Question 1

A firm's primary interest when it hires an additional worker is

Accepted Answer

A) the cost of hiring the additional worker. 
B) how the average output of the firm will be affected by this new worker. 
C) the extra revenue the firm realises from hiring that worker. 
D) whether or not the new worker gets along with the firm's existing workers. 
A) the cost of hiring the additional worker. 
B) how the average output of the firm will be affected by this new worker. 
C) the extra revenue the firm realises from hiring that worker. 
D) whether or not the new worker gets along with the firm's existing workers.

Question 2

As more output is produced,the marginal product of labour declines

Accepted Answer

A) because of the law of diminishing returns. 
B) if firms reduce the wage paid to labour. 
C) if the firm's output supply curve is inelastic. 
D) because the firm's marginal revenue declines. 
A) because of the law of diminishing returns. 
B) if firms reduce the wage paid to labour. 
C) if the firm's output supply curve is inelastic. 
D) because the firm's marginal revenue declines.

Question 3

A successful compensation scheme

Accepted Answer

A) must pay workers with comparable skills a comparable wage. 
B) must induce effort from workers and ensure that both employer and employees benefit. 
C) must enable workers to enjoy a certain standard of living and must enable employers to earn a normal rate of return. 
D) must allow employees to participate in a firm's profits. 
A) must pay workers with comparable skills a comparable wage. 
B) must induce effort from workers and ensure that both employer and employees benefit. 
C) must enable workers to enjoy a certain standard of living and must enable employers to earn a normal rate of return. 
D) must allow employees to participate in a firm's profits.

Question 4

The price of a factor of production that is in fixed supply is called

Accepted Answer

A) economic rent. 
B) economic profit. 
C) a compensating differential. 
D) opportunity cost. 
A) economic rent. 
B) economic profit. 
C) a compensating differential. 
D) opportunity cost.

Question 5

Holding the price of a firm's output constant,if the marginal product of labour increases

Accepted Answer

A) the marginal revenue product of labour decreases. 
B) the marginal revenue product of labour also increases. 
C) the marginal products of other inputs also increase. 
D) the marginal revenue product of labour may increase or decrease. 
A) the marginal revenue product of labour decreases. 
B) the marginal revenue product of labour also increases. 
C) the marginal products of other inputs also increase. 
D) the marginal revenue product of labour may increase or decrease.

Question 6

Higher wages that compensate workers for unpleasant aspects of a job are called compensating differentials.

Accepted Answer

A) True 
 B)False

Question 7

Consider the market for pilots.What is likely to happen to the equilibrium wage and quantity of pilots if the government enforces a lower mandatory retirement age,say from age 65 to age 62?

Accepted Answer

A) The equilibrium wage and the equilibrium quantity of pilots rise. 
B) The equilibrium wage and the equilibrium quantity of pilots fall. 
C) The equilibrium wage falls and the equilibrium quantity of pilots rises. 
D) The equilibrium wage rises and the equilibrium quantity of pilots falls. 
A) The equilibrium wage and the equilibrium quantity of pilots rise. 
B) The equilibrium wage and the equilibrium quantity of pilots fall. 
C) The equilibrium wage falls and the equilibrium quantity of pilots rises. 
D) The equilibrium wage rises and the equilibrium quantity of pilots falls.

Question 8

The present value of $475 received 3 years in the future would be calculated as which of the following when the interest rate is 6 per cent?

Accepted Answer

A) 475/(1.6)3 
B) 475/(1.06)3 
C) 475 × 1.6 × 3 
D) 3.06/475 
A) 475/(1.6)3 
B) 475/(1.06)3 
C) 475 × 1.6 × 3 
D) 3.06/475

Question 9

If Alan Shaw reduces his work hours when his salary increases,then

Accepted Answer

A) the income effect of his salary increase dominates the substitution effect. 
B) the substitution effect of his salary increase dominates the income effect. 
C) the income effect of his salary increase is completely offset by the substitution effect. 
D) leisure is an inferior good to Alan. 
A) the income effect of his salary increase dominates the substitution effect. 
B) the substitution effect of his salary increase dominates the income effect. 
C) the income effect of his salary increase is completely offset by the substitution effect. 
D) leisure is an inferior good to Alan.

