Question 1

Suppose that U.S. firms outsource plane manufacturing jobs to China, it is expected that

Accepted Answer

A)  the wage rate for workers manufacturing planes will decrease in the U.S. but increase in China. 
B)  the wage rate for workers manufacturing planes will increase in the U.S. but decrease in China. 
C)  the wage rate for workers manufacturing planes will increase in both the U.S. and China. 
D)  the wage rate for workers manufacturing planes will decrease in both the U.S. and China. 
A)  the wage rate for workers manufacturing planes will decrease in the U.S. but increase in China. 
B)  the wage rate for workers manufacturing planes will increase in the U.S. but decrease in China. 
C)  the wage rate for workers manufacturing planes will increase in both the U.S. and China. 
D)  the wage rate for workers manufacturing planes will decrease in both the U.S. and China. A

Question 2

-The above table depicts output from a firm that manufactures computers. The computers sell for $1,000 each. What is the marginal revenue product (MRP) for the fourteenth worker per week?

Accepted Answer

A)  90 units 
B)  80 units 
C)  $70,000 
D)  $60,000 
A)  90 units 
B)  80 units 
C)  $70,000 
D)  $60,000 D

Question 3

A change in a price of a substitute input for labor will cause

Accepted Answer

A)  a change in the demand for labor in the opposite direction of the price change. 
B)  no change in the demand for labor. 
C)  a change in the supply of labor in the opposite direction of the price change. 
D)  a change in the demand for labor in the same direction of the price change. 
A)  a change in the demand for labor in the opposite direction of the price change. 
B)  no change in the demand for labor. 
C)  a change in the supply of labor in the opposite direction of the price change. 
D)  a change in the demand for labor in the same direction of the price change. D

Question 4

The additional output from one more worker is known as

Accepted Answer

A)  marginal revenue product. 
B)  marginal physical product. 
C)  marginal factor cost. 
D)  marginal wage. 
A)  marginal revenue product. 
B)  marginal physical product. 
C)  marginal factor cost. 
D)  marginal wage.

Question 5

-Refer to the above table. How many worker will this firm hire if the weekly wage rate is $1350?

Accepted Answer

A)  28 
B)  25 
C)  26 
D)  27 
A)  28 
B)  25 
C)  26 
D)  27

Question 6

Coal is required to make steel. Hence, the price elasticity of demand for coal by steel manufacturers will be

Accepted Answer

A)  unit elastic. 
B)  inelastic. 
C)  elastic. 
D)  perfectly elastic. 
A)  unit elastic. 
B)  inelastic. 
C)  elastic. 
D)  perfectly elastic.

Question 7

Which of the following will not cause the marginal revenue product of labor curve for a firm to shift?

Accepted Answer

A)  An increase in the productivity of workers. 
B)  An increase in demand for the product. 
C)  A decrease in the price of the product. 
D)  An increase in the wage rate. 
A)  An increase in the productivity of workers. 
B)  An increase in demand for the product. 
C)  A decrease in the price of the product. 
D)  An increase in the wage rate.

Question 8

When the price of labor increases, the substitution effect will ________ the quantity of labor demanded and the output effect will ________ it.

Accepted Answer

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

Question 9

An increase in the supply of labor generates

Accepted Answer

A)  increased unemployment. 
B)  lower wages. 
C)  an offsetting increase in the demand for labor. 
D)  a decrease in the quantity demanded of labor. 
A)  increased unemployment. 
B)  lower wages. 
C)  an offsetting increase in the demand for labor. 
D)  a decrease in the quantity demanded of labor.

Question 10

The MRP curve for a monopolist in the product market is

Accepted Answer

A)  the same as the MRP curve for a perfectly competitive firm in the product market. 
B)  to the left and below the MRP curve for a perfectly competitive firm in the product market. 
C)  to the right and above the MRP curve for a perfectly competitive firm in the product market. 
D)  upward sloping and below the MFC curve for a perfectly competitive firm in the product market. 
A)  the same as the MRP curve for a perfectly competitive firm in the product market. 
B)  to the left and below the MRP curve for a perfectly competitive firm in the product market. 
C)  to the right and above the MRP curve for a perfectly competitive firm in the product market. 
D)  upward sloping and below the MFC curve for a perfectly competitive firm in the product market.

Question 11

The marginal revenue product curve shifts when

Accepted Answer

A)  wages fall. 
B)  there is a change in the product price workers are producing. 
C)  wages rise. 
D)  the wages paid exceed the price. 
A)  wages fall. 
B)  there is a change in the product price workers are producing. 
C)  wages rise. 
D)  the wages paid exceed the price.

