other inputs can be substituted for labor.

Question 13

The output effect of a change in the wage rate on a firm's demand for labor input will be greater

Accepted Answer

A) the larger the share of labor costs in total costs and the greater the price elasticity of demand for output. 
B) the larger the share of labor costs in total costs and the smaller the price elasticity of demand for output. 
C) the larger the share of labor costs in total costs and the higher the quantity demanded. 
D) the smaller the possibilities of substituting capital for labor. 
A) the larger the share of labor costs in total costs and the greater the price elasticity of demand for output. 
B) the larger the share of labor costs in total costs and the smaller the price elasticity of demand for output. 
C) the larger the share of labor costs in total costs and the higher the quantity demanded. 
D) the smaller the possibilities of substituting capital for labor.

Question 14

Suppose the market for labor is perfectly competitive and the demand for labor is $L = 100 - 10 w$ and market supply is $i L = - 20 + 10 \mathrm { ws }$ .If a minimum wage is imposed at w = 8,the gain to workers who keep their jobs,(in producer surplus terms)will be

Accepted Answer

A) 10 
B) 20 
C) 30 
D) 40 
A) 10 
B) 20 
C) 30 
D) 40

Question 15

A monopolist union that desired to maximize its total wage bill ( $\text { W.L }$ )would offer that quantity of labor for which

Accepted Answer

A) labor's marginal productivity is zero. 
B) labor's wage falls to zero. 
C) the quantity of labor hired is as great as possible given the firm's demand curve. 
D) the marginal revenue from providing one more worker to the market is zero. 
A) labor's marginal productivity is zero. 
B) labor's wage falls to zero. 
C) the quantity of labor hired is as great as possible given the firm's demand curve. 
D) the marginal revenue from providing one more worker to the market is zero.

Question 16

Suppose the market for labor is perfectly competitive and the demand for labor is $L = 100 - 10 w$ and market supply is $L = - 20 + 10 w$ .If a minimum wage is imposed at w = 8,the loss to firms will be

Accepted Answer

A) 20 
B) 40 
C) 60 
D) 80 
A) 20 
B) 40 
C) 60 
D) 80

Question 17

If a firm is a monopsonistic hirer of labor,

Accepted Answer

A) its marginal expense for labor is greater than the market wage. 
B) its marginal expense for labor is equal to the market wage. 
C) its marginal expense for labor is less than the market wage. 
D) it is a price taker in the labor market. 
A) its marginal expense for labor is greater than the market wage. 
B) its marginal expense for labor is equal to the market wage. 
C) its marginal expense for labor is less than the market wage. 
D) it is a price taker in the labor market.

Question 18

Suppose the market for labor is perfectly competitive and the demand for labor is $L = 100 - 10 w$ and market supply is $L = - 20 + 10 w$ .If a minimum wage is imposed at w = 8,the deadweight loss of the imposition of the minimum wage is

Accepted Answer

A) 10 
B) 20 
C) 30 
D) 40 
A) 10 
B) 20 
C) 30 
D) 40

If a profit-maximizing firm is a price taker in the input market but not in the output market,its marginal value product of labor

Suppose the market for labor is perfectly competitive and the demand for labor is $L = 100 - 10 w$ and market supply is $L = - 20 + 10 w$ .The equilibrium number of workers hired will be

When an individual's wage rises,the income effect tends to

For a monopsonistic hirer of labor the gap between labor's marginal value product and its wage rate will be greater

The notion that when the price of an input falls,a firm's marginal cost curve shifts down and overall production increases so that more of every input is employed is known as

A profit-maximizing firm will never hire that quantity of a factor of production for which that factor has an increasing marginal productivity because

If a profit-maximizing firm is a price taker in both the input and output markets,its marginal revenue product of labor is given by

A firm will hire additional units of any input up to the point where

Suppose the market for labor is perfectly competitive and the demand for labor is $L = 100 - 10 w$ and market supply is $L = - 20 + 10 w$ .The equilibrium wage will be

A monopsonist will hire labor up to the point where

Consider two situations: In situation A the production of widgets is monopolized by a single firm.In situation B the production of widgets is perfectly competitive.In both situations the supply of labor to widget makers is infinitely elastic at a wage of w.Which of the following statements is true?

