Deck 13: How Factor Markets Work

Question 1

Consider labour hired for $18 per hour. If the last hour of labour hired produces 8 units of output which sells for $10 per unit, labour should be hired in this situation since the wage is MRP.

A) more; greater than
B) more; less than
C) less; greater than
D) less; less than
E) no; equal to

Answer 1

B

Question 2

Consider labour that is hired for $18 per hour. If the last hour of labour hired produces 8 units of output which sells for $10 per unit, that labour-hour adds to the firmʹs profit and so labour should be hired.

A) $80; more
B) -$80; less
C) $62; less
D) $62; more
E) $0; no

Answer 2

D

Question 3

Consider the following production and cost schedule for a firm. The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-1
Refer to Table 13-1. The marginal product of the 12th unit of the factor of production is

A) 4.
B) 14.
C) 20.
D) 44.
E) 64.

Answer 3

C

Question 4

Consider a small firm that is producing winter jackets. It can lease an additional sewing machine for one month for $2400. With this additional machine, the firm can produce an additional 4 jackets during that time period that it sells for $550 each. Hiring the marginal machine adds to the firmʹs profit and so it should the machine.

A) -$2400; not lease
B) -$200; not lease
C) $0; be indifferent as to whether to lease
D) $200; lease
E) $2400; lease

Question 5

Suppose the last unit of a factor of production employed has a marginal product of 12. The factorʹs price is $8, and the productʹs competitive market price is $6. This factorʹs marginal revenue product is

A) $6.
B) $36.
C) $48.
D) $72.
E) $96.

Question 6

Consider the following production and cost schedule for a firm. The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-1
Refer to Table 13-1. The total revenue of the output produced by 12 units of the factor is

A) $120.
B) $520.
C) $640.
D) $768.
E) $1440.

Question 7

A condition for the profit-maximizing use of any factor of production is
Where MP = marginal product, w = the price of a factor of production, p = price of one unit of the firmʹs output, MR = marginal revenue, MC = marginal cost, MRP = marginal revenue product):

A) MRP = MP × p
B) MR = MRP P
C) MC = MR × w
D) w = MP × p
E) MRP = MR × MC

Question 8

Consider labour that is hired for $18 per hour. If the last hour hired produces 8 units of output which sells for
$2 per unit, that labour-hour adds to the firmʹs profit and so labour should be hired.

A) -$128; more
B) -$2; less
C) $16; less
D) $16; more
E) $0; no

Question 9

Consider the following production and cost schedule for a firm. The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-1
Refer to Table 13-1. The marginal product of the 15th unit of the factor of production is

A) -2.
B) 0.
C) 2.
D) 82.
E) 84.

Question 10

Consider the following production and cost schedule for a firm. The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-1
Refer to Table 13-1. The total revenue of the output produced by 15 units of the factor is

A) $860.
B) $150.
C) $640.
D) $780.
E) $1440.

Question 11

Consider labour that is hired for $18 per hour. If the last hour hired produces 8 units of output which sells for
$2 per unit, labour should be hired in this situation since the wage is MRP.

A) more; greater than
B) more; less than
C) less; greater than
D) less; less than
E) no; equal to

Question 12

Consider a small firm that is producing winter jackets. It can lease an additional sewing machine for one month for $1200. With this additional machine, the firm can produce an additional 7 jackets during that time period that it sells for $250 each. Hiring the marginal machine adds to the firmʹs profit and so it should the machine.

A) -$1200; not lease
B) $0; be indifferent as to whether to lease
C) $1200; lease
D) $550; lease
E) $1750; lease

Question 13

For any firm in any market structure, a factorʹs marginal revenue product is

A) the average product of the factor multiplied by the price of the output.
B) the change in revenue caused by the sale of the product contributed by an additional unit of input.
C) the change in revenue caused by the sale of an additional unit of output.
D) the increase in output resulting from the use of an additional unit of the factor multiplied by the cost of that factor.
E) marginal revenue multiplied by total product.

