Question 1

A firm's employment of labor outside the country in which the firm is located is called

Accepted Answer

A)  featherbedding. 
B)  a lockout. 
C)  outsourcing. 
D)  dumping. 
A)  featherbedding. 
B)  a lockout. 
C)  outsourcing. 
D)  dumping.

Question 2

Some companies are having their technical support calls answered by people located in India. This is an example of

Accepted Answer

A)  a factor that shifts the supply of labor curve in the U.S. 
B)  insourcing. 
C)  outsourcing. 
D)  a change in the demand for the final product that labor produces. 
A)  a factor that shifts the supply of labor curve in the U.S. 
B)  insourcing. 
C)  outsourcing. 
D)  a change in the demand for the final product that labor produces.

Question 3

At a perfectly competitive firm, all of the following is true of the MRP curve EXCEPT

Accepted Answer

A)  the MRP curve is the derived supply of labor. 
B)  the MRP curve shifts leftward when labor productivity falls. 
C)  the MRP curve shifts rightward when the product price rises. 
D)  the MRP curve shifts leftward when the demand for the final product falls. 
A)  the MRP curve is the derived supply of labor. 
B)  the MRP curve shifts leftward when labor productivity falls. 
C)  the MRP curve shifts rightward when the product price rises. 
D)  the MRP curve shifts leftward when the demand for the final product falls.

Question 4

Suppose a firm employs only capital and labor as inputs. Explain how the firm should allocate its inputs in order to maximize profits in a perfectly competitive market.

Accepted Answer

To maximize profits, the firm should all

Question 5

The market demand curve for labor

Accepted Answer

A)  slopes downward. 
B)  slopes upward. 
C)  is vertical at the existing supply of labor. 
D)  is horizontal at the going wage rate. 
A)  slopes downward. 
B)  slopes upward. 
C)  is vertical at the existing supply of labor. 
D)  is horizontal at the going wage rate.

Question 6

A firm will not hire additional workers once

Accepted Answer

A)  it earns accounting profits. 
B)  the additional cost of a worker equals the additional revenue from the worker. 
C)  total product is rising. 
D)  the company reaches its breakeven output level. 
A)  it earns accounting profits. 
B)  the additional cost of a worker equals the additional revenue from the worker. 
C)  total product is rising. 
D)  the company reaches its breakeven output level.

Question 7

As new substitutes for office productivity software are developed, the demand for workers in office productivity software production should

Accepted Answer

A)  become more elastic. 
B)  become less elastic. 
C)  be unchanged. 
D)  change in an undetermined way. 
A)  become more elastic. 
B)  become less elastic. 
C)  be unchanged. 
D)  change in an undetermined way.

Question 8

A profit-maximizing firm will hire workers up to the point at which

Accepted Answer

A)  MRP  MFC. 
D)  MRP = MPP. 
A)  MRP  MFC. 
D)  MRP = MPP.

Question 9

-Refer to the above table. Suppose the marginal revenue product of the 5th worker is $800. This implies that

Accepted Answer

A)  the price of the good is $5.33. 
B)  the price of the good is $8. 
C)  the price of the good is $70. 
D)  we cannot tell what the price of the good is without more information. 
A)  the price of the good is $5.33. 
B)  the price of the good is $8. 
C)  the price of the good is $70. 
D)  we cannot tell what the price of the good is without more information.

Question 10

The market demand for labor will be

Accepted Answer

A)  insensitive to the wage rate in the short run. 
B)  downward sloping. 
C)  the inverse of the market demand for output. 
D)  perfectly inelastic. 
A)  insensitive to the wage rate in the short run. 
B)  downward sloping. 
C)  the inverse of the market demand for output. 
D)  perfectly inelastic.

Question 11

-In the above table, if this is a perfectly competitive firm and the market price of the product is $5 and the marginal factor cost of labor is $60, how many units of labor will the firm hire?

Accepted Answer

A)  2 
B)  3 
C)  4 
D)  6 
A)  2 
B)  3 
C)  4 
D)  6

Question 12

The labor supply curve faced by an individual firm in a perfectly competitive market is

Accepted Answer

A)  upward sloping. 
B)  horizontal. 
C)  vertical. 
D)  downward sloping. 
A)  upward sloping. 
B)  horizontal. 
C)  vertical. 
D)  downward sloping.

Question 13

If the price of labor increases, the typical perfectly competitive firm in the short run will

Accepted Answer

A)  produce more output. 
B)  hire less labor. 
C)  hire the same labor and produce the same output. 
D)  hire more labor. 
A)  produce more output. 
B)  hire less labor. 
C)  hire the same labor and produce the same output. 
D)  hire more labor.

