Question 1

A leftward shift in the labor supply curve would result if:

Accepted Answer

A)  people value leisure less highly. 
B)  people have less nonlabor income. 
C)  transit costs to and from work increase. 
D)  the population increases. 
A)  people value leisure less highly. 
B)  people have less nonlabor income. 
C)  transit costs to and from work increase. 
D)  the population increases.

Question 2

A firm's most profitable level of a factor of production hired in a perfectly competitive market occurs at a point at which there is equality between the:

Accepted Answer

A)  total cost and total revenue curves. 
B)  marginal factor cost and product demand curves. 
C)  marginal factor cost and marginal revenue product curves. 
D)  average factor cost and marginal revenue product curves. 
A)  total cost and total revenue curves. 
B)  marginal factor cost and product demand curves. 
C)  marginal factor cost and marginal revenue product curves. 
D)  average factor cost and marginal revenue product curves.

Question 3

Use the following to answer question(s):    
-(Exhibit: Marginal Revenue Product and Demand) If the product price is $2 per unit and the price of the factor of production is $1080 per unit, the profit-maximizing quantity of the factor is _______ units.

Accepted Answer

A)  0 
B)  2 
C)  4 
D)  6 
A)  0 
B)  2 
C)  4 
D)  6

Question 4

A factor demand curve will shift because of:

Accepted Answer

A)  the slope of the MP curve. 
B)  the elasticity of demand for the final product. 
C)  the proportion of the factor's cost relative to total cost. 
D)  a change in the price of a complementary factor. 
A)  the slope of the MP curve. 
B)  the elasticity of demand for the final product. 
C)  the proportion of the factor's cost relative to total cost. 
D)  a change in the price of a complementary factor.

Question 5

Given an increase in the demand for labor, the more the supply of labor rises:

Accepted Answer

A)  the greater the increase in wages. 
B)  the less the increase in wages and the greater the number of workers employed. 
C)  the greater the increase in workers employed at the original wage rate. 
D)  the fewer the number of workers employed. 
A)  the greater the increase in wages. 
B)  the less the increase in wages and the greater the number of workers employed. 
C)  the greater the increase in workers employed at the original wage rate. 
D)  the fewer the number of workers employed.

Question 6

In perfect competition where P is the price of output:

Accepted Answer

A)  MRP = MP x P. 
B)  MRP/ P = Price of input. 
C)  MRP/MP = Price of input. 
D)  MRP x P = MP. 
A)  MRP = MP x P. 
B)  MRP/ P = Price of input. 
C)  MRP/MP = Price of input. 
D)  MRP x P = MP.

Question 7

Which of the following is correct?

Accepted Answer

A)  MRP = MC x MR. 
B)  MRP = MP x MR. 
C)  MP = MRP x MR. 
D)  MRP/ MC = TR. 
A)  MRP = MC x MR. 
B)  MRP = MP x MR. 
C)  MP = MRP x MR. 
D)  MRP/ MC = TR.

Question 8

A factor demand curve will shift because of:

Accepted Answer

A)  a change in the number of firms. 
B)  the slope of the MP curve. 
C)  the elasticity of demand for the final product. 
D)  the proportion of the factor's cost relative to total cost. 
A)  a change in the number of firms. 
B)  the slope of the MP curve. 
C)  the elasticity of demand for the final product. 
D)  the proportion of the factor's cost relative to total cost.

Question 9

A profit-maximizing firm will base its decision to hire additional labor on the marginal decision rule: If the extra output that is produced by hiring one more unit of labor adds more to _______ than to _______ , the firm will increase its profit by increasing the use of labor.

Accepted Answer

A)  total cost; total revenue 
B)  total revenue; total cost 
C)  marginal cost; marginal revenue 
D)  marginal revenue; marginal cost 
A)  total cost; total revenue 
B)  total revenue; total cost 
C)  marginal cost; marginal revenue 
D)  marginal revenue; marginal cost

Question 10

MFC is equal to the:

Accepted Answer

A)  marginal product of labor times the price of output. 
B)  change in total cost resulting from a one-unit change in a factor. 
C)  change in the quantity of labor times the price of labor. 
D)  change in total cost resulting from a one-unit change in output. 
A)  marginal product of labor times the price of output. 
B)  change in total cost resulting from a one-unit change in a factor. 
C)  change in the quantity of labor times the price of labor. 
D)  change in total cost resulting from a one-unit change in output.