Question 14

Consider the following production and cost schedule for a firm. The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-1
Refer to Table 13-1. The marginal revenue product of the 15th unit of the factor is

A) -$20.
B) $20.
C) $60.
D) $150.
E) $820.

Question 15

Consider the following production and cost schedule for a firm. The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-1
Refer to Table 13-1. The marginal revenue product of the 14th unit of the factor is

A) -$60.
B) $60.
C) $140.
D) $700.
E) $840.

Question 16

Consider labour hired for $1000 per week. If the last week of labour hired produces 0.25 units of output which sells for $5000 per unit, labour should be hired in this situation since the wage is MRP.

A) more; greater than
B) more; less than
C) less; greater than
D) less; less than
E) no; equal to

Question 17

Consider the following production and cost schedule for a firm. The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-1
Refer to Table 13-1. Diminishing marginal returns are present for which units of the factor of production?

A) 10th unit only
B) 11th unit only
C) 12th unit only
D) 13th unit only
E) all units shown in the table

Question 18

Consider labour that is hired for $18 per hour. If the last hour of labour hired produces 8 units of output which sells for $10 per unit, that labour-hourʹs marginal revenue product is

A) $1.20.
B) $4.44.
C) $64.
D) $80.
E) $144.

Question 19

Consider a small firm that is producing winter jackets. It can lease an additional sewing machine for one month for $750. With this additional machine, the firm can produce an additional 6 jackets during that time period that it sells for $125 each. Hiring the marginal machine adds to the firmʹs profit and so it should the machine.

A) -$750; not lease
B) -$750; lease
C) $0; be indifferent as to whether to lease
D) $750; not lease
E) $750; lease

Question 20

The marginal revenue product of labour is the change in the value of the firmʹs output resulting from

A) a change in the productʹs price.
B) an increase in the marginal physical product of labour.
C) a change in the wage rate paid to labour.
D) producing one more unit of output.
E) hiring one more unit of labour input.

Question 21

Profit-maximizing firms increase production up to the point at which the last unit of the variable factor employed adds

A) nothing to marginal cost.
B) nothing to marginal revenue.
C) positive economic profits.
D) just as much to revenue as to profit.
E) just as much to revenue as to cost.

Question 22

Consider the following production and cost schedule for a firm. The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-1
Refer to Table 13-1. How many units of this factor of production would the profit-maximizing firm choose to hire?

A) 11
B) 12
C) 13
D) 14
E) It is not possible to determine with the data provided.

Question 23

Consider the following production and cost schedule for a firm. The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-3
Refer to Table 13-3. The marginal product of the 6th unit of the factor of production is

A) -2.
B) 2.
C) 4.
D) 8.
E) 32.

Question 24

Consider the following table for a firm. The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-2
Refer to Table 13-2. This firm begins to experience diminishing marginal productivity when it hires the
Unit of the factor.

A) 3rd
B) 4th
C) 5th
D) 6th
E) 7th

Question 25

Consider the following production and cost schedule for a firm. The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-3
Refer to Table 13-3. The increase in total revenue generated by hiring the 5th unit of the factor of production is

A) -$11.00.
B) -$2.00.
C) $2.00.
D) $7.50.
E) $11.00.

Question 26

Consider the following table for a firm. The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-2
Refer to Table 13-2. Suppose the firm is a perfect competitor and faces a given price of the product equal to $2 per unit. The marginal revenue product of the 5th unit of the factor is

A) $128.
B) $148.
C) $20.
D) $40.
E) $2.

Question 27

Consider the following production and cost schedule for a firm. The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-3
Refer to Table 13-3. The marginal product of the 4th unit of the factor of production is

A) 4.
B) 6.
C) 8.
D) 26.
E) 30.

Question 28

The table below shows the total production for varying numbers of hours worked producing yo -yos. The firm sells its product and hires its workers in competitive markets. TABLE 13-4
Refer to Table 13-4. What is the marginal cost of the variable factor employed by this firm?

A) $0
B) $5
C) $10
D) $20
E) $30

Question 29

The shape of the marginal revenue product curve for a perfectly competitive firm would be its marginal product curve because .

