Question 1

Which of the following statements best illustrates the relationship between the market for products and the market for resources?

Accepted Answer

A) An increase in the price of cameras will decrease the demand for film. 
B) As income rises,people demand relatively smaller amounts of food. 
C) An increase in demand for textiles will increase the demand for textile workers. 
D) An increase in the price of butter will cause more people to buy margarine. 
E) A decrease in demand for tea will increase the demand for coffee. 
A) An increase in the price of cameras will decrease the demand for film. 
B) As income rises,people demand relatively smaller amounts of food. 
C) An increase in demand for textiles will increase the demand for textile workers. 
D) An increase in the price of butter will cause more people to buy margarine. 
E) A decrease in demand for tea will increase the demand for coffee.

Question 2

If the resource market is perfectly competitive,the marginal factor cost is equal to the price of the resource.

Accepted Answer

A) True 
 B)False

Question 3

The figure given below represents equilibrium in the labor market. Figure 14.5   In the figure,
VMP: Value of marginal product curve
MRP: Marginal revenue product curve
MFC: Marginal factor cost
S: Supply curve of labor
In Figure 14.5,the firm is:

Accepted Answer

A) a monopsonist in the labor market and a perfect competitor in the output market. 
B) a monopsonist in the labor market and a monopolist in the output market. 
C) a perfect competitor in all markets. 
D) a perfect competitor in the labor market and a monopolist in the output market. 
E) either a monopolist or a monopsonist,but not both. 
A) a monopsonist in the labor market and a perfect competitor in the output market. 
B) a monopsonist in the labor market and a monopolist in the output market. 
C) a perfect competitor in all markets. 
D) a perfect competitor in the labor market and a monopolist in the output market. 
E) either a monopolist or a monopsonist,but not both.

Question 4

Assume that labor is the only variable input and that an additional input of labor increases total output from 72 to 78 units.If the product sells for $6 per unit in a perfectly competitive market,then the MRPof this additional worker is:

Accepted Answer

A) $78 
B) $72 
C) $36 
D) $39 
E) $6 
A) $78 
B) $72 
C) $36 
D) $39 
E) $6

Question 5

The following table shows output per hour produced by the different units of labor. Table 14.1
  The marginal revenue product of a resource is equal to the product of the marginal product of an input and marginal revenue.
Refer to Table 14.1.If both the wage rate and the price of the good falls to $2,how many workers would the firm hire?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
E) 5 
A) 1 
B) 2 
C) 3 
D) 4 
E) 5

Question 6

A monopsonist firm faces a negatively sloped marginal factor cost curve.

Accepted Answer

A) True 
 B)False

Question 7

The following figure shows the marginal revenue product of a resource [MRP]: Figure 14.1   In Figure 14.1,if the price of the resource is equal to 0C and the resource market is perfectly competitive,the quantity employed of the resource would be:

Accepted Answer

A) less than L2. 
B) equal to L1. 
C) equal to L2. 
D) equal to L3. 
E) more than L3. 
A) less than L2. 
B) equal to L1. 
C) equal to L2. 
D) equal to L3. 
E) more than L3.

Question 8

Suppose output of a firm hiring workers in a competitive labor market increases by three units when an additional worker is hired.This firm will hire more laborers if the market price of its product is $4 and the wage rate is $9.[Hint: Marginal revenue product of a resource is equal to the product of marginal product of the resource and the marginal revenue of the firm.]

Accepted Answer

A) True 
 B)False

Question 9

If the government sets a minimum wage which is more than the equilibrium wage,the firms tend to demand more labor.

Accepted Answer

A) True 
 B)False

Question 10

A market is classified as a monopsony will arise when there is only one seller of the product.

Accepted Answer

A) True 
 B)False

Question 11

Consider a perfectly competitive firm that can raise its output by 2 units by hiring an additional unit of capital.If the cost of hiring this additional unit of capital is $4 and the market price of the good is $1,the firm will certainly hire this unit of capital.[Hint: MRP = MP ´ MR]

Accepted Answer

A) True 
 B)False

Question 12

The marginal-revenue product (MRP) is the:

Accepted Answer

A) value of the additional output that an extra unit of a resource can produce. 
B) cost of hiring an additional unit of a resource. 
C) extra cost of producing an additional unit of output. 
D) increase in total output when an additional unit of an input is hired. 
E) change in total revenue when an additional unit of a good is sold. 
A) value of the additional output that an extra unit of a resource can produce. 
B) cost of hiring an additional unit of a resource. 
C) extra cost of producing an additional unit of output. 
D) increase in total output when an additional unit of an input is hired. 
E) change in total revenue when an additional unit of a good is sold.

Question 13

Firms are consumers and households are the producers in the _____.

Accepted Answer

A) stock market 
B) bond market 
C) labor market 
D) product market 
E) underground market 
A) stock market 
B) bond market 
C) labor market 
D) product market 
E) underground market

Question 14

The following table shows the marginal productivity of different units of labor for producing a product. Table 14.4
  In the table,
MR: Marginal Revenue
MPP: Marginal Physical Product
According to Table 14.4,what is the highest MRP the firm can reach? (MRP = MPP ´ MPP)

Accepted Answer

A) 5 
B) 6 
C) 15 
D) 18 
E) 25 
A) 5 
B) 6 
C) 15 
D) 18 
E) 25

Question 15

Which of the following goods is likely to have a derived demand?

Accepted Answer

A) Tractor 
B) T-shirt 
C) Italian food 
D) Residential buildings 
E) Cigarettes 
A) Tractor 
B) T-shirt 
C) Italian food 
D) Residential buildings 
E) Cigarettes

Question 16

The demand curve for labor indicates that:

Accepted Answer

A) as the real wage rate increases,employers will hire more workers. 
B) as the nominal wage rate increases,employers will hire more workers. 
C) as the nominal wage rate decreases,the real wage rate increases. 
D) as the real wage rate increases,employers will hire fewer workers. 
E) the real wage rate does not affect firms' hiring decisions. 
A) as the real wage rate increases,employers will hire more workers. 
B) as the nominal wage rate increases,employers will hire more workers. 
C) as the nominal wage rate decreases,the real wage rate increases. 
D) as the real wage rate increases,employers will hire fewer workers. 
E) the real wage rate does not affect firms' hiring decisions.

Question 17

Under perfect competition in the resource market,the marginal factor cost curve:

Accepted Answer

A) is positively sloped. 
B) is vertical. 
C) is negatively sloped. 
D) is horizontal. 
E) does not exist. 
A) is positively sloped. 
B) is vertical. 
C) is negatively sloped. 
D) is horizontal. 
E) does not exist.

Question 18

As the total quantity of land is fixed the payment for land is termed as economic rent.

Accepted Answer

A) True 
 B)False

Question 19

The following figure represents the equilibrium in the labor markets. Figure 14.4   In the figure,
MFC: Marginal Factor Cost curve
D: Demand or the Marginal Revenue Product curve
S: Supply curve
Refer to Figure 14.4.A monopsonist will pay the wage rate _____ and hire _____ units of labor.

Accepted Answer

A) W2; Q2 
B) W1; Q2 
C) W3; Q1 
D) W1; Q3 
E) W1; Q1 
A) W2; Q2 
B) W1; Q2 
C) W3; Q1 
D) W1; Q3 
E) W1; Q1

Question 20

Transfer earnings of a factor is equal to its:

Accepted Answer

A) economic rent. 
B) explicit cost. 
C) actual earnings. 
D) overhead cost. 
E) opportunity cost. 
A) economic rent. 
B) explicit cost. 
C) actual earnings. 
D) overhead cost. 
E) opportunity cost.

Which of the following statements best illustrates the relationship between the market for products and the market for resources?

If the resource market is perfectly competitive,the marginal factor cost is equal to the price of the resource.

The figure given below represents equilibrium in the labor market. Figure 14.5 In the figure, VMP: Value of marginal product curve MRP: Marginal revenue product curve MFC: Marginal factor cost S: Supply curve of labor In Figure 14.5,the firm is:

Assume that labor is the only variable input and that an additional input of labor increases total output from 72 to 78 units.If the product sells for $6 per unit in a perfectly competitive market,then the MRPof this additional worker is:

A monopsonist firm faces a negatively sloped marginal factor cost curve.