Question 11

If a firm is using a factor of production from a perfectly competitive market such that MFC < MRP, then profit:

Accepted Answer

A)  is maximized. 
B)  can be increased by using less of the factor. 
C)  can be increased by using more of the factor. 
D)  can be increased by increasing the factor price. 
A)  is maximized. 
B)  can be increased by using less of the factor. 
C)  can be increased by using more of the factor. 
D)  can be increased by increasing the factor price.

Question 12

Use the following to answer question(s): Wage Determination in Perfect Competition
  
-(Exhibit: Wage Determination in Perfect Competition) A(n) _______ in the ________ of (for) labor will result in a(n) _______ in _______ .

Accepted Answer

A)  increase; supply; decrease; the wage rate 
B)  decrease; supply; decrease; the wage rate 
C)  decrease; demand; increase; the amount of labor hired 
D)  increase; demand; decrease; the amount of labor hired 
A)  increase; supply; decrease; the wage rate 
B)  decrease; supply; decrease; the wage rate 
C)  decrease; demand; increase; the amount of labor hired 
D)  increase; demand; decrease; the amount of labor hired

Question 13

In perfect competition, marginal revenue product is equal to:

Accepted Answer

A)  the product price. 
B)  marginal product. 
C)  marginal product multiplied by the product price. 
D)  the ratio of marginal product to the product price. 
A)  the product price. 
B)  marginal product. 
C)  marginal product multiplied by the product price. 
D)  the ratio of marginal product to the product price.

Question 14

Use the following to answer question(s): Demand and Supply of Bricklayers in a Perfectly Competitive Labor Market
  
-(Exhibit: Demand and Supply of Bricklayers in a Perfectly Competitive Labor Market) Assume that the market determined price of bricklayers is $100.For a profit-maximizing firm at the equilibrium level of output, the MRPBRICKLAYERS is:

Accepted Answer

A)  $200. 
B)  equal to the MFCBRICKLAYERS. 
C)  the supply curve for the firm hiring bricklayers. 
D)  irrelevant, since the firm is a price taker. 
A)  $200. 
B)  equal to the MFCBRICKLAYERS. 
C)  the supply curve for the firm hiring bricklayers. 
D)  irrelevant, since the firm is a price taker.

Question 15

In terms of labor supply, the income effect of a higher wage causes a(n):

Accepted Answer

A)  decrease in leisure time. 
B)  decrease in the quantity of labor supplied. 
C)  substitution of work for leisure. 
D)  reduction of leisure time to zero. 
A)  decrease in leisure time. 
B)  decrease in the quantity of labor supplied. 
C)  substitution of work for leisure. 
D)  reduction of leisure time to zero.

Question 16

In general, a firm hires the quantity of a factor of production up to the point at which marginal factor cost equals marginal revenue product.

Accepted Answer

A) True 
 B)False

Question 17

Use the following to answer question(s): Wage Determination in Perfect Competition
  
-(Exhibit: Wage Determination in Perfect Competition) All other things unchanged, if the workers in this exhibit are construction workers and there is a slump in construction activity:

Accepted Answer

A)  the market wage of labor will increase. 
B)  less labor will be hired. 
C)  the supply of labor will fall. 
D)  the demand for construction workers will increase. 
A)  the market wage of labor will increase. 
B)  less labor will be hired. 
C)  the supply of labor will fall. 
D)  the demand for construction workers will increase.

Question 18

A firm's supply curve for labor:

Accepted Answer

A)  is vertical for a firm in perfect competition. 
B)  is the same thing as the MRPL for a firm in perfect competition. 
C)  and the firm's MRPL will determine the profit-maximizing quantity of labor hired by the firm in perfect competition. 
D)  is the same as its demand curve for labor. 
A)  is vertical for a firm in perfect competition. 
B)  is the same thing as the MRPL for a firm in perfect competition. 
C)  and the firm's MRPL will determine the profit-maximizing quantity of labor hired by the firm in perfect competition. 
D)  is the same as its demand curve for labor.

Question 19

The accepted way(s) to view the labor market is (are):

Accepted Answer

A)  as a single national market. 
B)  as a focus on particular job categories. 
C)  as a focus on geographic areas. 
D)  all of the above-as a single national market or as a focus on particular jobs and geographic areas. 
A)  as a single national market. 
B)  as a focus on particular job categories. 
C)  as a focus on geographic areas. 
D)  all of the above-as a single national market or as a focus on particular jobs and geographic areas.