A) the same as; MR is constant as output increases
B) steeper than; MR decreases as output increases
C) steeper than; its productʹs price increases as output increases
D) flatter than; its productʹs price decreases as output increases
E) flatter than; it must pay a higher wage to the variable factor as output increases

Question 30

Consider the following table for a firm. The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-2
Refer to Table 13-2. Suppose this firm is a perfect competitor and faces a given price of the product equal to $10 per unit. The marginal revenue product of the 3rd unit of the factor is

A) $30.
B) $100.
C) $110.
D) $1000.
E) $1100.

Question 31

The marginal revenue product curve for a monopolist would be its marginal product curve because
)

A) steeper than; its MR decreases as output increases
B) steeper than; its productʹs price increases as output increases
C) flatter than; it must pay a higher wage to labour
D) flatter than; its productʹs price decreases as output increases
E) the same as; the MRP curve always has the same shape as the MP curve

Question 32

If a firm is a perfect competitor in its product market, the marginal product of a factor multiplied by the productʹs price equals

A) marginal cost.
B) marginal profit.
C) total revenue.
D) marginal revenue.
E) marginal revenue product.

Question 33

Consider the following production and cost schedule for a firm. The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-3
Refer to Table 13-3. A profit-maximizing firm would never hire more than the unit of this factor of production.

A) 3rd
B) 4th
C) 5th
D) 6th
E) 7th

Question 34

The table below shows the total production for varying numbers of hours worked producing yo -yos. The firm sells its product and hires its workers in competitive markets. TABLE 13-4
Refer to Table 13-4. What is the MRP for the 13th hour worked?

A) $78
B) $84
C) $5
D) $30
E) $10

Question 35

Consider the following table for a firm. The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-2
Refer to Table 13-2. Suppose this firm is a perfect competitor and faces a given price of the product equal to $15 per unit. The marginal revenue product of the 5th unit of the factor is

A) $30.
B) $100.
C) $75.
D) $300.
E) $2220.

Question 36

Consider the following table for a firm. The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-2
Refer to Table 13-2. The marginal product of the 7th unit of the factor is

A) -8.
B) 0.
C) 8.
D) 162.
E) 170.

Question 37

Consider the following production and cost schedule for a firm. The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-3
Refer to Table 13-3. The total revenue obtained if the 7th unit of the factor of production is hired is

A) $160.
B) $180.
C) $192.
D) $202.
E) $210.

Question 38

Consider the following production and cost schedule for a firm. The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-3
Refer to Table 13-3. The total revenue obtained if the 5th unit of the factor of production is hired is

A) $160.
B) $180.
C) $192.
D) $202.
E) $210.

Question 39

Which of the following is the best definition of the marginal revenue product MRP) of a factor of production?

A) the average product of the factor multiplied by the price of the output
B) the change in revenue generated by the sale of the product produced by an additional unit of input
C) the change in revenue caused by the sale of an additional unit of output
D) the increase in output resulting from the use of an additional unit of the factor multiplied by the cost of that factor
E) marginal revenue multiplied by total product

Question 40

Consider the following production and cost schedule for a firm. The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-3
Refer to Table 13-3. The rise in total revenue generated by hiring the 4th unit of the factor of production is

A) -$11.00.
B) $2.00.
C) $3.67.
D) $7.50.
E) $28.00.

Question 41

The diagram below shows the MRP curve for a firm producing copper plumbing pipe. The factor of production being considered here is hours of labour.
FIGURE 13-1
Refer to Figure 13-1. Assume that the firm is a perfect competitor and the price of the firmʹs output is fixed. We know that the firmʹs MRP curve is

A) the same shape as the firmʹs marginal product curve for labour.
B) the same shape as the firmʹs marginal revenue curve.
C) horizontal, if the firm is perfectly competitive.
D) steeper than the firmʹs marginal product curve for labour.
E) flatter than the firmʹs marginal product curve for labour.

