Question 1

The marginal revenue product represents

Accepted Answer

A)  the marginal physical product of labor divided by the price of the good produced. 
B)  the worker's contribution to the firm's total revenues. 
C)  the worker's contribution to the firm's output. 
D)  the value of each additional unit of output. 
A)  the marginal physical product of labor divided by the price of the good produced. 
B)  the worker's contribution to the firm's total revenues. 
C)  the worker's contribution to the firm's output. 
D)  the value of each additional unit of output.

Question 2

When an input represents a small proportion of a firm's total costs, then

Accepted Answer

A)  demand for the input will tend to be less elastic. 
B)  the input demand will vary significantly with a change in input price. 
C)  the usage of the input cannot be varied in the production function. 
D)  output demand will be highly elastic. 
A)  demand for the input will tend to be less elastic. 
B)  the input demand will vary significantly with a change in input price. 
C)  the usage of the input cannot be varied in the production function. 
D)  output demand will be highly elastic.

Question 3

The MRP is

Accepted Answer

A)  the supply curve of labor for an individual firm. 
B)  the demand curve for labor for an individual firm. 
C)  the demand curve for labor for the entire market. 
D)  the supply curve of labor for the entire market. 
A)  the supply curve of labor for an individual firm. 
B)  the demand curve for labor for an individual firm. 
C)  the demand curve for labor for the entire market. 
D)  the supply curve of labor for the entire market.

Question 4

A monopolist will hire fewer workers than a perfectly competitive firm because

Accepted Answer

A)  the marginal product curve decreases as additional units of labor are hired for a monopoly but not for a competitive firm. 
B)  there is a variety of employers in a competitive market and only one in a monopoly. 
C)  marginal revenue is greater than price for a monopoly while marginal revenue is equal to price for a competitive firm. 
D)  to sell an additional unit of the good the competitive firm will keep the price the same while the monopolist must lower it on all units sold. 
A)  the marginal product curve decreases as additional units of labor are hired for a monopoly but not for a competitive firm. 
B)  there is a variety of employers in a competitive market and only one in a monopoly. 
C)  marginal revenue is greater than price for a monopoly while marginal revenue is equal to price for a competitive firm. 
D)  to sell an additional unit of the good the competitive firm will keep the price the same while the monopolist must lower it on all units sold.

Question 5

Since the demand for labor depends upon the demand for the final product, we say that labor is

Accepted Answer

A)  a derived demand. 
B)  an "inverse" demand. 
C)  a positive demand. 
D)  a reverse demand. 
A)  a derived demand. 
B)  an "inverse" demand. 
C)  a positive demand. 
D)  a reverse demand.

Question 6

When Canadian firms outsource accounting services to the United States, in markets for the labor of accountants,

Accepted Answer

A)  equilibrium employment and the market clearing wage rate will both increase in Canada, but equilibrium employment and the market clearing wage rate will both decrease in the United States. 
B)  equilibrium employment and the market clearing wage rate will both decrease in Canada, but equilibrium employment and the market clearing wage rate will both increase in the United States. 
C)  equilibrium employment and the market clearing wage rate will both increase in Canada and in the United States. 
D)  equilibrium employment and the market clearing wage rate will both decrease in Canada and the United States. 
A)  equilibrium employment and the market clearing wage rate will both increase in Canada, but equilibrium employment and the market clearing wage rate will both decrease in the United States. 
B)  equilibrium employment and the market clearing wage rate will both decrease in Canada, but equilibrium employment and the market clearing wage rate will both increase in the United States. 
C)  equilibrium employment and the market clearing wage rate will both increase in Canada and in the United States. 
D)  equilibrium employment and the market clearing wage rate will both decrease in Canada and the United States.

Question 7

If a firm sells its product in a monopolistic market, even though the firm operates in a perfectly competitive labor market, the firm will employ workers up to the point where

Accepted Answer

A)  TR = TC. 
B)  the MRP = the wage rate. 
C)  the MRP = the marginal physical product of labor. 
D)  the MRP = the output price. 
A)  TR = TC. 
B)  the MRP = the wage rate. 
C)  the MRP = the marginal physical product of labor. 
D)  the MRP = the output price.

Question 8

A fall in the price of the final product produced by a firm will cause

Accepted Answer

A)  a decline in the price of an input used to produce the good. 
B)  a movement down the demand curve for an input used to produce the final product. 
C)  a reduction in demand for an input used to produce the final product. 
D)  a reduction in the supply of an input used to produce the final product. 
A)  a decline in the price of an input used to produce the good. 
B)  a movement down the demand curve for an input used to produce the final product. 
C)  a reduction in demand for an input used to produce the final product. 
D)  a reduction in the supply of an input used to produce the final product.

Question 9

Suppose the price elasticity of demand for iPods is inelastic. What would you expect about the demand elasticity for workers producing iPods? Explain.

Accepted Answer

Because the demand for workers producing

Question 10

An industry's equilibrium wage rate is established

Accepted Answer

A)  by the industry supply curve for labor alone. 
B)  by the slope of the industry demand curve for labor alone. 
C)  by the Labor Department and based on the cost of living in the area. 
D)  by the intersection of the industry supply and demand curves for labor. 
A)  by the industry supply curve for labor alone. 
B)  by the slope of the industry demand curve for labor alone. 
C)  by the Labor Department and based on the cost of living in the area. 
D)  by the intersection of the industry supply and demand curves for labor.