Question 20

The supply curve of labor to the firm buying factors in perfectly competitive factor markets is horizontal.

Accepted Answer

A) True 
 B)False

A leftward shift in the labor supply curve would result if:

A firm's most profitable level of a factor of production hired in a perfectly competitive market occurs at a point at which there is equality between the:

Use the following to answer question(s): -(Exhibit: Marginal Revenue Product and Demand) If the product price is $2 per unit and the price of the factor of production is $1080 per unit, the profit-maximizing quantity of the factor is _______ units.

A factor demand curve will shift because of:

Given an increase in the demand for labor, the more the supply of labor rises:

In perfect competition where P is the price of output:

Which of the following is correct?

A factor demand curve will shift because of:

A profit-maximizing firm will base its decision to hire additional labor on the marginal decision rule: If the extra output that is produced by hiring one more unit of labor adds more to _ than to _ , the firm will increase its profit by increasing the use of labor.

MFC is equal to the:

If a firm is using a factor of production from a perfectly competitive market such that MFC < MRP, then profit:

Use the following to answer question(s): Wage Determination in Perfect Competition -(Exhibit: Wage Determination in Perfect Competition) A(n) ___ in the of (for) labor will result in a(n) _ in _____ .

In perfect competition, marginal revenue product is equal to:

In terms of labor supply, the income effect of a higher wage causes a(n):

In general, a firm hires the quantity of a factor of production up to the point at which marginal factor cost equals marginal revenue product.

Use the following to answer question(s): Wage Determination in Perfect Competition -(Exhibit: Wage Determination in Perfect Competition) All other things unchanged, if the workers in this exhibit are construction workers and there is a slump in construction activity:

A firm's supply curve for labor:

The accepted way(s) to view the labor market is (are):

The supply curve of labor to the firm buying factors in perfectly competitive factor markets is horizontal.

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

Markets, Maximizers, and Efficiency

The Analysis of Consumer Choice

Production and Cost

Competitive Markets for Goods and Services

Monopoly

The World of Imperfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

Exam 12: Wages and Employment in Perfect Competition

A leftward shift in the labor supply curve would result if:

A firm's most profitable level of a factor of production hired in a perfectly competitive market occurs at a point at which there is equality between the:

Use the following to answer question(s): -(Exhibit: Marginal Revenue Product and Demand) If the product price is $2 per unit and the price of the factor of production is $1080 per unit, the profit-maximizing quantity of the factor is _______ units.

A factor demand curve will shift because of:

Given an increase in the demand for labor, the more the supply of labor rises:

In perfect competition where P is the price of output:

Which of the following is correct?

A factor demand curve will shift because of:

A profit-maximizing firm will base its decision to hire additional labor on the marginal decision rule: If the extra output that is produced by hiring one more unit of labor adds more to _______ than to _______ , the firm will increase its profit by increasing the use of labor.

MFC is equal to the:

If a firm is using a factor of production from a perfectly competitive market such that MFC < MRP, then profit:

Use the following to answer question(s): Wage Determination in Perfect Competition -(Exhibit: Wage Determination in Perfect Competition) A(n) _______ in the ________ of (for) labor will result in a(n) _______ in _______ .

In perfect competition, marginal revenue product is equal to:

In terms of labor supply, the income effect of a higher wage causes a(n):

In general, a firm hires the quantity of a factor of production up to the point at which marginal factor cost equals marginal revenue product.

Use the following to answer question(s): Wage Determination in Perfect Competition -(Exhibit: Wage Determination in Perfect Competition) All other things unchanged, if the workers in this exhibit are construction workers and there is a slump in construction activity:

A firm's supply curve for labor:

The accepted way(s) to view the labor market is (are):

The supply curve of labor to the firm buying factors in perfectly competitive factor markets is horizontal.

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

Markets, Maximizers, and Efficiency

The Analysis of Consumer Choice

Production and Cost

Competitive Markets for Goods and Services

Monopoly

The World of Imperfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

A profit-maximizing firm will base its decision to hire additional labor on the marginal decision rule: If the extra output that is produced by hiring one more unit of labor adds more to _ than to _ , the firm will increase its profit by increasing the use of labor.

Use the following to answer question(s): Wage Determination in Perfect Competition -(Exhibit: Wage Determination in Perfect Competition) A(n) ___ in the of (for) labor will result in a(n) _ in _____ .