Question 42

A demand for a factor of production is said to be ʺderivedʺ because the factorʹs demand depends

A) entirely on the cost of the factor.
B) entirely on corporate advertising.
C) heavily on government policy.
D) heavily on public choice.
E) on the demand for the good or services it helps to make.

Question 43

The diagram below shows the MRP curve for a firm producing copper plumbing pipe. The factor of production being considered here is hours of labour.
FIGURE 13-1
Refer to Figure 13-1. This firmʹs MRP curve is the firmʹs

A) derived demand for copper plumbing pipe.
B) demand curve for labour.
C) market demand curve for copper plumbing pipe.
D) marginal product of labour curve.
E) total product curve for labour.

Question 44

The demand for a factor will be more elastic if

A) there is little substitutability between factors.
B) it is easier to substitute between this factor and others.
C) that factor determines a small percentage of total cost.
D) the demand for the good being produced is inelastic.
E) the supply of the factor is elastic.

Question 45

The table below shows the total production for varying numbers of hours worked producing yo -yos. The firm sells its product and hires its workers in competitive markets. TABLE 13-4
Refer to Table 13-4. Which of the following statements best describes the situation of this firm when it is employing 15 hours of labour? The 15th hour of labour hired

A) adds $5 to revenue, but costs $10 to hire, so this firm should hire less labour.
B) adds $20 to revenue, but only costs $10 to hire, so this firm should hire more labour.
C) adds $10 to revenue and costs $10 to hire, so this firm is maximizing its profit at 15 hours of labour.
D) adds $50 to revenue, but only costs $10 to hire, so this firm should hire more labour.
E) adds $2 to revenue, but costs $10 to hire, so this firm should hire less labour.

Question 46

The table below shows the total production for varying numbers of hours worked producing yo -yos. The firm sells its product and hires its workers in competitive markets. TABLE 13-4
Refer to Table 13-4. A profit-maximizing firm will continue to hire labour to produce yo-yos until they have equated

A) the price of yo-yos and the wage rate per hour.
B) the marginal product of an additional hour of labour and the price of the yo -yos.
C) the wage rate per hour and the value of the yo -yos produced by hiring one additional hour of labour.
D) the marginal revenue product of an additional hour of labour and the price of yo -yos.
E) the wage rate per hour and the marginal product of labour.

Question 47

Consider a firmʹs demand curve for labour. If a technological change makes it easier to substitute capital for labour, the demand curve for labour

A) shifts parallel to the right.
B) shifts parallel to the left.
C) becomes more inelastic.
D) becomes more elastic.
E) is not affected.

Question 48

Consider a firmʹs demand curve for labour. If a technological change makes it harder to substitute capital for labour, the demand curve for labour

A) shifts parallel to the right.
B) shifts parallel to the left.
C) becomes less elastic.
D) becomes more elastic.
E) is not affected.

Question 49

The table below shows the total production for varying numbers of hours worked producing yo -yos. The firm sells its product and hires its workers in competitive markets. TABLE 13-4
Refer to Table 13-4. If plotted on a graph, the marginal revenue product curve for the ʺnumber of hours workedʺ would be the same as

A) the firmʹs marginal product curve, and would be downward sloping and concave to the origin.
B) the firmʹs marginal product curve, and would be downward sloping and convex to the origin.
C) the firmʹs demand curve for hours worked, and would be downward sloping and linear.
D) the firmʹs demand curve for yo-yos, and would be downward sloping and linear.
E) the firmʹs marginal revenue curve, and would be horizontal at $5 because this firm is operating in a competitive labour market.

Question 50

The table below shows the total production for varying numbers of hours worked producing yo -yos. The firm sells its product and hires its workers in competitive markets. TABLE 13-4
Refer to Table 13-4. Which of the following statements best describes the situation of this firm when it is employing 12 hours of labour? The 12th hour of labour hired

A) adds $10 to revenue and costs $10 to hire, so this firm is maximizing its profit at 12 hours of labour.
B) adds $5 to revenue, but costs $10 to hire, so this firm should hire less labour.
C) adds $30 to revenue, but only costs $10 to hire, so this firm should hire more labour.
D) adds $8 to revenue, but costs $10 to hire, so this firm should hire less labour.
E) adds $40 to revenue, but only costs $10 to hire, so this firm should hire more labour.

