Question 1

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. A

Question 2

An increase in the marginal product of capital shifts the

Accepted Answer

A)  supply of capital curve rightward. 
B)  supply of capital curve leftward. 
C)  demand for capital curve rightward. 
D)  demand for capital curve leftward. 
A)  supply of capital curve rightward. 
B)  supply of capital curve leftward. 
C)  demand for capital curve rightward. 
D)  demand for capital curve leftward. C

Question 3

Changes in which of the following change the demand for capital and shifts the demand curve for capital?

Accepted Answer

A)  current income 
B)  expected future income 
C)  the rental rate 
D)  the marginal product of capital 
A)  current income 
B)  expected future income 
C)  the rental rate 
D)  the marginal product of capital D

Question 4

If the substitution effect from a higher wage rate exceeds the income effect, then a higher wage rate

Accepted Answer

A)  increases the quantity of labor supplied. 
B)  decreases the quantity of labor supplied. 
C)  shifts the supply of labor curve leftward. 
D)  shifts the supply of labor curve rightward. 
A)  increases the quantity of labor supplied. 
B)  decreases the quantity of labor supplied. 
C)  shifts the supply of labor curve leftward. 
D)  shifts the supply of labor curve rightward.

Question 5

-Hank's Propane Storage Company is a profit-maximizing monopsony in the local labor market for propane handling, delivery, and other associated services. The supply and marginal cost of labor curves are shown in the figure above. Hank's demand for labor curve is the curve labeled VMP = D. Hank will employ ________ hours of labor per week and pay a wage rate of ________ per hour.

Accepted Answer

A)  100; $12 
B)  100; $8 
C)  100; $6 
D)  120; $8 
A)  100; $12 
B)  100; $8 
C)  100; $6 
D)  120; $8

Question 6

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 7

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 8

A labor market monopsony

Accepted Answer

A)  has a marginal cost of labor curve that lies above the labor supply curve. 
B)  has a marginal cost of labor curve that lies below the labor supply curve. 
C)  is a labor market in which the firm has an elastic demand for labor. 
D)  is a labor market in which the firm has an inelastic demand for labor. 
A)  has a marginal cost of labor curve that lies above the labor supply curve. 
B)  has a marginal cost of labor curve that lies below the labor supply curve. 
C)  is a labor market in which the firm has an elastic demand for labor. 
D)  is a labor market in which the firm has an inelastic demand for labor.

Question 9

-The preceding table gives monthly production information for Peter's Peanuts, a firm in a perfectly competitive industry. The market price of peanuts is $2.00 per pound. A worker costs $1,200 per month. How many workers does Peter hire to maximize his profit?

Accepted Answer

A)  zero 
B)  one 
C)  three 
D)  four 
A)  zero 
B)  one 
C)  three 
D)  four

Question 10

For a perfectly competitive firm, the value of marginal product diminishes as employment increases because the

Accepted Answer

A)  price falls as the firm's production increases. 
B)  marginal revenue decreases as the firm's production increases. 
C)  marginal product decreases as the firm's production increases. 
D)  None of the above answers is correct. 
A)  price falls as the firm's production increases. 
B)  marginal revenue decreases as the firm's production increases. 
C)  marginal product decreases as the firm's production increases. 
D)  None of the above answers is correct.

Question 11

The labor supply curve is backward bending because at higher wages the income effect eventually dominates the substitution effect.

Accepted Answer

A) True 
 B)False

Question 12

-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 13

The value of marginal product of labor is the ________ when one additional unit of a labor is employed, all other things remaining the same.

Accepted Answer

A)  change in marginal revenue 
B)  change in marginal product 
C)  change in total revenue 
D)  total revenue 
A)  change in marginal revenue 
B)  change in marginal product 
C)  change in total revenue 
D)  total revenue

Question 14

In a monopsony labor market, a minimum wage set equal to the competitive market equilibrium wage rate can ________ the wage rate and ________ employment.

Accepted Answer

A)  raise; increase 
B)  raise; decrease 
C)  lower; increase 
D)  lower; decrease 
A)  raise; increase 
B)  raise; decrease 
C)  lower; increase 
D)  lower; decrease

Question 15

"In order for Charlie Trotter's, an upscale restaurant in Chicago, to maximize profit from the employment of chefs, the restaurant should hire chefs up to the point where the value of marginal product equals the wage rate for chefs." Is the statement correct or incorrect?

