Question 1

-Refer to the above table. The marginal factor cost of labor is $200. To get the firm to hire 8 workers, the

Accepted Answer

A)  firm must be able to reduce wages below the marginal factor cost. 
B)  price of the good must be $8. 
C)  eighth worker must be at least as productive as the seventh worker was. 
D)  wage rate must be a fraction of the marginal factor cost of labor. 
A)  firm must be able to reduce wages below the marginal factor cost. 
B)  price of the good must be $8. 
C)  eighth worker must be at least as productive as the seventh worker was. 
D)  wage rate must be a fraction of the marginal factor cost of labor.

Question 2

Suppose the market for autoworkers is initially in equilibrium, but then the automakers purchase capital goods that are a substitute for workers. What happens in the market for autoworkers?

Accepted Answer

A)  The equilibrium wage rate will increase and the equilibrium quantity of labor will decrease. 
B)  The equilibrium wage rate and the equilibrium quantity of labor will both increase. 
C)  The equilibrium wage rate and the equilibrium quantity of labor will both decrease. 
D)  The equilibrium wage rate will decrease and the equilibrium quantity of labor will increase. 
A)  The equilibrium wage rate will increase and the equilibrium quantity of labor will decrease. 
B)  The equilibrium wage rate and the equilibrium quantity of labor will both increase. 
C)  The equilibrium wage rate and the equilibrium quantity of labor will both decrease. 
D)  The equilibrium wage rate will decrease and the equilibrium quantity of labor will increase.

Question 3

The price elasticity of demand for a variable input will be greater

Accepted Answer

A)  the fewer substitutes there are for the final product. 
B)  the easier it is for a particular input to be substituted for by other inputs. 
C)  the lower the price elasticity of supply of all other inputs. 
D)  the smaller the proportion of total costs accounted for by a particular variable input. 
A)  the fewer substitutes there are for the final product. 
B)  the easier it is for a particular input to be substituted for by other inputs. 
C)  the lower the price elasticity of supply of all other inputs. 
D)  the smaller the proportion of total costs accounted for by a particular variable input.

Question 4

When hiring additional workers, a firm operating in a perfectly competitive labor market will

Accepted Answer

A)  have to offer higher wages to hire additional workers, but the old workers do not get the higher wage. 
B)  have to offer higher wages to hire additional workers, and the old workers will also receive the new, higher wage. 
C)  be able to hire additional workers without offering higher wages. 
D)  be able to hire additional workers at lower wages because the new workers have been unemployed. 
A)  have to offer higher wages to hire additional workers, but the old workers do not get the higher wage. 
B)  have to offer higher wages to hire additional workers, and the old workers will also receive the new, higher wage. 
C)  be able to hire additional workers without offering higher wages. 
D)  be able to hire additional workers at lower wages because the new workers have been unemployed.

Question 5

-Refer to the above figure. The firm is operating using   . An increase in productivity has occurred. The relevant curve for the firm after the increase in productivity

Accepted Answer

A)  is   . 
B)  is   . 
C)  is   . 
D)  could be   or   depending upon whether the firm was earning a positive profit. 
A)  is   . 
B)  is   . 
C)  is   . 
D)  could be   or   depending upon whether the firm was earning a positive profit.

Question 6

Which of the following would NOT a reason for a shift in the labor demand curve?

Accepted Answer

A)  A change in demand for the final product 
B)  A change in labor productivity 
C)  A change in the market wage rate 
D)  A change in the price of a related input 
A)  A change in demand for the final product 
B)  A change in labor productivity 
C)  A change in the market wage rate 
D)  A change in the price of a related input

Question 7

The additional production resulting from hiring one more worker is

Accepted Answer

A)  marginal physical product. 
B)  marginal cost. 
C)  marginal production. 
D)  additional production. 
A)  marginal physical product. 
B)  marginal cost. 
C)  marginal production. 
D)  additional production.

Question 8

Profit maximization requires that

Accepted Answer

A)  the marginal factor cost of every input equals that input's marginal physical product. 
B)  the marginal factor cost of every input equals that input's marginal revenue product. 
C)  the amount of one input hired divided by the amount of another input hired equals the total costs of the first input hired divided by the total costs of the second input. 
D)  equal amounts of each input are employed. 
A)  the marginal factor cost of every input equals that input's marginal physical product. 
B)  the marginal factor cost of every input equals that input's marginal revenue product. 
C)  the amount of one input hired divided by the amount of another input hired equals the total costs of the first input hired divided by the total costs of the second input. 
D)  equal amounts of each input are employed.

Question 9

A firm's demand curve for labor is equal to the

Accepted Answer

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

Question 10

-Refer to the above table. How many workers will this firm hire if the weekly wage rate is $770?

Accepted Answer

A)  26 
B)  27 
C)  28 
D)  29 
A)  26 
B)  27 
C)  28 
D)  29

Question 11

The marginal revenue product represents

Accepted Answer

A)  the marginal physical product of labor divided by the price of the good produced. 
B)  the worker's contribution to the firm's total revenues. 
C)  the worker's contribution to the firm's output. 
D)  the value of each additional unit of output. 
A)  the marginal physical product of labor divided by the price of the good produced. 
B)  the worker's contribution to the firm's total revenues. 
C)  the worker's contribution to the firm's output. 
D)  the value of each additional unit of output.

Question 12

What has been the impact of the widespread adoption of automated teller machines (ATMs) on the demand for bank tellers?

Accepted Answer

A)  The demand for tellers has increased. 
B)  The demand for bank tellers has become more inelastic. 
C)  The demand for bank tellers has become more elastic. 
D)  There has been no change because the ATMs and the employees provide completely different services. 
A)  The demand for tellers has increased. 
B)  The demand for bank tellers has become more inelastic. 
C)  The demand for bank tellers has become more elastic. 
D)  There has been no change because the ATMs and the employees provide completely different services.

