Question 1

A firm's marginal revenue product of labor curve is also

Accepted Answer

A)  its labor demand curve. 
B)  its marginal cost curve. 
C)  its total revenue line. 
D)  its long-run input cost function. 
A)  its labor demand curve. 
B)  its marginal cost curve. 
C)  its total revenue line. 
D)  its long-run input cost function.

Question 2

The demand curve for labor is the

Accepted Answer

A)  marginal factor cost curve for labor. 
B)  marginal physical product curve for labor. 
C)  marginal physical product curve for labor times the wage rate. 
D)  marginal revenue product curve for labor. 
A)  marginal factor cost curve for labor. 
B)  marginal physical product curve for labor. 
C)  marginal physical product curve for labor times the wage rate. 
D)  marginal revenue product curve for labor.

Question 3

If a perfectly competitive firm is currently employing workers to the point where the value of the last worker's marginal product is equal to the wage rate, and the government imposes a minimum wage higher than the value of the worker's marginal product, we can predict that

Accepted Answer

A)  the firm will pay the higher wage rate and not change the number of workers hired. 
B)  the firm will no longer employ the marginal worker. 
C)  the firm will increase its price. 
D)  the firm will employ more workers. 
A)  the firm will pay the higher wage rate and not change the number of workers hired. 
B)  the firm will no longer employ the marginal worker. 
C)  the firm will increase its price. 
D)  the firm will employ more workers.

Question 4

As a firm hires more workers, holding capital and other factors constant, the marginal physical product of labor declines because

Accepted Answer

A)  there are diseconomies of scale. 
B)  less efficient workers are hired as the number of workers increase. 
C)  workers don't perform well in teams. 
D)  the amount of other inputs each worker has to work with declines as the number of workers increases. 
A)  there are diseconomies of scale. 
B)  less efficient workers are hired as the number of workers increase. 
C)  workers don't perform well in teams. 
D)  the amount of other inputs each worker has to work with declines as the number of workers increases.

Question 5

When a firm has maximized profits

Accepted Answer

A)  it has also minimized total costs. 
B)  the marginal product of each input is also maximized. 
C)  the marginal physical product is greater than the input price for all inputs. 
D)  its marginal cost is zero. 
A)  it has also minimized total costs. 
B)  the marginal product of each input is also maximized. 
C)  the marginal physical product is greater than the input price for all inputs. 
D)  its marginal cost is zero.

Question 6

Iron is required to make steel. Hence, the price elasticity of demand for iron by steel manufacturers will be

Accepted Answer

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

Question 7

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 8

Which of the following would be the most likely outcome if all perfectly competitive firms in a product market join together to form a monopoly?

Accepted Answer

A)  Both the rate of output and the quantity of labor input employed will decrease. 
B)  Both the rate of output and the quantity of labor input employed will increase. 
C)  The rate of output in the market will increase but the quantity of labor input will decrease. 
D)  The rate of output in the market will decrease but the quantity of labor input will increase. 
A)  Both the rate of output and the quantity of labor input employed will decrease. 
B)  Both the rate of output and the quantity of labor input employed will increase. 
C)  The rate of output in the market will increase but the quantity of labor input will decrease. 
D)  The rate of output in the market will decrease but the quantity of labor input will increase.

Question 9

-Refer to the above figure. Which panel represents what happens in the U.S. job market in the short-run when U.S. firms substitute labor outside of the U.S. for labor inside the U.S.?

Accepted Answer

A)  Panel A 
B)  Panel B 
C)  Panel C 
D)  Panel D 
A)  Panel A 
B)  Panel B 
C)  Panel C 
D)  Panel D

Question 10

The wage rate found by the intersection of the market demand and supply curves for labor then determines the

Accepted Answer

A)  firm's demand curve for labor. 
B)  firm's supply curve for labor. 
C)  labor's supply curve of labor. 
D)  labor's demand curve for jobs. 
A)  firm's demand curve for labor. 
B)  firm's supply curve for labor. 
C)  labor's supply curve of labor. 
D)  labor's demand curve for jobs.

Question 11

A firm should hire workers up to the point where

Accepted Answer

A)  MP = P. 
B)  MFC = P. 
C)  MFC = MRP. 
D)  MP = MRP. 
A)  MP = P. 
B)  MFC = P. 
C)  MFC = MRP. 
D)  MP = MRP.

Question 12

-In the above table, what is the marginal physical product of worker 5?