Question 11

The equilibrium wage rate in an industry is determined by

Accepted Answer

A)  finding where the market supply curve indicates that the substitution effect and income effect of a wage increase are offsetting. 
B)  the intersection of the market demand curve for labor and the market supply curve for labor. 
C)  the strength of the substitution effect relative to the elasticity of demand for labor. 
D)  whether workers or management are better at negotiating. 
A)  finding where the market supply curve indicates that the substitution effect and income effect of a wage increase are offsetting. 
B)  the intersection of the market demand curve for labor and the market supply curve for labor. 
C)  the strength of the substitution effect relative to the elasticity of demand for labor. 
D)  whether workers or management are better at negotiating.

Question 12

What does a monopolist's demand curve for labor look like? How does it compare to the market demand curve for a competitive industry? What does the supply curve of labor to a monopolist look like? Explain.

Accepted Answer

The demand curve for labor for a monopol

Question 13

-In the above table, if this is a perfectly competitive firm and the market price of the product is $5 and the marginal factor cost of labor is $60, how many units of labor will the firm hire?

Accepted Answer

A)  2 
B)  3 
C)  4 
D)  6 
A)  2 
B)  3 
C)  4 
D)  6

Question 14

When U.S. companies hire workers in India to staff their customer service call centers, they are engaging in

Accepted Answer

A)  predatory pricing. 
B)  unfair trade practices. 
C)  outsourcing. 
D)  labor engagement. 
A)  predatory pricing. 
B)  unfair trade practices. 
C)  outsourcing. 
D)  labor engagement.

Question 15

Other things being equal, the behavior of a monopolist differs from that of a competitive industry in that

Accepted Answer

A)  the monopolist does not attempt to maximize economic profit. 
B)  the monopolist hires more labor. 
C)  the monopolist restricts output and hires less labor. 
D)  the monopolist must consider fixed costs in deciding the optimal level of output to produce in the short run. 
A)  the monopolist does not attempt to maximize economic profit. 
B)  the monopolist hires more labor. 
C)  the monopolist restricts output and hires less labor. 
D)  the monopolist must consider fixed costs in deciding the optimal level of output to produce in the short run.

Question 16

If the price of a product being sold in a perfectly competitive market decreases

Accepted Answer

A)  the MRP curve shifts to the left. 
B)  the MRP curve shifts to the right. 
C)  the MFC curve shifts to the right. 
D)  the MFC curve shifts to the left. 
A)  the MRP curve shifts to the left. 
B)  the MRP curve shifts to the right. 
C)  the MFC curve shifts to the right. 
D)  the MFC curve shifts to the left.

Question 17

The demand for an input will be more inelastic when

Accepted Answer

A)  the demand for the product being produced is elastic. 
B)  the cost of the input is a relatively large percentage of total production costs. 
C)  the time period being considered is relatively long. 
D)  it is difficult to substitute other inputs for this input. 
A)  the demand for the product being produced is elastic. 
B)  the cost of the input is a relatively large percentage of total production costs. 
C)  the time period being considered is relatively long. 
D)  it is difficult to substitute other inputs for this input.

Question 18

In a perfectly competitive industry, an individual firm faces

Accepted Answer

A)  a perfectly inelastic labor supply curve. 
B)  a perfectly vertical labor supply curve. 
C)  a perfectly elastic labor supply curve. 
D)  none of the above. 
A)  a perfectly inelastic labor supply curve. 
B)  a perfectly vertical labor supply curve. 
C)  a perfectly elastic labor supply curve. 
D)  none of the above.

Question 19

When 4 units of labor are employed, total product is 6 units; when 5 units of labor are employed, total product is 8 units of output. If the price of output is $5 per unit, what is the marginal revenue product of the 5th unit of labor?

Accepted Answer

A)  $2 
B)  $5 
C)  $10 
D)  $40 
A)  $2 
B)  $5 
C)  $10 
D)  $40

Question 20

If a firm is a perfectly competitive purchaser of factor inputs and the wage rate is $10, the marginal factor cost for labor is

Accepted Answer

A)  greater than $10. 
B)  less than $10. 
C)  $10. 
D)  indeterminate. 
A)  greater than $10. 
B)  less than $10. 
C)  $10. 
D)  indeterminate.

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

The marginal revenue product represents

When an input represents a small proportion of a firm's total costs, then

The MRP is

A monopolist will hire fewer workers than a perfectly competitive firm because

Since the demand for labor depends upon the demand for the final product, we say that labor is

When Canadian firms outsource accounting services to the United States, in markets for the labor of accountants,

If a firm sells its product in a monopolistic market, even though the firm operates in a perfectly competitive labor market, the firm will employ workers up to the point where

A fall in the price of the final product produced by a firm will cause

Suppose the price elasticity of demand for iPods is inelastic. What would you expect about the demand elasticity for workers producing iPods? Explain.

An industry's equilibrium wage rate is established

The equilibrium wage rate in an industry is determined by

What does a monopolist's demand curve for labor look like? How does it compare to the market demand curve for a competitive industry? What does the supply curve of labor to a monopolist look like? Explain.

-In the above table, if this is a perfectly competitive firm and the market price of the product is $5 and the marginal factor cost of labor is $60, how many units of labor will the firm hire?

When U.S. companies hire workers in India to staff their customer service call centers, they are engaging in

Other things being equal, the behavior of a monopolist differs from that of a competitive industry in that

If the price of a product being sold in a perfectly competitive market decreases

The demand for an input will be more inelastic when

In a perfectly competitive industry, an individual firm faces

When 4 units of labor are employed, total product is 6 units; when 5 units of labor are employed, total product is 8 units of output. If the price of output is $5 per unit, what is the marginal revenue product of the 5th unit of labor?

If a firm is a perfectly competitive purchaser of factor inputs and the wage rate is $10, the marginal factor cost for labor is

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

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