Question 13

The marginal physical product of labor is the

Accepted Answer

A)  total output divided by the number of labor employed. 
B)  wage that must be paid to labor. 
C)  value of sales divided by additional labor used. 
D)  change in output generated by a unit change in labor. 
A)  total output divided by the number of labor employed. 
B)  wage that must be paid to labor. 
C)  value of sales divided by additional labor used. 
D)  change in output generated by a unit change in labor.

Question 14

The individual demand curve for an input such as labor to a firm would be the downward sloping portion of the firm's

Accepted Answer

A)  marginal physical product curve. 
B)  marginal revenue product curve. 
C)  marginal revenue curve. 
D)  total revenue curve. 
A)  marginal physical product curve. 
B)  marginal revenue product curve. 
C)  marginal revenue curve. 
D)  total revenue curve.

Question 15

A firm is a price taker in the labor market if

Accepted Answer

A)  the skills of available workers do not match the requirements for the job. 
B)  there is a scarcity of labor in the market. 
C)  the hiring of more workers will drive the existing wage rate up. 
D)  the hiring of more workers will leave the existing wage rate unchanged. 
A)  the skills of available workers do not match the requirements for the job. 
B)  there is a scarcity of labor in the market. 
C)  the hiring of more workers will drive the existing wage rate up. 
D)  the hiring of more workers will leave the existing wage rate unchanged.

Question 16

When MFC > MRP, a firm in a competitive market will

Accepted Answer

A)  stop hiring. 
B)  hire more workers. 
C)  earn additional profits. 
D)  layoff workers. 
A)  stop hiring. 
B)  hire more workers. 
C)  earn additional profits. 
D)  layoff workers.

Question 17

Employment of labor in a country other than the firm's home country is called

Accepted Answer

A)  employing guest workers. 
B)  outsourcing. 
C)  employing non-naturalized workers. 
D)  employing illegal aliens. 
A)  employing guest workers. 
B)  outsourcing. 
C)  employing non-naturalized workers. 
D)  employing illegal aliens.

Question 18

When Canadian firms outsource accounting services to the United States, in markets for the labor of accountants,

Accepted Answer

A)  equilibrium employment and the market clearing wage rate will both increase in Canada, but equilibrium employment and the market clearing wage rate will both decrease in the United States. 
B)  equilibrium employment and the market clearing wage rate will both decrease in Canada, but equilibrium employment and the market clearing wage rate will both increase in the United States. 
C)  equilibrium employment and the market clearing wage rate will both increase in Canada and in the United States. 
D)  equilibrium employment and the market clearing wage rate will both decrease in Canada and the United States. 
A)  equilibrium employment and the market clearing wage rate will both increase in Canada, but equilibrium employment and the market clearing wage rate will both decrease in the United States. 
B)  equilibrium employment and the market clearing wage rate will both decrease in Canada, but equilibrium employment and the market clearing wage rate will both increase in the United States. 
C)  equilibrium employment and the market clearing wage rate will both increase in Canada and in the United States. 
D)  equilibrium employment and the market clearing wage rate will both decrease in Canada and the United States.

Question 19

The demand for computers increases. As a result,

Accepted Answer

A)  the quantity demanded of workers increases, the wage rate rises, and the supply of labor increases. 
B)  the demand for workers increases, hiring increases, but wages stay the same since each firm faces a horizontal supply curve of labor. 
C)  the wage rate increases in the industry and the quantity demanded of workers falls. 
D)  the wage rate increases in the industry and the quantity supplied of workers increases. 
A)  the quantity demanded of workers increases, the wage rate rises, and the supply of labor increases. 
B)  the demand for workers increases, hiring increases, but wages stay the same since each firm faces a horizontal supply curve of labor. 
C)  the wage rate increases in the industry and the quantity demanded of workers falls. 
D)  the wage rate increases in the industry and the quantity supplied of workers increases.

Question 20

If the additional revenue from hiring an additional worker equals the additional costs from hiring the extra worker, then we know that

Accepted Answer

A)  MFC =   . 
B)  MFC/   = wage. 
C)  MFC/   = 1. 
D)    /P = MFC. 
A)  MFC =   . 
B)  MFC/   = wage. 
C)  MFC/   = 1. 
D)    /P = MFC.

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

-Refer to the above table. The marginal factor cost of labor is $200. To get the firm to hire 8 workers, the

Suppose the market for autoworkers is initially in equilibrium, but then the automakers purchase capital goods that are a substitute for workers. What happens in the market for autoworkers?

The price elasticity of demand for a variable input will be greater

When hiring additional workers, a firm operating in a perfectly competitive labor market will

-Refer to the above figure. The firm is operating using . An increase in productivity has occurred. The relevant curve for the firm after the increase in productivity

Which of the following would NOT a reason for a shift in the labor demand curve?

The additional production resulting from hiring one more worker is

Profit maximization requires that

A firm's demand curve for labor is equal to the

-Refer to the above table. How many workers will this firm hire if the weekly wage rate is $770?

The marginal revenue product represents

What has been the impact of the widespread adoption of automated teller machines (ATMs) on the demand for bank tellers?

The marginal physical product of labor is the

The individual demand curve for an input such as labor to a firm would be the downward sloping portion of the firm's

A firm is a price taker in the labor market if

When MFC > MRP, a firm in a competitive market will

Employment of labor in a country other than the firm's home country is called

When Canadian firms outsource accounting services to the United States, in markets for the labor of accountants,

The demand for computers increases. As a result,

If the additional revenue from hiring an additional worker equals the additional costs from hiring the extra worker, then we know that

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

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