The following figure shows the marginal revenue product of a resource [MRP]: Figure 14.1 In Figure 14.1,if the price of the resource is equal to 0C and the resource market is perfectly competitive,the quantity employed of the resource would be:

If the government sets a minimum wage which is more than the equilibrium wage,the firms tend to demand more labor.

A market is classified as a monopsony will arise when there is only one seller of the product.

Consider a perfectly competitive firm that can raise its output by 2 units by hiring an additional unit of capital.If the cost of hiring this additional unit of capital is $4 and the market price of the good is $1,the firm will certainly hire this unit of capital.[Hint: MRP = MP ´ MR]

The marginal-revenue product (MRP) is the:

Firms are consumers and households are the producers in the _____.

The following table shows the marginal productivity of different units of labor for producing a product. Table 14.4 In the table, MR: Marginal Revenue MPP: Marginal Physical Product According to Table 14.4,what is the highest MRP the firm can reach? (MRP = MPP ´ MPP)

Which of the following goods is likely to have a derived demand?

The demand curve for labor indicates that:

Under perfect competition in the resource market,the marginal factor cost curve:

As the total quantity of land is fixed the payment for land is termed as economic rent.

The following figure represents the equilibrium in the labor markets. Figure 14.4 In the figure, MFC: Marginal Factor Cost curve D: Demand or the Marginal Revenue Product curve S: Supply curve Refer to Figure 14.4.A monopsonist will pay the wage rate _ and hire _ units of labor.

Transfer earnings of a factor is equal to its:

Economics: The World Around You

Choice, opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

Consumer Choice

Supply: The Costs of Doing Business

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution,Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters

Exam 14: Resource Markets

Which of the following statements best illustrates the relationship between the market for products and the market for resources?

If the resource market is perfectly competitive,the marginal factor cost is equal to the price of the resource.

The figure given below represents equilibrium in the labor market. Figure 14.5 In the figure, VMP: Value of marginal product curve MRP: Marginal revenue product curve MFC: Marginal factor cost S: Supply curve of labor In Figure 14.5,the firm is:

Assume that labor is the only variable input and that an additional input of labor increases total output from 72 to 78 units.If the product sells for $6 per unit in a perfectly competitive market,then the MRPof this additional worker is:

A monopsonist firm faces a negatively sloped marginal factor cost curve.

The following figure shows the marginal revenue product of a resource [MRP]: Figure 14.1 In Figure 14.1,if the price of the resource is equal to 0C and the resource market is perfectly competitive,the quantity employed of the resource would be:

If the government sets a minimum wage which is more than the equilibrium wage,the firms tend to demand more labor.

A market is classified as a monopsony will arise when there is only one seller of the product.

Consider a perfectly competitive firm that can raise its output by 2 units by hiring an additional unit of capital.If the cost of hiring this additional unit of capital is $4 and the market price of the good is $1,the firm will certainly hire this unit of capital.[Hint: MRP = MP ´ MR]

The marginal-revenue product (MRP) is the:

Firms are consumers and households are the producers in the _____.

The following table shows the marginal productivity of different units of labor for producing a product. Table 14.4 In the table, MR: Marginal Revenue MPP: Marginal Physical Product According to Table 14.4,what is the highest MRP the firm can reach? (MRP = MPP ´ MPP)

Which of the following goods is likely to have a derived demand?

The demand curve for labor indicates that:

Under perfect competition in the resource market,the marginal factor cost curve:

As the total quantity of land is fixed the payment for land is termed as economic rent.

The following figure represents the equilibrium in the labor markets. Figure 14.4 In the figure, MFC: Marginal Factor Cost curve D: Demand or the Marginal Revenue Product curve S: Supply curve Refer to Figure 14.4.A monopsonist will pay the wage rate _____ and hire _____ units of labor.

Transfer earnings of a factor is equal to its:

Economics: The World Around You

Choice, opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

Consumer Choice

Supply: The Costs of Doing Business

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution,Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters

The following figure represents the equilibrium in the labor markets. Figure 14.4 In the figure, MFC: Marginal Factor Cost curve D: Demand or the Marginal Revenue Product curve S: Supply curve Refer to Figure 14.4.A monopsonist will pay the wage rate _ and hire _ units of labor.