Question 1

If the marginal factor cost is greater than the marginal revenue product of a resource,the producer can increase profits by laying off some units of the resource.

Accepted Answer

A) True 
 B)False

Question 2

The figure given below represents the marginal revenue product (MRP) and the marginal factor cost (MFC) of a resource in the resource market. Figure 14.3   Consider the resource market shown in Figure 14.3.Given that the resource market is perfectly competitive,determine the equilibrium price of the resource.

Accepted Answer

A) $8 
B) $3 
C) $5 
D) $4 
E) Cannot be determined from the information given 
A) $8 
B) $3 
C) $5 
D) $4 
E) Cannot be determined from the information given

Question 3

After hiring 151 units of the variable input (say labor) a firm determines the MFC to be $0.33 and the MRP to be $0.30.The firm should:

Accepted Answer

A) increase the output of its product. 
B) increase the use of labor. 
C) decrease the use of labor. 
D) produce 151 units. 
E) produce 33 units of the output. 
A) increase the output of its product. 
B) increase the use of labor. 
C) decrease the use of labor. 
D) produce 151 units. 
E) produce 33 units of the output.

Question 4

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
Refer to Figure 14.5.What wage rate will this firm pay?

Accepted Answer

A) W1 
B) W2 
C) W3 
D) W4 
E) W5 
A) W1 
B) W2 
C) W3 
D) W4 
E) W5

Question 5

The following table shows the total output produced by different units of a resource.Assume that the resource and output markets are both perfectly competitive.The equilibrium price of the resource is $15.00,and the equilibrium price of the product is $0.50. Table 14.2
  Marginal revenue product (MRP) of a resource is the product of the marginal product of the resource and the marginal revenue.
Refer to Table 14.2.What is the marginal-factor cost for the third unit of the resource?

Accepted Answer

A) $13.00 
B) $15.00 
C) $17.50 
D) $195.00 
E) $19.50 
A) $13.00 
B) $15.00 
C) $17.50 
D) $195.00 
E) $19.50

Question 6

During the recession witnessed in early 2001,many firms laid off their employees and downsized.The reason for this decrease in the demand for employees was:

Accepted Answer

A) a reduction in the demand for the final good. 
B) a reduction in the price of the final good. 
C) an increase in the demand for the final good. 
D) an increase in the price of the final good. 
E) the incompetency and poor performance of the employees. 
A) a reduction in the demand for the final good. 
B) a reduction in the price of the final good. 
C) an increase in the demand for the final good. 
D) an increase in the price of the final good. 
E) the incompetency and poor performance of the employees.

Question 7

If a resource is purchased and sold in a perfectly competitive market:

Accepted Answer

A) there are a large number of resource suppliers and the resources are identical. 
B) there is a single buyer of resource and the resources are identical. 
C) there is a single buyer of resource and the resources are differentiated. 
D) there is a large number of resource suppliers and the resources are differentiated. 
E) there are a large number of resource suppliers and there is no entry or exit. 
A) there are a large number of resource suppliers and the resources are identical. 
B) there is a single buyer of resource and the resources are identical. 
C) there is a single buyer of resource and the resources are differentiated. 
D) there is a large number of resource suppliers and the resources are differentiated. 
E) there are a large number of resource suppliers and there is no entry or exit.

Question 8

Because of their derived nature,resource markets are completely different from any other type of market studied by economists.

Accepted Answer

A) True 
 B)False

Question 9

A firm under any market structure maximizes profits at a point where:

Accepted Answer

A) marginal revenue product is greater than marginal factor cost. 
B) marginal revenue product is equal to marginal factor cost. 
C) marginal revenue product is equal to zero. 
D) marginal factor cost is equal to zero. 
E) marginal revenue product is less than marginal factor cost. 
A) marginal revenue product is greater than marginal factor cost. 
B) marginal revenue product is equal to marginal factor cost. 
C) marginal revenue product is equal to zero. 
D) marginal factor cost is equal to zero. 
E) marginal revenue product is less than marginal factor cost.

Question 10

The market-supply-of-resource curve slopes upward,indicating that as the price of a resource rises,the quantity supplied of the resource rises,everything else held constant.

Accepted Answer

A) True 
 B)False

Question 11

The profit-maximizing number of workers for a monopsony to employ is derived at the point where the marginal-revenue product of labor is equal to the marginal-factor cost of labor.

Accepted Answer

A) True 
 B)False

Question 12

If the price of a product increases,the demand for the resource used in producing that product decreases.

Accepted Answer

A) True 
 B)False

If the marginal factor cost is greater than the marginal revenue product of a resource,the producer can increase profits by laying off some units of the resource.

After hiring 151 units of the variable input (say labor) a firm determines the MFC to be $0.33 and the MRP to be $0.30.The firm should:

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 Refer to Figure 14.5.What wage rate will this firm pay?

During the recession witnessed in early 2001,many firms laid off their employees and downsized.The reason for this decrease in the demand for employees was:

If a resource is purchased and sold in a perfectly competitive market:

Because of their derived nature,resource markets are completely different from any other type of market studied by economists.

A firm under any market structure maximizes profits at a point where:

The market-supply-of-resource curve slopes upward,indicating that as the price of a resource rises,the quantity supplied of the resource rises,everything else held constant.

The profit-maximizing number of workers for a monopsony to employ is derived at the point where the marginal-revenue product of labor is equal to the marginal-factor cost of labor.

If the price of a product increases,the demand for the resource used in producing that product decreases.

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

If the marginal factor cost is greater than the marginal revenue product of a resource,the producer can increase profits by laying off some units of the resource.

After hiring 151 units of the variable input (say labor) a firm determines the MFC to be $0.33 and the MRP to be $0.30.The firm should:

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 Refer to Figure 14.5.What wage rate will this firm pay?

During the recession witnessed in early 2001,many firms laid off their employees and downsized.The reason for this decrease in the demand for employees was:

If a resource is purchased and sold in a perfectly competitive market:

Because of their derived nature,resource markets are completely different from any other type of market studied by economists.

A firm under any market structure maximizes profits at a point where:

The market-supply-of-resource curve slopes upward,indicating that as the price of a resource rises,the quantity supplied of the resource rises,everything else held constant.

The profit-maximizing number of workers for a monopsony to employ is derived at the point where the marginal-revenue product of labor is equal to the marginal-factor cost of labor.

If the price of a product increases,the demand for the resource used in producing that product decreases.

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