Question 1

A firm's price rises. As a result, the

Accepted Answer

A)  supply of labor to the firm decreases, that is, the labor supply curve shifts leftward. 
B)  supply of labor to the firm increases, that is, the labor supply curve shifts rightward. 
C)  demand for labor by the firm increases, that is, the labor demand curve shifts rightward. 
D)  demand for labor by the firm decreases, that is, the labor demand curve shifts leftward. 
A)  supply of labor to the firm decreases, that is, the labor supply curve shifts leftward. 
B)  supply of labor to the firm increases, that is, the labor supply curve shifts rightward. 
C)  demand for labor by the firm increases, that is, the labor demand curve shifts rightward. 
D)  demand for labor by the firm decreases, that is, the labor demand curve shifts leftward.

Question 2

In order to hire an additional worker, a monopsony must pay

Accepted Answer

A)  a higher wage rate than it paid before. 
B)  the same wage rate it paid before. 
C)  a lower wage rate than it paid before. 
D)  a wage rate that is sometimes higher, sometimes lower, and sometimes the same as before, depending on the elasticity of the supply of labor. 
A)  a higher wage rate than it paid before. 
B)  the same wage rate it paid before. 
C)  a lower wage rate than it paid before. 
D)  a wage rate that is sometimes higher, sometimes lower, and sometimes the same as before, depending on the elasticity of the supply of labor.

Question 3

-The preceding table gives monthly production information for Peter's Peanuts, a firm in a perfectly competitive industry. An increase in the wage rate for labor leads to

Accepted Answer

A)  an increase in the quantity of labor demanded. 
B)  a decrease in the quantity of labor demanded. 
C)  an increase in the demand for labor. 
D)  a decrease in the demand for labor. 
A)  an increase in the quantity of labor demanded. 
B)  a decrease in the quantity of labor demanded. 
C)  an increase in the demand for labor. 
D)  a decrease in the demand for labor.

Question 4

Why does a monopsony increase employment when faced with an effective minimum wage law?

Accepted Answer

A monopsony hires the quantity of labor

Question 5

-Winnie's Car Wash is a perfectly competitive firm. The table above shows Winnie's total product schedule. What is the marginal product of labor when the 5th worker is hired?

Accepted Answer

A)  72.5 car washes 
B)  75 car washes 
C)  5 car washes 
D)  3 car washes 
A)  72.5 car washes 
B)  75 car washes 
C)  5 car washes 
D)  3 car washes

Question 6

A firm's demand for labor curve

Accepted Answer

A)  is the same as its value of marginal product curve. 
B)  is steeper than its value of marginal product curve. 
C)  is flatter than its value of marginal product curve. 
D)  intersects its value of marginal product curve at the profit-maximizing quantity of employment. 
A)  is the same as its value of marginal product curve. 
B)  is steeper than its value of marginal product curve. 
C)  is flatter than its value of marginal product curve. 
D)  intersects its value of marginal product curve at the profit-maximizing quantity of employment.

Question 7

A market structure in which there is only one buyer is

Accepted Answer

A)  a monopoly. 
B)  a monopsony. 
C)  an oligopoly. 
D)  a competitive market. 
A)  a monopoly. 
B)  a monopsony. 
C)  an oligopoly. 
D)  a competitive market.

Question 8

What is the present value of $200 one year from now when the interest rate is 6 percent?

Accepted Answer

A)  $125.00 
B)  $188.68 
C)  $212.00 
D)  $320.00 
A)  $125.00 
B)  $188.68 
C)  $212.00 
D)  $320.00

Question 9

The present value of $100 to be received in the year 2014 is

Accepted Answer

A)  less than the present value of $100 to be received in 2015. 
B)  greater than the present value of $100 to be received in 2015. 
C)  the same as the present value of $100 to be received in 2015. 
D)  greater than the present value of $100 to be received in 2015 if the interest rate in 2015 exceeds the interest rate in 2014; otherwise, it is less. 
A)  less than the present value of $100 to be received in 2015. 
B)  greater than the present value of $100 to be received in 2015. 
C)  the same as the present value of $100 to be received in 2015. 
D)  greater than the present value of $100 to be received in 2015 if the interest rate in 2015 exceeds the interest rate in 2014; otherwise, it is less.

Question 10

A firm's demand for labor

Accepted Answer

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

Question 11

With respect to labor supply, the substitution effect takes account of the point that at higher wage rates,

Accepted Answer

A)  a person can afford to take more leisure. 
B)  leisure has become less expensive and so a person consumes less leisure. 
C)  there are no factors inducing a person to work less. 
D)  leisure has become more expensive and so a person consumes less leisure. 
A)  a person can afford to take more leisure. 
B)  leisure has become less expensive and so a person consumes less leisure. 
C)  there are no factors inducing a person to work less. 
D)  leisure has become more expensive and so a person consumes less leisure.