Accepted Answer

A)  8 
B)  10 
C)  11 
D)  7 
A)  8 
B)  10 
C)  11 
D)  7

Question 13

-In the above table, if the marginal factor cost is $960, how many workers would be hired?

Accepted Answer

A)  3 
B)  4 
C)  5 
D)  2 
A)  3 
B)  4 
C)  5 
D)  2

Question 14

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 15

What is the marginal revenue product of labor (MRP)? What shape does the MRP curve have? Why?

Accepted Answer

Marginal revenue product of labor is the

Question 16

If a firm hires 312 workers it will produce 4,522 units of output. If it hires 313 workers it will produce 4,786 units of output. The marginal physical product of labor equals

Accepted Answer

A)  4,786. 
B)  313. 
C)  264. 
D)  1. 
A)  4,786. 
B)  313. 
C)  264. 
D)  1.

Question 17

Holding other things constant, an increase in the use of capital in production would

Accepted Answer

A)  increase the marginal productivity of labor. 
B)  decrease, but not proportionately, the marginal productivity of labor. 
C)  not change the marginal productivity of labor. 
D)  decrease proportionately the marginal productivity of labor. 
A)  increase the marginal productivity of labor. 
B)  decrease, but not proportionately, the marginal productivity of labor. 
C)  not change the marginal productivity of labor. 
D)  decrease proportionately the marginal productivity of labor.

Question 18

In an imperfectly competitive labor market, the firm is faced with a(n) ________ MPP curve and a(n) ________ MR curve.

Accepted Answer

A)  downward sloping; upward sloping 
B)  downward sloping; downward sloping 
C)  upward sloping; downward sloping 
D)  downward sloping; horizontal 
A)  downward sloping; upward sloping 
B)  downward sloping; downward sloping 
C)  upward sloping; downward sloping 
D)  downward sloping; horizontal

Question 19

Suppose that U.S. firms outsource computer manufacturing jobs to China, it is expected that

Accepted Answer

A)  the wage rate for workers manufacturing computers will decrease in the U.S. but increase in China. 
B)  the wage rate for workers manufacturing computers will increase in the U.S. but decrease in China. 
C)  the wage rate for workers manufacturing computers will increase in both the U.S. and China. 
D)  the wage rate for workers manufacturing computers will decrease in both the U.S. and China. 
A)  the wage rate for workers manufacturing computers will decrease in the U.S. but increase in China. 
B)  the wage rate for workers manufacturing computers will increase in the U.S. but decrease in China. 
C)  the wage rate for workers manufacturing computers will increase in both the U.S. and China. 
D)  the wage rate for workers manufacturing computers will decrease in both the U.S. and China.

Question 20

-Refer to the above table. What does the marginal physical product equal when the amount of labor goes from 10 to 11 units?

Accepted Answer

A)  60 
B)  50 
C)  10 
D)  5 
A)  60 
B)  50 
C)  10 
D)  5

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

A firm's marginal revenue product of labor curve is also

The demand curve for labor is the

If a perfectly competitive firm is currently employing workers to the point where the value of the last worker's marginal product is equal to the wage rate, and the government imposes a minimum wage higher than the value of the worker's marginal product, we can predict that

As a firm hires more workers, holding capital and other factors constant, the marginal physical product of labor declines because

When a firm has maximized profits

Iron is required to make steel. Hence, the price elasticity of demand for iron by steel manufacturers will be

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

Which of the following would be the most likely outcome if all perfectly competitive firms in a product market join together to form a monopoly?

-Refer to the above figure. Which panel represents what happens in the U.S. job market in the short-run when U.S. firms substitute labor outside of the U.S. for labor inside the U.S.?

The wage rate found by the intersection of the market demand and supply curves for labor then determines the

A firm should hire workers up to the point where

-In the above table, what is the marginal physical product of worker 5?

-In the above table, if the marginal factor cost is $960, how many workers would be hired?

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?

What is the marginal revenue product of labor (MRP)? What shape does the MRP curve have? Why?

If a firm hires 312 workers it will produce 4,522 units of output. If it hires 313 workers it will produce 4,786 units of output. The marginal physical product of labor equals

Holding other things constant, an increase in the use of capital in production would

In an imperfectly competitive labor market, the firm is faced with a(n) ________ MPP curve and a(n) ________ MR curve.

Suppose that U.S. firms outsource computer manufacturing jobs to China, it is expected that

-Refer to the above table. What does the marginal physical product equal when the amount of labor goes from 10 to 11 units?

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

In an imperfectly competitive labor market, the firm is faced with a(n) MPP curve and a(n) MR curve.