Question 1

All of the following statements regarding the marginal revenue product (MRP) curve and the demand for labor are true EXCEPT

Accepted Answer

A)  an individual firm's demand for labor is its MRP curve. 
B)  under conditions of perfect competition, MRP equals marginal physical product multiplied by the product's price. 
C)  an increase in the market demand for a given product decreases the product's price. 
D)  the demand for labor is a derived demand. 
A)  an individual firm's demand for labor is its MRP curve. 
B)  under conditions of perfect competition, MRP equals marginal physical product multiplied by the product's price. 
C)  an increase in the market demand for a given product decreases the product's price. 
D)  the demand for labor is a derived demand.

Question 2

Which of the following will not cause the marginal revenue product of labor curve for a firm to shift?

Accepted Answer

A)  an increase in the productivity of workers 
B)  an increase in demand for the product 
C)  a decrease in the price of the product 
D)  an increase in the wage rate 
A)  an increase in the productivity of workers 
B)  an increase in demand for the product 
C)  a decrease in the price of the product 
D)  an increase in the wage rate

Question 3

The monopolist's input demand curve is equal to its

Accepted Answer

A)  variable cost curve. 
B)  marginal cost curve. 
C)  average cost curve. 
D)  marginal revenue product curve. 
A)  variable cost curve. 
B)  marginal cost curve. 
C)  average cost curve. 
D)  marginal revenue product curve.

Question 4

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 5

The additional cost associated with hiring one additional unit of some factor input, such as labor, is referred to as

Accepted Answer

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

Question 6

The cost of hiring one more worker, ceteris paribus, is known as

Accepted Answer

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

Question 7

If a firm uses only capital and labor as inputs, then what should the firm do at a given rate of production if the marginal physical product of labor per last dollar spent is higher than the marginal physical product of capital per last dollar spent?

Accepted Answer

A)  The firm should increase both the quantity of capital and the quantity of labor. 
B)  The firm should decrease both the quantity of capital and the quantity of labor. 
C)  The firm should increase the quantity of capital and reduce the quantity of labor. 
D)  The firm should decrease the quantity of capital and increase the quantity of labor. 
A)  The firm should increase both the quantity of capital and the quantity of labor. 
B)  The firm should decrease both the quantity of capital and the quantity of labor. 
C)  The firm should increase the quantity of capital and reduce the quantity of labor. 
D)  The firm should decrease the quantity of capital and increase the quantity of labor.

Question 8

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 9

An increase in product price implies that

Accepted Answer

A)  the firm's marginal factor cost will increase. 
B)  the wage rate the firm pays will increase. 
C)  the firm's demand for labor increases. 
D)  the firm's demand for labor decreases. 
A)  the firm's marginal factor cost will increase. 
B)  the wage rate the firm pays will increase. 
C)  the firm's demand for labor increases. 
D)  the firm's demand for labor decreases.

Question 10

-Refer to the above table. How many worker will this firm hire if the weekly wage rate is $1350?

Accepted Answer

A)  28 
B)  25 
C)  26 
D)  27 
A)  28 
B)  25 
C)  26 
D)  27

Question 11

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 12

The demand curve for labor of a monopolist

Accepted Answer

A)  is horizontal even though the demand curve for labor for a competitive firm is downward sloping. 
B)  slopes down for the same reason as the demand curve for labor of a perfectly competitive firm. 
C)  slopes down because of the law of diminishing marginal product and because the monopolist must lower prices to sell additional units of the good. 
D)  slopes upward because monopolists use more capital than do perfectly competitive firms. 
A)  is horizontal even though the demand curve for labor for a competitive firm is downward sloping. 
B)  slopes down for the same reason as the demand curve for labor of a perfectly competitive firm. 
C)  slopes down because of the law of diminishing marginal product and because the monopolist must lower prices to sell additional units of the good. 
D)  slopes upward because monopolists use more capital than do perfectly competitive firms.

Question 13

Which of the following would NOT be 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 14

A rule of thumb in the employment of resources is to set

Accepted Answer

A)  marginal revenue product (MRP) equal to marginal factor cost (MF
C) . 
B)  marginal revenue (MR) equal to marginal cost (M
C) . 
C)  marginal physical product equal to marginal resource cost. 
D)  none of the above. 
A)  marginal revenue product (MRP) equal to marginal factor cost (MF
C) . 
B)  marginal revenue (MR) equal to marginal cost (M
C) . 
C)  marginal physical product equal to marginal resource cost. 
D)  none of the above.

