Question 1

A firm's short- run demand function for some input will shift up if:

Accepted Answer

A) the competitive equilibrium price of the input decreases. 
B) a new process makes the input more productive. 
C) the prices of the fixed inputs decrease. 
D) the price of the firm's product increases.

Question 2

A firm which is a monopolist in its output market and a monopsonist in an input market is:

Accepted Answer

A) inefficient because VMP > MRP and MFC > w. 
B) inefficient because VMP > MRP. 
C) efficient. 
D) inefficient because MFC > w.

Question 3

Figure 11A

-In Figure 11A, the individual's Production possibility frontier is:

Accepted Answer

A) the line including the points G, N* and E*. 
B) the line including the points N* and E*. 
C) the line including the points G, N*, and 0'. 
D) the line including the point E* only.

Question 4

Joanna currently gets $1000 weekly in investment income, and she works 10 hours each week at $50 an hour. Leisure is neither inferior nor a normal good for Joanna. Assume she is free to choose her hours of work. If offered a choice between a 10% increase in her investment income and a 20% increase in her hourly wage, then Joanna will choose the increase in wage.

Accepted Answer

A) True 
 B)False

Question 5

In long- run equilibrium a firm that is a perfect competitor in its input markets but a monopolist in its output market will choose an input bundle such that for each input:

Accepted Answer

A) MRP is greater than the VMP. 
B) input price is equal to VMP. 
C) MRP is equal to the VMP. 
D) MRP is less than the VMP.

Question 6

In long- run equilibrium, for a firm which is a monopolist in its output market and a perfect competitor in its input markets:

Accepted Answer

A) w = VMP for all inputs. 
B) w = MRP > VMP for all inputs. 
C) p = LRMC. 
D) w = MRP < VMP for all inputs.

Question 7

A perfectly competitive input market:

Accepted Answer

A) assumes there are no intermediate goods. 
B) has all firms as price takers and all inputs as price takers. 
C) has all firms as price searchers, but all inputs as price takers. 
D) is where the input price equals the output price.

Question 8

If a firm is a competitor in its output market and a competitor in an input market, its input bundle will be chosen so that:

Accepted Answer

A) VMP  MRP for that input. 
C) VMP is not equal MRP for that input. 
D) VMP = MRP for that input.

Question 9

A firm uses one variable factor, labour, which it buys as a monopsonist, to produce a single output. It sells the product in a perfectly competitive market. The firm's production function is: Y = - 7L²+ 200L where Y is daily output in units and L is the number of workers employed. The output is sold at $.5 (50 cents)per unit. The supply of labour to the firm is: w(L)=28 + L i)What is the number of workers employed ? What is the wage per worker? ii)Calculate the deadweight loss;

Accepted Answer

The answer of A firm uses one variable factor, labour,...

Question 10

Assume that the demand for labour is given by the inverse demand curve W = 5 - 0.1L where W is the nominal wage and L is the number of hours worked. Assume that the inverse supply curve of labour is W = 0.1L. In this case, the MC of labour is W = 0.2L.
i)Find the equilibrium wage and employment under perfect competition.
ii)Find the equilibrium wage and employment under monopsony.
iii)Assume that the government enacted a minimum wage where W = $10. Find the equilibrium wage and employment.

Accepted Answer

The answer of Assume that the demand for labour is...

Question 11

If a resource is nonexhaustible, its supply curve in a single period is:

Accepted Answer

A) upward sloping. 
B) perfectly elastic. 
C) perfectly inelastic. 
D) downward sloping.

Question 12

the own price elasticity of demand for imports is not dependent upon which of the following?

Accepted Answer

A) the price elasticity of demand for other inputs 
B) the price elasticity of demand for the final product 
C) the price elasticity of supply for other inputs 
D) the substitution effect between inputs

Question 13

If the VMP of an input for a competitive firm is downward sloping, then:

Accepted Answer

A) there are diminishing returns to the input. 
B) the aggregate input demand (AI
D) is upward sloping. 
C) the average revenue product curve is horizontal. 
D) the input is a variable input.

Question 14

Consider the following production function for a firm using two inputs x and y,
Q=20x+14y- 2x2+2xy- y2 where q denotes the quantity of output that is produced. The marginal (physical)product of x is:

Accepted Answer

A) 20+14y- 2x+2y. 
B) 20+14y- 2x2+2xy. 
C) 20- 4x+2y. 
D) 20- 2x+2xy.

Question 15

Suppose in a small community workers can find employment in two industries: Clothing and Steel. In the Clothing industry, the marginal product of labor is always 1. In the Steel industry, the marginal product of labor is 12L_S^.5-2, where L_Sis the total number of workers employed in the Steel sector. The total supply of labor in this community is fixed at L_C+L_S=25, and the output price is 1 for both Clothing and Steel. a)Suppose that the labor market is perfectly competitive. How many workers will be employed in the Clothing sector, and how many in the Steel sector? b)What wage rate will workers in each sector receive?

Accepted Answer

The answer of Suppose in a small community workers can...

Question 16

The marginal revenue product is:

Accepted Answer

A) equal to the marginal revenue times the marginal product. 
B) equal to the price of the input times the marginal product. 
C) equal to the price of the output times the marginal product. 
D) equal to the marginal revenue times the value of the marginal product.

Question 17

In the long run, a firm's demand curve for a resource is:

Accepted Answer

A) more elastic than it is in the short run. 
B) less elastic than it is in the short run. 
C) perfectly elastic. 
D) as elastic as it is in the short run.

Question 18

Firms will hire labor up to the point where

Accepted Answer

A) the marginal product is equal to the nominal wage 
B) the average product is equal to the real wage 
C) the average product is equal to the nominal wage 
D) the marginal product is equal to the real wage

Exam 11: Input Markets and the Allocation of Resources

A firm's short- run demand function for some input will shift up if:

A firm which is a monopolist in its output market and a monopsonist in an input market is:

Figure 11A -In Figure 11A, the individual's Production possibility frontier is:

In long- run equilibrium a firm that is a perfect competitor in its input markets but a monopolist in its output market will choose an input bundle such that for each input:

In long- run equilibrium, for a firm which is a monopolist in its output market and a perfect competitor in its input markets:

A perfectly competitive input market:

If a firm is a competitor in its output market and a competitor in an input market, its input bundle will be chosen so that:

If a resource is nonexhaustible, its supply curve in a single period is:

the own price elasticity of demand for imports is not dependent upon which of the following?

If the VMP of an input for a competitive firm is downward sloping, then:

Consider the following production function for a firm using two inputs x and y, Q=20x+14y- 2x²+2xy- y²where q denotes the quantity of output that is produced. The marginal (physical) product of x is:

The marginal revenue product is:

In the long run, a firm's demand curve for a resource is:

Firms will hire labor up to the point where

Exam 11: Input Markets and the Allocation of Resources

A firm's short- run demand function for some input will shift up if:

A firm which is a monopolist in its output market and a monopsonist in an input market is:

Figure 11A -In Figure 11A, the individual's Production possibility frontier is:

In long- run equilibrium a firm that is a perfect competitor in its input markets but a monopolist in its output market will choose an input bundle such that for each input:

In long- run equilibrium, for a firm which is a monopolist in its output market and a perfect competitor in its input markets:

A perfectly competitive input market:

If a firm is a competitor in its output market and a competitor in an input market, its input bundle will be chosen so that:

If a resource is nonexhaustible, its supply curve in a single period is:

the own price elasticity of demand for imports is not dependent upon which of the following?

If the VMP of an input for a competitive firm is downward sloping, then:

Consider the following production function for a firm using two inputs x and y, Q=20x+14y- 2x2+2xy- y2 where q denotes the quantity of output that is produced. The marginal (physical) product of x is:

The marginal revenue product is:

In the long run, a firm's demand curve for a resource is:

Firms will hire labor up to the point where

Consider the following production function for a firm using two inputs x and y, Q=20x+14y- 2x²+2xy- y²where q denotes the quantity of output that is produced. The marginal (physical) product of x is: