Question 1

The value of marginal product of labor is the change in

Accepted Answer

A)  profit from hiring one more worker. 
B)  output from hiring one more worker. 
C)  total revenue from hiring one more worker. 
D)  profit from producing one more unit of output. 
A)  profit from hiring one more worker. 
B)  output from hiring one more worker. 
C)  total revenue from hiring one more worker. 
D)  profit from producing one more unit of output.

Question 2

-If the labor market in the above figure is competitive, what is the equilibrium wage and quantity of labor hired?

Accepted Answer

A)  $10 and 100 hours 
B)  $10 and 50 hours 
C)  $5 and 100 hours 
D)  $15 and 50 hours 
A)  $10 and 100 hours 
B)  $10 and 50 hours 
C)  $5 and 100 hours 
D)  $15 and 50 hours

Question 3

A monopsony will never pay a wage that is

Accepted Answer

A)  equal to the minimum wage. 
B)  less than the value of marginal product. 
C)  more than the value of marginal product. 
D)  negotiated with the union. 
A)  equal to the minimum wage. 
B)  less than the value of marginal product. 
C)  more than the value of marginal product. 
D)  negotiated with the union.

Question 4

-Based on the production and revenue data in the above table, what is the marginal product of the 4th worker?

Accepted Answer

A)  28 
B)  6 
C)  4 
D)  2 
A)  28 
B)  6 
C)  4 
D)  2

Question 5

-The figure above shows a labor market. If there is a monopsony in this labor market, then increasing the minimum wage from $3 per hour to $5 per hour

Accepted Answer

A)  will increase the quantity of labor employed. 
B)  will leave unchanged the quantity of labor employed. 
C)  will decrease the quantity of labor employed. 
D)  could increase, decrease, or leave unchanged the quantity of labor employed. 
A)  will increase the quantity of labor employed. 
B)  will leave unchanged the quantity of labor employed. 
C)  will decrease the quantity of labor employed. 
D)  could increase, decrease, or leave unchanged the quantity of labor employed.

Question 6

If a union is able to decrease the supply of workers in a competitive labor market but the union cannot affect the demand for its members' labor, then

Accepted Answer

A)  wages and the quantity of labor hired will both increase. 
B)  wages will increase but the quantity of labor hired will decrease. 
C)  wages will decrease but the quantity of labor hired will increase. 
D)  wages and the quantity of labor hired will both decrease. 
A)  wages and the quantity of labor hired will both increase. 
B)  wages will increase but the quantity of labor hired will decrease. 
C)  wages will decrease but the quantity of labor hired will increase. 
D)  wages and the quantity of labor hired will both decrease.

Question 7

As the quantity of labor employed by a firm decreases , labor's ________ increases.

Accepted Answer

A)  marginal cost 
B)  value of marginal product 
C)  marginal revenue 
D)  average cost 
A)  marginal cost 
B)  value of marginal product 
C)  marginal revenue 
D)  average cost

Question 8

In which of the following situations is there most likely to be a monopsony?

Accepted Answer

A)  the market for farm workers in a large rural area 
B)  the market for advertising executives in New York City 
C)  the market for accountants in New York City 
D)  the market for NBA players drafted out of college by one NBA team 
A)  the market for farm workers in a large rural area 
B)  the market for advertising executives in New York City 
C)  the market for accountants in New York City 
D)  the market for NBA players drafted out of college by one NBA team

Question 9

The value of marginal product of labor

Accepted Answer

A)  is the change in total product that results from selling one more unit of a good. 
B)  is equal to the price multiplied by the marginal product of labor. 
C)  is equal to marginal revenue multiplied by the quantity. 
D)  increases as the amount of labor employed increases. 
A)  is the change in total product that results from selling one more unit of a good. 
B)  is equal to the price multiplied by the marginal product of labor. 
C)  is equal to marginal revenue multiplied by the quantity. 
D)  increases as the amount of labor employed increases.

Question 10

-Consider the labor market depicted in the above figure. The competitive equilibrium would be for workers to be paid an hourly wage equal to

Accepted Answer

A)  $10. 
B)  $15. 
C)  $20. 
D)  None of the above answers is correct. 
A)  $10. 
B)  $15. 
C)  $20. 
D)  None of the above answers is correct.

Question 11

In comparison to an employer in a competitive labor market, a monopsony employer pays a ________ wage rate and hires ________ workers.

Accepted Answer

A)  lower; fewer 
B)  lower; more 
C)  higher; more 
D)  higher; fewer 
A)  lower; fewer 
B)  lower; more 
C)  higher; more 
D)  higher; fewer

Question 12

If the supply of a factor is perfectly inelastic, then

Accepted Answer

A)  no more than the existing quantity can be supplied. 
B)  the supply curve is horizontal. 
C)  sellers will provide whatever quantity is demanded at the going price. 
D)  a fall in price results in no quantity being supplied. 
A)  no more than the existing quantity can be supplied. 
B)  the supply curve is horizontal. 
C)  sellers will provide whatever quantity is demanded at the going price. 
D)  a fall in price results in no quantity being supplied.

Question 13

Consider the demand for labor in the computer chip industry. The demand for labor

Accepted Answer

A)  is derived from the demand for computer chips. 
B)  is shown by a perfectly elastic demand for labor. 
C)  is shown by a perfectly inelastic demand for labor. 
D)  has a demand curve that is backward bending. 
A)  is derived from the demand for computer chips. 
B)  is shown by a perfectly elastic demand for labor. 
C)  is shown by a perfectly inelastic demand for labor. 
D)  has a demand curve that is backward bending.

Question 14

An increase in the price of a firm's product

Accepted Answer

A)  decreases its value of marginal product of labor. 
B)  increases its demand for labor. 
C)  increases its supply of labor. 
D)  None of the above answers is correct. 
A)  decreases its value of marginal product of labor. 
B)  increases its demand for labor. 
C)  increases its supply of labor. 
D)  None of the above answers is correct.

Question 15

-Winnie's Car Wash is a perfectly competitive firm. The table above shows Winnie's total product schedule. If the price of a car wash is $4, and Winnie maximizes his profit when he employs 3 workers, the wage rate is

Accepted Answer

A)  $25 per day. 
B)  $30 per day. 
C)  $70 per day. 
D)  $50 per day. 
A)  $25 per day. 
B)  $30 per day. 
C)  $70 per day. 
D)  $50 per day.

Question 16

Usually the demand for labor decreases (that is, the demand for labor curve shifts leftward) if the

Accepted Answer

A)  wage rate increases. 
B)  wage rate decreases. 
C)  price of the firm's output rises. 
D)  prices of other factors fall. 
A)  wage rate increases. 
B)  wage rate decreases. 
C)  price of the firm's output rises. 
D)  prices of other factors fall.

Question 17

For a monopsony, the marginal cost of labor exceeds the wage rate because the firm must increase the wage it pays to all of its workers if it wishes to increase its employment.

Accepted Answer

A) True 
 B)False

Question 18

-The figure above shows a labor market. If this labor market is perfectly competitive, employment is

Accepted Answer

A)  0 hours per week. 
B)  50 hours per week. 
C)  100 hours per week. 
D)  150 hours per week. 
A)  0 hours per week. 
B)  50 hours per week. 
C)  100 hours per week. 
D)  150 hours per week.

Question 19

The value of an additional baker to a bakery is equal to the

Accepted Answer

A)  price of bread. 
B)  value of marginal product of the baker. 
C)  baker's marginal productivity in terms of loaves of bread. 
D)  marginal cost of making an additional loaf of bread. 
A)  price of bread. 
B)  value of marginal product of the baker. 
C)  baker's marginal productivity in terms of loaves of bread. 
D)  marginal cost of making an additional loaf of bread.

Question 20

The monopsony will hire the amount of labor so that the

Accepted Answer

A)  demand for labor equals supply for labor. 
B)  value of marginal product of labor equals the wage rate. 
C)  value of marginal product of labor equals the marginal cost of labor. 
D)  supply for labor equals the wage rate. 
A)  demand for labor equals supply for labor. 
B)  value of marginal product of labor equals the wage rate. 
C)  value of marginal product of labor equals the marginal cost of labor. 
D)  supply for labor equals the wage rate.

Exam 18: Markets for Factors of Production

The value of marginal product of labor is the change in

-If the labor market in the above figure is competitive, what is the equilibrium wage and quantity of labor hired?

A monopsony will never pay a wage that is

-Based on the production and revenue data in the above table, what is the marginal product of the 4th worker?

-The figure above shows a labor market. If there is a monopsony in this labor market, then increasing the minimum wage from $3 per hour to $5 per hour

If a union is able to decrease the supply of workers in a competitive labor market but the union cannot affect the demand for its members' labor, then

As the quantity of labor employed by a firm decreases , labor's ________ increases.

In which of the following situations is there most likely to be a monopsony?

The value of marginal product of labor

-Consider the labor market depicted in the above figure. The competitive equilibrium would be for workers to be paid an hourly wage equal to

In comparison to an employer in a competitive labor market, a monopsony employer pays a ________ wage rate and hires ________ workers.

If the supply of a factor is perfectly inelastic, then

Consider the demand for labor in the computer chip industry. The demand for labor

An increase in the price of a firm's product

-Winnie's Car Wash is a perfectly competitive firm. The table above shows Winnie's total product schedule. If the price of a car wash is $4, and Winnie maximizes his profit when he employs 3 workers, the wage rate is

Usually the demand for labor decreases (that is, the demand for labor curve shifts leftward) if the

For a monopsony, the marginal cost of labor exceeds the wage rate because the firm must increase the wage it pays to all of its workers if it wishes to increase its employment.

-The figure above shows a labor market. If this labor market is perfectly competitive, employment is

The value of an additional baker to a bakery is equal to the

The monopsony will hire the amount of labor so that the

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices and Public Goods

Externalities and the Environment

Economic Inequality

Uncertainty and Information

Extension A: Review

Extension B: Review

Extension C: Review

Extension D: Review

Extension E: Review

Extension F: Review

Filters

In comparison to an employer in a competitive labor market, a monopsony employer pays a wage rate and hires workers.