Question 51

Which of the following is the best example of a derived demand?

A) an increase in the wage for yoga instructors causes an increase in the demand for yoga classes
B) a decrease in the price of Pilates classes causes an increase in the demand for yoga classes
C) an increase in demand for yoga classes causes an increase in demand for yoga instructors
D) a decrease in the demand for yoga mats causes a decrease in demand for yoga classes
E) an increase in awareness about fitness causes an increase in demand for yoga classes

Question 52

The table below shows the total production for varying numbers of hours worked producing yo -yos. The firm sells its product and hires its workers in competitive markets. TABLE 13-4
Refer to Table 13-4. If the market price of yo-yos drops to $2.50, how many worker-hours should this profit-maximizing firm hire?

A) 11
B) 12
C) 13
D) 14
E) 15

Question 53

In a perfectly competitive labour market, a profit-maximizing firm will employ labour until the

A) MPP = MRP.
B) wage = MP.
C) MRP = the productʹs price.
D) wage = MRP.
E) wage = the productʹs price.

Question 54

The table below shows the total production for varying numbers of hours worked producing yo -yos. The firm sells its product and hires its workers in competitive markets. TABLE 13-4
Refer to Table 13-4. How many worker-hours should this profit-maximizing firm hire?

A) 11
B) 12
C) 13
D) 14
E) 15

Question 55

The diagram below shows the MRP curve for a firm producing copper plumbing pipe. The factor of production being considered here is hours of labour.
FIGURE 13-1
Refer to Figure 13-1. Suppose this firm initially has the marginal revenue product curve MRP1. One reason that the curve could shift to MRP3 is

A) an increase in demand for the firmʹs output, copper plumbing pipe.
B) a decrease in the market price of copper plumbing pipe.
C) a decrease in the supply of labour.
D) an increase in the wage rate.
E) an increase in the marginal product of labour.

Question 56

The diagram below shows the MRP curve for a firm producing copper plumbing pipe. The factor of production being considered here is hours of labour.
FIGURE 13-1
Refer to Figure 13-1. Suppose this firm has the marginal revenue product curve MRP1. At a wage rate of $12, the profit-maximizing firm will hire units of labour.

A) 100
B) 120
C) 140
D) 160
E) 180

Question 57

Which of the following is the best example of a derived demand?

A) A decrease in interest rates increases the demand for housing.
B) An increase in the wage rate causes firms to substitute capital for labour.
C) An increase in demand for cars will increase the demand for auto workers.
D) A decrease in the price of internet connection will increase the demand for tablet computers.
E) An increase in the price of butter increases the demand for margarine.

Question 58

In a competitive labour market, an increase in the demand for labour might be due to an increase in the

A) supply of labour.
B) wage rate.
C) supply of the product that labour produces.
D) demand for the product that labour produces.
E) supply of the other factors.

Question 59

The diagram below shows the MRP curve for a firm producing copper plumbing pipe. The factor of production being considered here is hours of labour.
FIGURE 13-1
Refer to Figure 13-1. Suppose this firm initially has the marginal revenue product curve MRP1. One reason that the curve could shift to MRP2 is

A) a decrease in demand for the firmʹs output, copper plumbing pipe.
B) an increase in the supply of labour.
C) a decrease in the wage rate.
D) a decrease in the market price of copper plumbing pipe.
E) an improvement in workersʹ human capital.

Question 60

The demand curve for a variable factor is always

A) that factorʹs marginal cost curve.
B) that factorʹs MRP curve.
C) that factorʹs MP curve.
D) steeper than that factorʹs MRP curve.
E) flatter than that factorʹs MRP curve.

Question 61

The elasticity of supply of computer-game programmers will generally be greater if we are analyzing the amount supplied to

A) the whole economy in the short run.
B) the whole economy in the long run.
C) a particular industry in the short run.
D) a particular industry in the long run.
E) a specific firm.

Question 62

The demand and supply curves shown below apply to a competitive market for a factor used in the production of widgets.
FIGURE 13-2
Refer to Figure 13-2. This factor market is in equilibrium at point B. What is the marginal revenue product of the 40th unit of the factor employed?

A) $8 multiplied by the price of the product
B) $320
C) $8
D) the marginal product of the 40th unit employed multiplied by the wage
E) $8 multiplied by the marginal revenue of the 40th unit employed

Question 63

Which of the following statements concerning factor mobility is FALSE?

A) Land is a mobile resource in an economic sense, because it has many alternative uses.
B) Once it is in place, a factory designed and built for a specific purpose is highly mobile.
C) The allocation of labour tends to depend more on non -monetary considerations than does the allocation of either land or capital.
D) The elasticity of the supply of labour to any particular use is likely to be greater in the long run than in the short run.
E) Factor mobility is an important determinant of economic rent.

Question 64

The demand and supply curves shown below apply to a competitive market for a factor used in the production of widgets.
FIGURE 13-2
Consider a firmʹs demand for a factor of production. A perfectly competitive firm will continue to increase production until the marginal cost of the variable factor is

A) greater than the marginal revenue of the firmʹs output.
B) less than the marginal revenue of the firmʹs output.
C) equal to zero.
D) equal to the marginal revenue product of the factor.
E) equal to the marginal revenue of the firmʹs output.

Question 65

The diagram below shows the MRP curve for a firm producing copper plumbing pipe. The factor of production being considered here is hours of labour.
FIGURE 13-1
Refer to Figure 13-1. Suppose this firm is facing MRP1, a wage rate of $16 per hour and is employing 100 units of labour. At this level of employment,

A) the last unit of labour is adding less to the firmʹs cost than it is adding to the firmʹs revenue, so it should increase the use of labour.
B) the last unit of labour contributes as much to the firmʹs costs as to the firmʹs revenues and so the firm should not change its use of labour.
C) the last unit of labour is adding more to the firmʹs cost than it is adding to the firmʹs revenue, so it should reduce the use of labour.
D) the firm has shifted the MRP curve to MRP2.
E) the firm has shifted the MRP curve to MRP3.

Question 66

Consider computer programmers as a factor of production. Their factor mobility is quite , and so to any specific firm the supply of this factor is quite .

A) low; inelastic
B) low; elastic
C) high; inelastic
D) high; elastic

Question 67

If a given factor of production is highly mobile across alternative uses, the factorʹs supply is

A) highly price elastic.
B) highly price inelastic.
C) perfectly inelastic.
D) irrelevant to its earnings.
E) immobile at the industry level.

Question 68

The diagram below shows the MRP curve for a firm producing copper plumbing pipe. The factor of production being considered here is hours of labour.
FIGURE 13-1
Refer to Figure 13-1. Suppose this firm is facing MRP1, a wage rate of $12 per hour and is employing 150 units of labour. At this level of employment,

A) the last unit of labour is adding less to the firmʹs cost than it is adding to the firmʹs revenue, so it should increase the use of labour.
B) the last unit of labour contributes as much to the firmʹs costs as to the firmʹs revenues and so the firm should not change its use of labour.
C) the last unit of labour is adding more to the firmʹs cost than it is adding to the firmʹs revenue, so it should reduce the use of labour.
D) the firm has shifted the MRP curve to MRP2.
E) the firm has shifted the MRP curve to MRP3.

Question 69

The aggregate quantity of labour supplied will generally rise when there is an increase in
1) immigration;
2) labour-force participation rates;
3) the retirement age.

A) 1 and 2
B) 1 and 3
C) 2 and 3
D) 1, 2, and 3
E) 1 only

Question 70

The demand and supply curves shown below apply to a competitive market for a factor used in the production of widgets.
FIGURE 13-2
Other things being equal, if it becomes more difficult to substitute capital for labour in the production of cell phones, the demand curve for labour in that industry

A) will shift parallel to the left.
B) will shift parallel to the right.
C) will remain unchanged.
D) will become more elastic.
E) will become more inelastic.