Question 10

The success of Walt Disney's animated film The Lion King in 1994,increased production of animated films,increasing the demand for animators much faster than the supply of animators was increasing.As a result,in the market for animators,the equilibrium wage fell and the equilibrium quantity increased.

Accepted Answer

A) True 
 B)False

Question 11

According to the marginal productivity theory of income,

Accepted Answer

A) the greater the quantity of resources owned by an individual,the greater his incentive to increase productivity and his income. 
B) the average income received by an individual who supplies resources is influenced by the resources owner's marginal productivity. 
C) the income received by an individual who supplies labour services equals the incremental benefit generated to the firm by that individual's labour. 
D) the income received by an individual who supplies labour services equals the profit generated to the firm by that individual's labour. 
A) the greater the quantity of resources owned by an individual,the greater his incentive to increase productivity and his income. 
B) the average income received by an individual who supplies resources is influenced by the resources owner's marginal productivity. 
C) the income received by an individual who supplies labour services equals the incremental benefit generated to the firm by that individual's labour. 
D) the income received by an individual who supplies labour services equals the profit generated to the firm by that individual's labour.

Question 12

The price of a financial asset should be equal to

Accepted Answer

A) the face value of the asset. 
B) the present value of the sum of the coupon payments and the interest rate. 
C) the face value of the asset divided by the interest rate. 
D) the present value of payments to be received from owning that asset. 
A) the face value of the asset. 
B) the present value of the sum of the coupon payments and the interest rate. 
C) the face value of the asset divided by the interest rate. 
D) the present value of payments to be received from owning that asset.

Question 13

Figure 12-1   Figure 12-1 shows the marginal revenue product for Dale's Hand-Sewn Doilies,a producer of linen doilies.
-Refer to Figure 12-1.If the wage rate is $40,how many workers should Dale hire?

Accepted Answer

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

A firm's primary interest when it hires an additional worker is

As more output is produced,the marginal product of labour declines

A successful compensation scheme

The price of a factor of production that is in fixed supply is called

Holding the price of a firm's output constant,if the marginal product of labour increases

Higher wages that compensate workers for unpleasant aspects of a job are called compensating differentials.

Consider the market for pilots.What is likely to happen to the equilibrium wage and quantity of pilots if the government enforces a lower mandatory retirement age,say from age 65 to age 62?

The present value of $475 received 3 years in the future would be calculated as which of the following when the interest rate is 6 per cent?

If Alan Shaw reduces his work hours when his salary increases,then

According to the marginal productivity theory of income,

The price of a financial asset should be equal to

Figure 12-1 Figure 12-1 shows the marginal revenue product for Dale's Hand-Sewn Doilies,a producer of linen doilies. -Refer to Figure 12-1.If the wage rate is $40,how many workers should Dale hire?

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: the Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Consumer Choice and Behavioural Economics

Technology, Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters

Exam 12: The Markets for Labour and Other Factors of Production

A firm's primary interest when it hires an additional worker is

As more output is produced,the marginal product of labour declines

A successful compensation scheme

The price of a factor of production that is in fixed supply is called

Holding the price of a firm's output constant,if the marginal product of labour increases

Higher wages that compensate workers for unpleasant aspects of a job are called compensating differentials.

Consider the market for pilots.What is likely to happen to the equilibrium wage and quantity of pilots if the government enforces a lower mandatory retirement age,say from age 65 to age 62?

The present value of $475 received 3 years in the future would be calculated as which of the following when the interest rate is 6 per cent?

If Alan Shaw reduces his work hours when his salary increases,then

According to the marginal productivity theory of income,

The price of a financial asset should be equal to

Figure 12-1 Figure 12-1 shows the marginal revenue product for Dale's Hand-Sewn Doilies,a producer of linen doilies. -Refer to Figure 12-1.If the wage rate is $40,how many workers should Dale hire?

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: the Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Consumer Choice and Behavioural Economics

Technology, Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters