Question 1

In order to maximize profits in the hiring of a factor, the firm will hire where MRP = MFC.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements is true?

Accepted Answer

A)  Leisure is a normal good. 
B)  Leisure is an inferior good. 
C)  All other things unchanged, an increase in income will decrease the demand for leisure. 
D)  The demand for leisure is perfectly inelastic. 
A)  Leisure is a normal good. 
B)  Leisure is an inferior good. 
C)  All other things unchanged, an increase in income will decrease the demand for leisure. 
D)  The demand for leisure is perfectly inelastic.

Question 3

A firm's demand curve for labor is:

Accepted Answer

A)  the upward-sloping portion of its marginal revenue product curve. 
B)  the downward-sloping portion of its marginal product curve. 
C)  the downward-sloping portion of its marginal revenue product curve. 
D)  horizontal for the firm in perfect competition. 
A)  the upward-sloping portion of its marginal revenue product curve. 
B)  the downward-sloping portion of its marginal product curve. 
C)  the downward-sloping portion of its marginal revenue product curve. 
D)  horizontal for the firm in perfect competition.

Question 4

Given that MUY = marginal utility of income, MULE = marginal utility of leisure, and W is the wage, utility is maximized by allocating time between work and leisure so that:

Accepted Answer

A)  MUY = MULE. 
B)  MUY × PY = MULE ×W. 
C)  MUY/PY = MULE/W. 
D)  PY = W. 
A)  MUY = MULE. 
B)  MUY × PY = MULE ×W. 
C)  MUY/PY = MULE/W. 
D)  PY = W.

Question 5

Just because a firm's MFC = MRP in the factor market, it need not be true that the firm's MC = MR in the output market.

Accepted Answer

A) True 
 B)False

Question 6

The fact that a(n) _______ in the _______ tends to _______ wages explains efforts by some groups to reduce labor _______ .

Accepted Answer

A)  increase; supply of labor; reduce; demand 
B)  decrease; supply of labor; increase; supply 
C)  increase; demand for labor; increase; supply 
D)  decrease; demand; increase; demand 
A)  increase; supply of labor; reduce; demand 
B)  decrease; supply of labor; increase; supply 
C)  increase; demand for labor; increase; supply 
D)  decrease; demand; increase; demand

Question 7

If the demand for a certain type of labor is elastic, a(n) _______ in its price will lead to a(n) _______ in total spending on that type of labor by firms.

Accepted Answer

A)  increase; decrease 
B)  decrease; decrease 
C)  increase; increase 
D)  decrease; no change 
A)  increase; decrease 
B)  decrease; decrease 
C)  increase; increase 
D)  decrease; no change

Question 8

Marginal product times marginal revenue is:

Accepted Answer

A)  marginal revenue. 
B)  marginal revenue product. 
C)  additional revenue product. 
D)  none of the above. 
A)  marginal revenue. 
B)  marginal revenue product. 
C)  additional revenue product. 
D)  none of the above.

Question 9

Use the following to answer question(s): Demand and Supply in a Perfectly Competitive Labor Market
  
-(Exhibit: Demand and Supply in a Perfectly Competitive Labor Market) The firm should hire:

Accepted Answer

A)  where MRPL = MFCL. 
B)  when quantity demanded is greater than quantity supplied. 
C)  where MRPL =MPL ×P of output. 
D)  at a lower wage than WL. 
A)  where MRPL = MFCL. 
B)  when quantity demanded is greater than quantity supplied. 
C)  where MRPL =MPL ×P of output. 
D)  at a lower wage than WL.

Question 10

Use the following to answer question(s):    
-(Exhibit: Marginal Revenue Product and Demand) If the product price is $2 per unit, the marginal revenue product for the third unit of the variable input is:

Accepted Answer

A)  $2. 
B)  $10. 
C)  $60. 
D)  $80. 
A)  $2. 
B)  $10. 
C)  $60. 
D)  $80.

Question 11

The amount a factor adds to a firm's total cost per period is called:

Accepted Answer

A)  marginal factor cost. 
B)  marginal cost. 
C)  MFR. 
D)  marginal fixed cost. 
A)  marginal factor cost. 
B)  marginal cost. 
C)  MFR. 
D)  marginal fixed cost.

Question 12

The supply curve of labor to the firm buying factors in a perfectly competitive factor market is the marginal factor cost curve.

Accepted Answer

A) True 
 B)False

Question 13

When an increase in the use of one factor of production decreases the demand for the other, the two factors are complementary factors of production.

Accepted Answer

A) True 
 B)False

Question 14

A change in the quantity demanded of chocolate, a factor of production used to produce chocolate-covered peanuts, will occur if:

Accepted Answer

A)  the price of chocolate increases. 
B)  the price of chocolate-covered peanuts increases. 
C)  the demand for chocolate-covered peanuts decreases. 
D)  a new, improved chocolate-covered-peanut-making machine is purchased by candy companies. 
A)  the price of chocolate increases. 
B)  the price of chocolate-covered peanuts increases. 
C)  the demand for chocolate-covered peanuts decreases. 
D)  a new, improved chocolate-covered-peanut-making machine is purchased by candy companies.

Question 15

In a perfectly competitive factor market, a firm finds that the price of a factor of production is _______ its marginal factor cost.

Accepted Answer

A)  less than 
B)  the same as 
C)  greater than 
D)  unrelated to 
A)  less than 
B)  the same as 
C)  greater than 
D)  unrelated to

Question 16

Explain how changes in technology affect and change the demand for labor.Distinguish between situations in which a particular type of technological change increases the demand for a particular type of labor and those in which it decreases the demand for a particular type of labor.

