Question 1

All of the following shift the labor demand curve EXCEPT changes in

Accepted Answer

A)  fringe benefits offered to employees. 
B)  the demand for the final product. 
C)  labor productivity. 
D)  prices of related factors. 
A)  fringe benefits offered to employees. 
B)  the demand for the final product. 
C)  labor productivity. 
D)  prices of related factors. A

Question 2

The demand for labor is

Accepted Answer

A)  derived from the demand for the final product of the firm. 
B)  derived from the satisfaction that hiring labor provides the owner of the firm. 
C)  derived from the satisfaction workers get for being employed. 
D)  derived from a utility-maximizing process similar to that used to derive the demand curve for all workers in a given industry. 
A)  derived from the demand for the final product of the firm. 
B)  derived from the satisfaction that hiring labor provides the owner of the firm. 
C)  derived from the satisfaction workers get for being employed. 
D)  derived from a utility-maximizing process similar to that used to derive the demand curve for all workers in a given industry. A

Question 3

The demand for labor is considered a derived demand since it depends on

Accepted Answer

A)  the supply of labor. 
B)  the market for capital. 
C)  the consumer demand for the output produced. 
D)  competitive markets. 
A)  the supply of labor. 
B)  the market for capital. 
C)  the consumer demand for the output produced. 
D)  competitive markets. C

Question 4

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 5

The additional revenue earned from hiring one more worker is known as the

Accepted Answer

A)  marginal physical product of labor. 
B)  marginal revenue product of labor. 
C)  marginal factor cost of labor. 
D)  marginal utility of labor. 
A)  marginal physical product of labor. 
B)  marginal revenue product of labor. 
C)  marginal factor cost of labor. 
D)  marginal utility of labor.

Question 6

-Refer to the above table. What does the marginal revenue product equal when 27 workers are hired a week?

Accepted Answer

A)  $1040 
B)  $216 
C)  $16.25 
D)  $8 
A)  $1040 
B)  $216 
C)  $16.25 
D)  $8

Question 7

A decrease in the supply of labor could be caused by

Accepted Answer

A)  wage rates falling in another industry. 
B)  better working conditions. 
C)  more job flexibility. 
D)  increased wage rates in another industry. 
A)  wage rates falling in another industry. 
B)  better working conditions. 
C)  more job flexibility. 
D)  increased wage rates in another industry.

Question 8

-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 9

If labor productivity increases

Accepted Answer

A)  labor costs rise by equal increments. 
B)  the demand for labor increases. 
C)  some workers will be laid off. 
D)  jobs will relocate. 
A)  labor costs rise by equal increments. 
B)  the demand for labor increases. 
C)  some workers will be laid off. 
D)  jobs will relocate.

Question 10

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 11

For a firm in a perfectly competitive labor market, the supply curve of labor is

Accepted Answer

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

Question 12

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 13

If an increase in the price of one input causes an increase in demand for labor, the two inputs are

Accepted Answer

A)  complementary. 
B)  substitutes. 
C)  interchangeable. 
D)  flexible. 
A)  complementary. 
B)  substitutes. 
C)  interchangeable. 
D)  flexible.

Question 14

-In the above figure, the marginal revenue product is represented by line

Accepted Answer

A)  "a." 
B)  "b." 
C)  "c." 
D)  "d." 
A)  "a." 
B)  "b." 
C)  "c." 
D)  "d."

Question 15

A monopolist will hire an additional unit of labor as long as

Accepted Answer

A)  the additional cost of the worker is outweighed by the additional revenues made from selling the output of theses workers. 
B)  the marginal revenue curve is above the demand curve. 
C)  the marginal revenue product is larger than the marginal factor cost. 
D)  the marginal revenue product is less than the marginal factor cost. 
A)  the additional cost of the worker is outweighed by the additional revenues made from selling the output of theses workers. 
B)  the marginal revenue curve is above the demand curve. 
C)  the marginal revenue product is larger than the marginal factor cost. 
D)  the marginal revenue product is less than the marginal factor cost.

Question 16

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 17

Marginal factor cost is computed as

Accepted Answer

A)  total cost of the resource/total amount of the resource being used. 
B)  change in the total cost of the resource/total amount of the resource being used. 
C)  total cost of the resource/change in the amount of the resource being used. 
D)  change in the total cost of the resource/change in the amount of the resource being used. 
A)  total cost of the resource/total amount of the resource being used. 
B)  change in the total cost of the resource/total amount of the resource being used. 
C)  total cost of the resource/change in the amount of the resource being used. 
D)  change in the total cost of the resource/change in the amount of the resource being used.

Question 18

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 19

Suppose that in a computer factory, if there is 1 worker, 80 computers are produced per week. If there are 2 workers, 150 computers are produced per week. If there are 3 workers, 200 computers are produced per week. Given this information, the marginal product of the third worker is

Accepted Answer

A)  210 computers per week. 
B)  70 computers per week. 
C)  60 computers per week. 
D)  50 computers per week. 
A)  210 computers per week. 
B)  70 computers per week. 
C)  60 computers per week. 
D)  50 computers per week.

Question 20

The additional revenue a firm obtains when it hires an additional worker (holding other inputs constant) is the

Accepted Answer

A)  marginal revenue product (MRP) of labor. 
B)  total factor cost (TF
C)  per worker. 
C)  general rule for hiring. 
D)  marginal physical product (MPP) of labor. 
A)  marginal revenue product (MRP) of labor. 
B)  total factor cost (TF
C)  per worker. 
C)  general rule for hiring. 
D)  marginal physical product (MPP) of labor.

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

All of the following shift the labor demand curve EXCEPT changes in

The demand for labor is

The demand for labor is considered a derived demand since it depends on

The demand for computers increases. As a result

The additional revenue earned from hiring one more worker is known as the

-Refer to the above table. What does the marginal revenue product equal when 27 workers are hired a week?

A decrease in the supply of labor could be caused by

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

If labor productivity increases

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

For a firm in a perfectly competitive labor market, the supply curve of labor is

A decrease in the marginal factor cost of labor will

If an increase in the price of one input causes an increase in demand for labor, the two inputs are

-In the above figure, the marginal revenue product is represented by line

A monopolist will hire an additional unit of labor as long as

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

Marginal factor cost is computed as

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

Suppose that in a computer factory, if there is 1 worker, 80 computers are produced per week. If there are 2 workers, 150 computers are produced per week. If there are 3 workers, 200 computers are produced per week. Given this information, the marginal product of the third worker is

The additional revenue a firm obtains when it hires an additional worker (holding other inputs constant) is the

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

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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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