Deck 3: Factor and Product Markets, Equilibrium, and Production Factors

Question 1

The firm is in equilibrium in the factor market when it employs units of labour upto the point where

A)The marginal revenue product of labour is equal to its marginal cost
B)The marginal revenue product of labour is more than its marginal cost
C)The marginal revenue product of labour is less than its marginal cost
D)none

Answer 1

The marginal revenue product of labour is equal to its marginal cost

Question 2

Equilibrium in the factor market achieved at the factor price and factor quantity is given by

A)The intersection of the factor demand curve and the factor supply curve
B)The sum total of the elasticities of demand and supply
C)The product of the elasticities of demand and supply
D)none

Answer 2

The intersection of the factor demand curve and the factor supply curve

Question 3

Monopsony means

A)A single seller
B)A single buyer
C)Large number of buyers
D)None of the above

Answer 3

A single buyer

Question 4

Monopoly means

A)A single seller
B)A single buyer
C)Large number of buyers
D)None of the above

Question 5

Factor prices are determined in the factor market under the forces of

A)Marginal productivity
B)Elasticity of demand
C)Elasticity of supply
D)Demand and supply

Question 6

The labour market equilibrium determines the wage rate and

A)Investment
B)Employment
C)Savings
D)Profits

Question 7

Equilibrium conditions for factor market is

A)Demand for factors is equal to supply of factors
B)Demand for factors is less than supply of factors
C)Demand for factors is more than supply of factors
D)None of the above

Question 8

Demand for factor of production is

A)Supplementary demand
B)Intermediate goods
C)Derived demand
D)Complementary demand

Question 9

Factor market will be in equilibrium when

A)Demand for factors is less than its supply
B)Demand for factors is equal to supply of factors
C)Supply of factors is less than for it
D)All of the above

Question 10

Which of the following is not a factor of production?

A)Land
B)Labour
C)Money
D)Capital

Question 11

The supply of a good refers to:

A)Stock available for sale
B)Total stock in the warehouse
C)Actual Production of the good
D)Quantity of the good offered for sale at a particular price per unit of time

Question 12

The cost of one thing in terms of the alternative given up is called:

A)Real cost
B)Opportunity cost
C)Production cost
D)Physical cost

Question 13

The producer's demand for a factor of production is governed by the ___ of that factor.

A)Price
B)Marginal Productivity
C)Availability
D)Profitability

Question 14

Under conditions of perfect competition in the product market:

A)MRP = VMP
B)MRP > VMP
C)VMP > MRP
D)None of the above

Question 15

In a perfectly competitive market a firm in the long run will be in equilibrium when:

A)AC = MC
B)AR = MR
C)MR = MC
D)Price = AR = MR= AC= MC

Question 16

Which of the following is a characteristic of capital as a factor of production?

A)It is fixed in supply
B)It never depreciates
C)It is a passive factor of production
D)It is an active factor of production

Question 17

On which law of consumption the concept of consumer's surplus is based?

A)Engel's law
B)Law of demand
C)First law of Gossen
D)Second law of Gossen

Question 18

The relation that the law of demand for factor defines is.

A)Income and quantity demanded of a factor
B)Price and quantity of a factor
C)Income and price of a factor
D)Quantity demanded and quantity supplied of a factor

Question 19

Union leaders are in a better position to bargain for higher wages if demand for labour is

A)Elastic
B)Inelastic
C)Very large
D)Permanent

Question 20

Sometimes the supply curve of labour ends:

A)Downward
B)Upward
C)Backward
D)Firstly upward and then downward

Question 21

A firm maximizes profit if:

A)MRP = Wage rate
B)MRP is rising
C)MRP = ARP
D)None of these

Question 22

The opportunity cost of a machine which can produce only one product is:

A)Low
B)Infinite
C)High
D)Medium

Question 23

When price is below equilibrium level, there will be:

A)Surplus commodity in the market
B)Supply curve will shift
C)Demand curve will shift
D)Shortage of commodity in the market