Question 71

If small changes in incentives can induce a factor to shift between alternative uses, we say that the factor is

A) efficient.
B) mobile.
C) inelastic.
D) declining.
E) flighty.

Question 72

Consider the following production and cost schedule for a firm. The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-1
Refer to Table 13-1. In order to determine this firmʹs profit-maximizing number of units of the variable factor of production, what necessary information is missing from the table?

A) the price per unit of the factor
B) the per unit price of the output
C) the marginal product of the factor
D) the marginal revenue product of the factor
E) the total output for the firm

Question 73

Assume that the market for farmland in the fruit-growing region of southwestern Ontario is perfectly competitive. Which of the following will shift the demand curve for this land to the left?
1) a decrease in demand for Canadian-grown fruit;
2) a change in consumer preferences toward eating more fruit;
3) scientific reports that confirm a reduction in water supply to the region.

A) 1 and 2
B) 2 and 3
C) 1 and 3
D) 1 only
E) 3 only

Question 74

Consider the following production and cost schedule for a firm. The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-1
Consider a perfectly competitive labour market for video-game designers. Which of the following will shift the demand curve for these workers to the right?
1) an increase in the equilibrium wage rate for video-game designers;
2) a decrease in the market price of video games;
3) new software that improves the design process.

A) 1 only
B) 2 only
C) 3 only
D) 1 and 2
E) 2 and 3

Question 75

Consider the following production and cost schedule for a firm. The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-1
Refer to Table 13-1. How many units of this factor of production would the profit-maximizing firm hire if the price of each unit of the factor was $140?

A) 11
B) 12
C) 13
D) 14
E) It is not possible to determine with the data given.

Question 76

The demand and supply curves shown below apply to a competitive market for a factor used in the production of widgets.
FIGURE 13-2
Refer to Figure 13-2. If the supply and demand curves for the factor are as shown in the diagram, but the wage being paid is $9, and the market is at point C,

A) the wage is higher than the factorʹs marginal revenue product, and firms will reduce the amount of the factor employed.
B) the wage is higher than the factorʹs marginal product, and firms will reduce the amount of the factor employed.
C) the marginal revenue product is not equal to the marginal cost of the factor and firms will increase the amount of the factor employed.
D) the demand curve will shift to the right until equilibrium factor price and quantity are re -established.
E) the demand curve will shift to the left until equilibrium factor price and quantity are re-established.

Question 77

The demand and supply curves shown below apply to a competitive market for a factor used in the production of widgets.
FIGURE 13-2
Consider a firmʹs demand for a factor of production. A monopolist will continue to increase production until the marginal cost of the variable factor is

A) greater than the marginal revenue of the firmʹs output.
B) less than the marginal revenue of the firmʹs output.
C) equal to zero.
D) equal to the marginal revenue product of the factor.
E) equal to the marginal revenue of the firmʹs output.

Question 78

Consider the following production and cost schedule for a firm. The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-1
Refer to Table 13-1. How many units of this factor of production would the profit-maximizing firm hire if the price of each unit of the factor was $30?

A) 12
B) 13
C) 14
D) 15
E) It is not possible to determine with the data given.

Question 79

Consider the following production and cost schedule for a firm. The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-1
Refer to Table 13-1. How many units of this factor of production would the profit-maximizing firm hire if the price of each unit of the factor was $200?

A) 10
B) 11
C) 12
D) 13
E) It is not possible to determine with the data given.

Question 80

The diagram below shows the MRP curve for a firm producing copper plumbing pipe. The factor of production being considered here is hours of labour.
FIGURE 13-1
Refer to Figure 13-1. Suppose this profit-maximizing firm is facing MRP1 and a wage rate of $12 per hour. Now suppose there is, simultaneously, an increase in demand for copper plumbing pipe such that MRP shifts to MRP2), and an increase in the wage rate to $16 per hour. The firm should

A) employ 20 more units of labour.
B) employ 40 more units of labour.
C) employ the same number of units of labour.
D) employ 40 fewer units of labour
E) employ 20 fewer units of labour.