Question 14

A profit maximizing monopolist will hire labor up to the point where

Accepted Answer

A)  marginal revenue product equals the price of the product. 
B)  marginal revenue product is greater than the wage rate. 
C)  marginal revenue product equals than the wage rate. 
D)  marginal revenue product is less than the wage rate. 
A)  marginal revenue product equals the price of the product. 
B)  marginal revenue product is greater than the wage rate. 
C)  marginal revenue product equals than the wage rate. 
D)  marginal revenue product is less than the wage rate.

Question 15

When a firm has monopoly power, it

Accepted Answer

A)  hires fewer workers because its marginal revenue lies below the demand curve. 
B)  hires more workers because its marginal revenue lies below the demand curve. 
C)  hires fewer workers because its marginal revenue lies above the demand curve. 
D)  hires more workers because its marginal revenue lies above the demand curve. 
A)  hires fewer workers because its marginal revenue lies below the demand curve. 
B)  hires more workers because its marginal revenue lies below the demand curve. 
C)  hires fewer workers because its marginal revenue lies above the demand curve. 
D)  hires more workers because its marginal revenue lies above the demand curve.

Question 16

A decrease in the marginal factor cost of labor will

Accepted Answer

A)  lead to an decrease in the quantity demanded of labor. 
B)  induce a firm to hire fewer workers. 
C)  induce a firm to hire more workers. 
D)  cause the value of the marginal product of labor to decrease. 
A)  lead to an decrease in the quantity demanded of labor. 
B)  induce a firm to hire fewer workers. 
C)  induce a firm to hire more workers. 
D)  cause the value of the marginal product of labor to decrease.

Question 17

Suppose the market for pizza makers is initially in equilibrium, but then the equilibrium wage rate increased and the equilibrium quantity of labor will decreased. What happened in the market for pizza makers?

Accepted Answer

A)  The demand for pizza makers increased. 
B)  The demand for pizza makers decreased. 
C)  The supply for pizza makers decreased. 
D)  The supply for pizza makers increased. 
A)  The demand for pizza makers increased. 
B)  The demand for pizza makers decreased. 
C)  The supply for pizza makers decreased. 
D)  The supply for pizza makers increased.

Question 18

Explain how the equilibrium wage rate is determined for a perfectly competitive industry and how a firm in that industry determines its profit maximizing employment level.

Accepted Answer

@#IMG-DLM& In the above figure, the right-hand fig

Question 19

If we assume competitive labor markets, the supply curve of labor when the firm is a monopoly is

Accepted Answer

A)  upward sloping. 
B)  vertical. 
C)  horizontal. 
D)  downward sloping. 
A)  upward sloping. 
B)  vertical. 
C)  horizontal. 
D)  downward sloping.

Question 20

In a perfectly competitive situation, the profit-maximizing hiring situation for all inputs being used is where

Accepted Answer

A)  the MRP of each input is equal to the price of each input. 
B)  the MRP of each input is greater than the price of each input. 
C)  the MRP of each input is less than the price of each input. 
D)  There is no relationship between MRP and the prices of the inputs. 
A)  the MRP of each input is equal to the price of each input. 
B)  the MRP of each input is greater than the price of each input. 
C)  the MRP of each input is less than the price of each input. 
D)  There is no relationship between MRP and the prices of the inputs.

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

A firm's employment of labor outside the country in which the firm is located is called

Some companies are having their technical support calls answered by people located in India. This is an example of

At a perfectly competitive firm, all of the following is true of the MRP curve EXCEPT

Suppose a firm employs only capital and labor as inputs. Explain how the firm should allocate its inputs in order to maximize profits in a perfectly competitive market.

The market demand curve for labor

A firm will not hire additional workers once

As new substitutes for office productivity software are developed, the demand for workers in office productivity software production should

A profit-maximizing firm will hire workers up to the point at which

-Refer to the above table. Suppose the marginal revenue product of the 5th worker is $800. This implies that

The market demand for labor will be

-In the above table, if this is a perfectly competitive firm and the market price of the product is $5 and the marginal factor cost of labor is $60, how many units of labor will the firm hire?

The labor supply curve faced by an individual firm in a perfectly competitive market is

If the price of labor increases, the typical perfectly competitive firm in the short run will

A profit maximizing monopolist will hire labor up to the point where

When a firm has monopoly power, it

A decrease in the marginal factor cost of labor will

Suppose the market for pizza makers is initially in equilibrium, but then the equilibrium wage rate increased and the equilibrium quantity of labor will decreased. What happened in the market for pizza makers?

Explain how the equilibrium wage rate is determined for a perfectly competitive industry and how a firm in that industry determines its profit maximizing employment level.

If we assume competitive labor markets, the supply curve of labor when the firm is a monopoly is

In a perfectly competitive situation, the profit-maximizing hiring situation for all inputs being used is where

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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