Accepted Answer

The statement is correct. In o

Question 16

-Consider the labor market depicted in the above figure. What wage rate must be paid to have the 200th hour of labor supplied?

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 17

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 18

The ________ effect means that, other things remaining the same, the higher the wage rate, the less time people will spend working and the more time people will spend at leisure.

Accepted Answer

A)  price 
B)  labor 
C)  income 
D)  substitution 
A)  price 
B)  labor 
C)  income 
D)  substitution

Question 19

A firm's demand for labor increases and its demand curve for labor shifts rightward if

Accepted Answer

A)  the wage rate falls. 
B)  the price of its product falls. 
C)  its value of marginal product decreases. 
D)  an advance in technology increases the marginal product of labor. 
A)  the wage rate falls. 
B)  the price of its product falls. 
C)  its value of marginal product decreases. 
D)  an advance in technology increases the marginal product of labor.

Question 20

An example of a bilateral monopoly would be when a union

Accepted Answer

A)  bargains with many different employers. 
B)  deals directly with the final consumers. 
C)  bargains with a monopoly. 
D)  bargains with a monopsony. 
A)  bargains with many different employers. 
B)  deals directly with the final consumers. 
C)  bargains with a monopoly. 
D)  bargains with a monopsony.

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

An increase in the marginal product of capital shifts the

Changes in which of the following change the demand for capital and shifts the demand curve for capital?

If the substitution effect from a higher wage rate exceeds the income effect, then a higher wage rate

A monopsony will never pay a wage that is

Which of the following will increase the wage rate?

A labor market monopsony

-The preceding table gives monthly production information for Peter's Peanuts, a firm in a perfectly competitive industry. The market price of peanuts is $2.00 per pound. A worker costs $1,200 per month. How many workers does Peter hire to maximize his profit?

For a perfectly competitive firm, the value of marginal product diminishes as employment increases because the

The labor supply curve is backward bending because at higher wages the income effect eventually dominates the substitution effect.

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

The value of marginal product of labor is the ________ when one additional unit of a labor is employed, all other things remaining the same.

In a monopsony labor market, a minimum wage set equal to the competitive market equilibrium wage rate can the wage rate and employment.

"In order for Charlie Trotter's, an upscale restaurant in Chicago, to maximize profit from the employment of chefs, the restaurant should hire chefs up to the point where the value of marginal product equals the wage rate for chefs." Is the statement correct or incorrect?

-Consider the labor market depicted in the above figure. What wage rate must be paid to have the 200th hour of labor supplied?

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

The ________ effect means that, other things remaining the same, the higher the wage rate, the less time people will spend working and the more time people will spend at leisure.

A firm's demand for labor increases and its demand curve for labor shifts rightward if

An example of a bilateral monopoly would be when a union

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Economic Inequality

Uncertainty and Information

Filters

Exam 18: Markets for Factors of Production

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

An increase in the marginal product of capital shifts the

Changes in which of the following change the demand for capital and shifts the demand curve for capital?

If the substitution effect from a higher wage rate exceeds the income effect, then a higher wage rate

A monopsony will never pay a wage that is

Which of the following will increase the wage rate?

A labor market monopsony

-The preceding table gives monthly production information for Peter's Peanuts, a firm in a perfectly competitive industry. The market price of peanuts is $2.00 per pound. A worker costs $1,200 per month. How many workers does Peter hire to maximize his profit?

For a perfectly competitive firm, the value of marginal product diminishes as employment increases because the

The labor supply curve is backward bending because at higher wages the income effect eventually dominates the substitution effect.

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

The value of marginal product of labor is the ________ when one additional unit of a labor is employed, all other things remaining the same.

In a monopsony labor market, a minimum wage set equal to the competitive market equilibrium wage rate can ________ the wage rate and ________ employment.

"In order for Charlie Trotter's, an upscale restaurant in Chicago, to maximize profit from the employment of chefs, the restaurant should hire chefs up to the point where the value of marginal product equals the wage rate for chefs." Is the statement correct or incorrect?

-Consider the labor market depicted in the above figure. What wage rate must be paid to have the 200th hour of labor supplied?

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

The ________ effect means that, other things remaining the same, the higher the wage rate, the less time people will spend working and the more time people will spend at leisure.

A firm's demand for labor increases and its demand curve for labor shifts rightward if

An example of a bilateral monopoly would be when a union

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Economic Inequality

Uncertainty and Information

Filters

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

In a monopsony labor market, a minimum wage set equal to the competitive market equilibrium wage rate can the wage rate and employment.