Question 15

A profit maximizing firm will hire additional workers until

Accepted Answer

A)  the additional cost associated with hiring the last worker equals the average wage rate of the workers. 
B)  the additional cost associated with hiring the last worker equals the additional revenue generated by that worker. 
C)  the extra revenue generated by the last worker hired equals zero. 
D)  the extra cost associated with hiring the last worker equals the price of the good produced. 
A)  the additional cost associated with hiring the last worker equals the average wage rate of the workers. 
B)  the additional cost associated with hiring the last worker equals the additional revenue generated by that worker. 
C)  the extra revenue generated by the last worker hired equals zero. 
D)  the extra cost associated with hiring the last worker equals the price of the good produced.

Question 16

The cost-minimizing rule is that a firm should utilize inputs such that the marginal physical product of an input divided by the price of the input is the same for all inputs. This is also the profit-maximizing rule because

Accepted Answer

A)  we obtain the profit-maximizing rule by multiplying each ratio by the marginal revenue produced. 
B)  we obtain the profit-maximizing rule by multiplying each ratio by the product price, which is the same for each input. 
C)  the profit-maximizing rule is just the inverse of the cost-minimizing rule. 
D)  they are exactly the same. 
A)  we obtain the profit-maximizing rule by multiplying each ratio by the marginal revenue produced. 
B)  we obtain the profit-maximizing rule by multiplying each ratio by the product price, which is the same for each input. 
C)  the profit-maximizing rule is just the inverse of the cost-minimizing rule. 
D)  they are exactly the same.

Question 17

The MRP of labor will shift to the right if

Accepted Answer

A)  labor productivity increases. 
B)  labor productivity decreases. 
C)  wages increase. 
D)  wages decrease. 
A)  labor productivity increases. 
B)  labor productivity decreases. 
C)  wages increase. 
D)  wages decrease.

Question 18

As a firm hires more workers, holding the amounts of capital and other inputs constant,

Accepted Answer

A)  output increases at a decreasing rate. 
B)  output increases at a constant rate. 
C)  output increases for a while and then decreases. 
D)  output increases, but we can't be certain whether output increases at an increasing or a decreasing rate. 
A)  output increases at a decreasing rate. 
B)  output increases at a constant rate. 
C)  output increases for a while and then decreases. 
D)  output increases, but we can't be certain whether output increases at an increasing or a decreasing rate.

Question 19

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 20

Which of the following will cause a shift in the demand curve of labor?

Accepted Answer

A)  an increase or decrease in the productivity of labor 
B)  an increase or decrease in the demand for the product labor produces 
C)  a decline in the price of a complementary input 
D)  all of the above 
A)  an increase or decrease in the productivity of labor 
B)  an increase or decrease in the demand for the product labor produces 
C)  a decline in the price of a complementary input 
D)  all of the above

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

All of the following statements regarding the marginal revenue product (MRP) curve and the demand for labor are true EXCEPT

Which of the following will not cause the marginal revenue product of labor curve for a firm to shift?

The monopolist's input demand curve is equal to its

The market demand for labor will be

The additional cost associated with hiring one additional unit of some factor input, such as labor, is referred to as

The cost of hiring one more worker, ceteris paribus, is known as

If a firm uses only capital and labor as inputs, then what should the firm do at a given rate of production if the marginal physical product of labor per last dollar spent is higher than the marginal physical product of capital per last dollar spent?

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

An increase in product price implies that

-Refer to the above table. How many worker will this firm hire if the weekly wage rate is $1350?

A firm will not hire additional workers once

The demand curve for labor of a monopolist

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

A rule of thumb in the employment of resources is to set

A profit maximizing firm will hire additional workers until

The cost-minimizing rule is that a firm should utilize inputs such that the marginal physical product of an input divided by the price of the input is the same for all inputs. This is also the profit-maximizing rule because

The MRP of labor will shift to the right if

As a firm hires more workers, holding the amounts of capital and other inputs constant,

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.

Which of the following will cause a shift in the demand curve of labor?

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

Filters