Question 12

Other things being equal, the monopolist will

Accepted Answer

A)  hire more workers than if the industry were perfectly competitive. 
B)  hire the same number of workers as a perfectly competitive industry would. 
C)  hire fewer workers than if the industry were perfectly competitive. 
D)  have lower profits than if the industry were perfectly competitive. 
A)  hire more workers than if the industry were perfectly competitive. 
B)  hire the same number of workers as a perfectly competitive industry would. 
C)  hire fewer workers than if the industry were perfectly competitive. 
D)  have lower profits than if the industry were perfectly competitive.

Question 13

Suppose the price elasticity of demand for iPods is inelastic. What would you expect about the demand elasticity for workers producing iPods? Explain.

Accepted Answer

Because the demand for workers producing

Question 14

-Refer to the above table. What does the marginal physical product equal when the amount of labor goes from 10 to 11 units?

Accepted Answer

A)  600 
B)  500 
C)  100 
D)  54.5 
A)  600 
B)  500 
C)  100 
D)  54.5

Question 15

-In the above table, what is the marginal revenue product of the 1st worker?

Accepted Answer

A)  $92 
B)  $70 
C)  $40 
D)  $8 
A)  $92 
B)  $70 
C)  $40 
D)  $8

Question 16

We would expect that a rise in labor supply will have a proportionately larger effect on the market wage rate when

Accepted Answer

A)  the demand for labor is unitary elastic. 
B)  the demand for labor is inelastic. 
C)  the supply for labor is elastic 
D)  the demand for labor is elastic. 
A)  the demand for labor is unitary elastic. 
B)  the demand for labor is inelastic. 
C)  the supply for labor is elastic 
D)  the demand for labor is elastic.

Question 17

-In the above table, what is the marginal physical product of worker 4?

Accepted Answer

A)  10 
B)  40 
C)  11 
D)  12 
A)  10 
B)  40 
C)  11 
D)  12

Question 18

-In the above figure, if the wage rate fell below Wb, in the short run the firm would

Accepted Answer

A)  hire more workers. 
B)  fire several workers. 
C)  reduce its level of output. 
D)  keep all its input levels the same as they were before. 
A)  hire more workers. 
B)  fire several workers. 
C)  reduce its level of output. 
D)  keep all its input levels the same as they were before.

Question 19

Suppose at the current level of labor used, MRP = $100 and MFC = $150. To maximize profits, the firm should

Accepted Answer

A)  hire more labor. 
B)  reduce the level of labor. 
C)  maintain the current level of labor. 
D)  expand production. 
A)  hire more labor. 
B)  reduce the level of labor. 
C)  maintain the current level of labor. 
D)  expand production.

Question 20

Ajax has just discovered that the marginal revenue product generated by the last worker hired was $50 while the marginal factor cost was $50. What should Ajax do?

Accepted Answer

A)  Leave the level of production unchanged. 
B)  Increase the amount produced. 
C)  Reduce the amount produced. 
D)  Collect more information before making a decision. 
A)  Leave the level of production unchanged. 
B)  Increase the amount produced. 
C)  Reduce the amount produced. 
D)  Collect more information before making a decision.

Exam 28: The Labor Market: Demand, Supply and Outsourcing

Suppose that U.S. firms outsource plane manufacturing jobs to China, it is expected that

-The above table depicts output from a firm that manufactures computers. The computers sell for $1,000 each. What is the marginal revenue product (MRP) for the fourteenth worker per week?

A change in a price of a substitute input for labor will cause

The additional output from one more worker is known as

-Refer to the above table. How many worker will this firm hire if the weekly wage rate is $1350?

Coal is required to make steel. Hence, the price elasticity of demand for coal by steel manufacturers will be

Which of the following will not cause the marginal revenue product of labor curve for a firm to shift?

When the price of labor increases, the substitution effect will ________ the quantity of labor demanded and the output effect will ________ it.

An increase in the supply of labor generates

The MRP curve for a monopolist in the product market is

The marginal revenue product curve shifts when

Other things being equal, the monopolist will

Suppose the price elasticity of demand for iPods is inelastic. What would you expect about the demand elasticity for workers producing iPods? Explain.

-Refer to the above table. What does the marginal physical product equal when the amount of labor goes from 10 to 11 units?

-In the above table, what is the marginal revenue product of the 1st worker?

We would expect that a rise in labor supply will have a proportionately larger effect on the market wage rate when

-In the above table, what is the marginal physical product of worker 4?

-In the above figure, if the wage rate fell below Wb, in the short run the firm would

Suppose at the current level of labor used, MRP = $100 and MFC = $150. To maximize profits, the firm should

Ajax has just discovered that the marginal revenue product generated by the last worker hired was $50 while the marginal factor cost was $50. What should Ajax do?

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

When the price of labor increases, the substitution effect will the quantity of labor demanded and the output effect will it.

-In the above figure, if the wage rate fell below W_b, in the short run the firm would