The size of the reduction in quantity of labor hired by a firm due to an increase in the wage rate depends upon all of the following except

The output effect of a change in the wage rate on a firm's demand for labor input will be greater

Suppose the market for labor is perfectly competitive and the demand for labor is $L = 100 - 10 w$ and market supply is $i L = - 20 + 10 \mathrm { ws }$ .If a minimum wage is imposed at w = 8,the gain to workers who keep their jobs,(in producer surplus terms)will be

A monopolist union that desired to maximize its total wage bill ( $\text { W.L }$ )would offer that quantity of labor for which

Suppose the market for labor is perfectly competitive and the demand for labor is $L = 100 - 10 w$ and market supply is $L = - 20 + 10 w$ .If a minimum wage is imposed at w = 8,the loss to firms will be

If a firm is a monopsonistic hirer of labor,

Suppose the market for labor is perfectly competitive and the demand for labor is $L = 100 - 10 w$ and market supply is $L = - 20 + 10 w$ .If a minimum wage is imposed at w = 8,the deadweight loss of the imposition of the minimum wage is

Economic Models

Utility and Choice

Demand Curves

Uncertainty

Game Theory

Production

Costs

Profit Maximization and Supply

Perfect Competition in a Single Market

General Equilibrium and Welfare

Monopoly

Imperfect Competition

Capital and Time

Asymmetric Information

Externalities and Public Goods

Behavioral Economics

Filters

Exam 13: Pricing in Input Markets

If a profit-maximizing firm is a price taker in the input market but not in the output market,its marginal value product of labor

Suppose the market for labor is perfectly competitive and the demand for labor is L=100−10wL = 100 - 10 wL=100−10w and market supply is L=−20+10wL = - 20 + 10 wL=−20+10w .The equilibrium number of workers hired will be

When an individual's wage rises,the income effect tends to

For a monopsonistic hirer of labor the gap between labor's marginal value product and its wage rate will be greater

The notion that when the price of an input falls,a firm's marginal cost curve shifts down and overall production increases so that more of every input is employed is known as

A profit-maximizing firm will never hire that quantity of a factor of production for which that factor has an increasing marginal productivity because

If a profit-maximizing firm is a price taker in both the input and output markets,its marginal revenue product of labor is given by

A firm will hire additional units of any input up to the point where

Suppose the market for labor is perfectly competitive and the demand for labor is L=100−10wL = 100 - 10 wL=100−10w and market supply is L=−20+10wL = - 20 + 10 wL=−20+10w .The equilibrium wage will be

A monopsonist will hire labor up to the point where

Consider two situations: In situation A the production of widgets is monopolized by a single firm.In situation B the production of widgets is perfectly competitive.In both situations the supply of labor to widget makers is infinitely elastic at a wage of w.Which of the following statements is true?

The size of the reduction in quantity of labor hired by a firm due to an increase in the wage rate depends upon all of the following except

The output effect of a change in the wage rate on a firm's demand for labor input will be greater

A monopolist union that desired to maximize its total wage bill ( W.L \text { W.L } W.L )would offer that quantity of labor for which

Suppose the market for labor is perfectly competitive and the demand for labor is L=100−10wL = 100 - 10 wL=100−10w and market supply is L=−20+10wL = - 20 + 10 wL=−20+10w .If a minimum wage is imposed at w = 8,the loss to firms will be

If a firm is a monopsonistic hirer of labor,

Suppose the market for labor is perfectly competitive and the demand for labor is L=100−10wL = 100 - 10 wL=100−10w and market supply is L=−20+10wL = - 20 + 10 wL=−20+10w .If a minimum wage is imposed at w = 8,the deadweight loss of the imposition of the minimum wage is

Economic Models

Utility and Choice

Demand Curves

Uncertainty

Game Theory

Production

Costs

Profit Maximization and Supply

Perfect Competition in a Single Market

General Equilibrium and Welfare

Monopoly

Imperfect Competition

Capital and Time

Asymmetric Information

Externalities and Public Goods

Behavioral Economics

Filters

Suppose the market for labor is perfectly competitive and the demand for labor is $L = 100 - 10 w$ and market supply is $L = - 20 + 10 w$ .The equilibrium number of workers hired will be

Suppose the market for labor is perfectly competitive and the demand for labor is $L = 100 - 10 w$ and market supply is $L = - 20 + 10 w$ .The equilibrium wage will be

A monopolist union that desired to maximize its total wage bill ( $\text { W.L }$ )would offer that quantity of labor for which

Suppose the market for labor is perfectly competitive and the demand for labor is $L = 100 - 10 w$ and market supply is $L = - 20 + 10 w$ .If a minimum wage is imposed at w = 8,the loss to firms will be

Suppose the market for labor is perfectly competitive and the demand for labor is $L = 100 - 10 w$ and market supply is $L = - 20 + 10 w$ .If a minimum wage is imposed at w = 8,the deadweight loss of the imposition of the minimum wage is