Accepted Answer

Changes in technology can have a signifi

Question 17

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 product demand. 
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 product demand.

Question 18

If marginal product is _______ , marginal revenue product must be _______ .

Accepted Answer

A)  rising; falling 
B)  falling; falling 
C)  falling; rising 
D)  rising; zero 
A)  rising; falling 
B)  falling; falling 
C)  falling; rising 
D)  rising; zero

Question 19

In a perfectly competitive labor market:

Accepted Answer

A)  the price of labor is equal to the MP of labor. 
B)  MFC is graphed as an upward sloping line. 
C)  the firm will maximize profits in the hiring of labor if it hires where MRP = MFC. 
D)  the price of labor and capital are equal. 
A)  the price of labor is equal to the MP of labor. 
B)  MFC is graphed as an upward sloping line. 
C)  the firm will maximize profits in the hiring of labor if it hires where MRP = MFC. 
D)  the price of labor and capital are equal.

Question 20

The trade-off between work and leisure underlying the supply of labor involves the substitution effect and the:

Accepted Answer

A)  production effect. 
B)  elasticity effect. 
C)  income effect. 
D)  complementary effect. 
A)  production effect. 
B)  elasticity effect. 
C)  income effect. 
D)  complementary effect.

In order to maximize profits in the hiring of a factor, the firm will hire where MRP = MFC.

Which of the following statements is true?

A firm's demand curve for labor is:

Given that MUY = marginal utility of income, MULE = marginal utility of leisure, and W is the wage, utility is maximized by allocating time between work and leisure so that:

Just because a firm's MFC = MRP in the factor market, it need not be true that the firm's MC = MR in the output market.

The fact that a(n) ___ in the _ tends to _ wages explains efforts by some groups to reduce labor ___ .

If the demand for a certain type of labor is elastic, a(n) _ in its price will lead to a(n) _ in total spending on that type of labor by firms.

Marginal product times marginal revenue is:

Use the following to answer question(s): Demand and Supply in a Perfectly Competitive Labor Market -(Exhibit: Demand and Supply in a Perfectly Competitive Labor Market) The firm should hire:

Use the following to answer question(s): -(Exhibit: Marginal Revenue Product and Demand) If the product price is $2 per unit, the marginal revenue product for the third unit of the variable input is:

The amount a factor adds to a firm's total cost per period is called:

The supply curve of labor to the firm buying factors in a perfectly competitive factor market is the marginal factor cost curve.

When an increase in the use of one factor of production decreases the demand for the other, the two factors are complementary factors of production.

A change in the quantity demanded of chocolate, a factor of production used to produce chocolate-covered peanuts, will occur if:

In a perfectly competitive factor market, a firm finds that the price of a factor of production is _______ its marginal factor cost.

Explain how changes in technology affect and change the demand for labor.Distinguish between situations in which a particular type of technological change increases the demand for a particular type of labor and those in which it decreases the demand for a particular type of labor.

A factor demand curve will shift because of:

If marginal product is _ , marginal revenue product must be _ .

In a perfectly competitive labor market:

The trade-off between work and leisure underlying the supply of labor involves the substitution effect and the:

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

In order to maximize profits in the hiring of a factor, the firm will hire where MRP = MFC.

Which of the following statements is true?

A firm's demand curve for labor is:

Given that MUY = marginal utility of income, MULE = marginal utility of leisure, and W is the wage, utility is maximized by allocating time between work and leisure so that:

Just because a firm's MFC = MRP in the factor market, it need not be true that the firm's MC = MR in the output market.

The fact that a(n) _______ in the _______ tends to _______ wages explains efforts by some groups to reduce labor _______ .

If the demand for a certain type of labor is elastic, a(n) _______ in its price will lead to a(n) _______ in total spending on that type of labor by firms.

Marginal product times marginal revenue is:

Use the following to answer question(s): Demand and Supply in a Perfectly Competitive Labor Market -(Exhibit: Demand and Supply in a Perfectly Competitive Labor Market) The firm should hire:

Use the following to answer question(s): -(Exhibit: Marginal Revenue Product and Demand) If the product price is $2 per unit, the marginal revenue product for the third unit of the variable input is:

The amount a factor adds to a firm's total cost per period is called:

The supply curve of labor to the firm buying factors in a perfectly competitive factor market is the marginal factor cost curve.

When an increase in the use of one factor of production decreases the demand for the other, the two factors are complementary factors of production.

A change in the quantity demanded of chocolate, a factor of production used to produce chocolate-covered peanuts, will occur if:

In a perfectly competitive factor market, a firm finds that the price of a factor of production is _______ its marginal factor cost.

Explain how changes in technology affect and change the demand for labor.Distinguish between situations in which a particular type of technological change increases the demand for a particular type of labor and those in which it decreases the demand for a particular type of labor.

A factor demand curve will shift because of:

If marginal product is _______ , marginal revenue product must be _______ .

In a perfectly competitive labor market:

The trade-off between work and leisure underlying the supply of labor involves the substitution effect and the:

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

The fact that a(n) ___ in the _ tends to _ wages explains efforts by some groups to reduce labor ___ .

If the demand for a certain type of labor is elastic, a(n) _ in its price will lead to a(n) _ in total spending on that type of labor by firms.

If marginal product is _ , marginal revenue product must be _ .