Question 12

-Which of the following will increase the wage rate?

Accepted Answer

A)  The price of the output produced by the workers increases. 
B)  New technology increases the marginal product of labor. 
C)  an increase in labor supply 
D)  Both answers A and B are correct. 
A)  The price of the output produced by the workers increases. 
B)  New technology increases the marginal product of labor. 
C)  an increase in labor supply 
D)  Both answers A and B are correct.

Question 13

-In the above figure, the monopsony wage rate is ________ and the quantity of labor is ________.

Accepted Answer

A)  $7.00; 150 hours 
B)  $8.00; 200 hours 
C)  $6.00; 100 hours 
D)  $8.00; 100 hours 
A)  $7.00; 150 hours 
B)  $8.00; 200 hours 
C)  $6.00; 100 hours 
D)  $8.00; 100 hours

Question 14

In a bilateral monopoly, the wage rate is likely to be ________ than the value of marginal product of labor and ________ than in a pure monopsony.

Accepted Answer

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

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 $5, what is the value of marginal product of the second worker?

Accepted Answer

A)  $100 
B)  $20 
C)  $30 
D)  $125 
A)  $100 
B)  $20 
C)  $30 
D)  $125

Question 16

-The above figure shows the market for labor. The employer is a monopsony. The firm will maximize its profit by hiring 400 hours of labor because at that point

Accepted Answer

A)  MCL > W. 
B)  VMP > W. 
C)  MCL > VMP. 
D)  MCL = VMP. 
A)  MCL > W. 
B)  VMP > W. 
C)  MCL > VMP. 
D)  MCL = VMP.

Question 17

-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 $5 and the wage rate is $37.50 per day, how many workers should Winnie employ to maximize his profit?

Accepted Answer

A)  2 
B)  3 
C)  4 
D)  5 
A)  2 
B)  3 
C)  4 
D)  5

Question 18

Which of the following groups lists the four factors of production?

Accepted Answer

A)  labor, capital, land, entrepreneurship 
B)  labor, capital, land, money 
C)  labor, money, land, entrepreneurship 
D)  labor, capital, money, entrepreneurship 
A)  labor, capital, land, entrepreneurship 
B)  labor, capital, land, money 
C)  labor, money, land, entrepreneurship 
D)  labor, capital, money, entrepreneurship

Question 19

If the interest rate is 10 percent, the present value of $400 to be received two years from today is about

Accepted Answer

A)  $331. 
B)  $484. 
C)  $364. 
D)  $440. 
A)  $331. 
B)  $484. 
C)  $364. 
D)  $440.

Question 20

In the short run, ________ increases the quantity of labor demanded by the firm.

Accepted Answer

A)  a decrease in the price of the firm's output 
B)  an increase in the prices of other factors of production used by the firm 
C)  a technological advance that decreases the marginal product of labor 
D)  a decrease in the wage rate 
A)  a decrease in the price of the firm's output 
B)  an increase in the prices of other factors of production used by the firm 
C)  a technological advance that decreases the marginal product of labor 
D)  a decrease in the wage rate

Exam 18: Markets for Factors of Production

A firm's price rises. As a result, the

In order to hire an additional worker, a monopsony must pay

-The preceding table gives monthly production information for Peter's Peanuts, a firm in a perfectly competitive industry. An increase in the wage rate for labor leads to

Why does a monopsony increase employment when faced with an effective minimum wage law?

-Winnie's Car Wash is a perfectly competitive firm. The table above shows Winnie's total product schedule. What is the marginal product of labor when the 5th worker is hired?

A firm's demand for labor curve

A market structure in which there is only one buyer is

What is the present value of $200 one year from now when the interest rate is 6 percent?

The present value of $100 to be received in the year 2014 is

A firm's demand for labor

With respect to labor supply, the substitution effect takes account of the point that at higher wage rates,

-Which of the following will increase the wage rate?

-In the above figure, the monopsony wage rate is ________ and the quantity of labor is ________.

In a bilateral monopoly, the wage rate is likely to be ________ than the value of marginal product of labor and ________ than in a pure monopsony.

-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 $5, what is the value of marginal product of the second worker?

-The above figure shows the market for labor. The employer is a monopsony. The firm will maximize its profit by hiring 400 hours of labor because at that point

-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 $5 and the wage rate is $37.50 per day, how many workers should Winnie employ to maximize his profit?

Which of the following groups lists the four factors of production?

If the interest rate is 10 percent, the present value of $400 to be received two years from today is about

In the short run, ________ increases the quantity of labor demanded by the firm.

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 the above figure, the monopsony wage rate is and the quantity of labor is .

In a bilateral monopoly, the wage rate is likely to be than the value of marginal product of labor and than in a pure monopsony.