Question 1

After hiring 151 units of the variable input (say labor)a firm determines the MFC to be $0.33 and the MRP to be $0.30.The firm should:

Accepted Answer

A) increase the output of its product. 
B) increase the use of labor. 
C) decrease the use of labor. 
D) produce 151 units. 
E) produce 33 units of the output. 
A) increase the output of its product. 
B) increase the use of labor. 
C) decrease the use of labor. 
D) produce 151 units. 
E) produce 33 units of the output.

Question 2

If the resource market is perfectly competitive:

Accepted Answer

A) the market demand for the resource is perfectly elastic. 
B) the market demand for the resource is perfectly inelastic. 
C) the suppliers can affect the input price by increasing or reducing their supply. 
D) the input price to each firm is constant. 
E) the supply of the resource is perfectly inelastic. 
A) the market demand for the resource is perfectly elastic. 
B) the market demand for the resource is perfectly inelastic. 
C) the suppliers can affect the input price by increasing or reducing their supply. 
D) the input price to each firm is constant. 
E) the supply of the resource is perfectly inelastic.

Question 3

A monopsonist firm pays a price to a factor that is:

Accepted Answer

A) equal to the marginal revenue product of the factor. 
B) greater than the marginal revenue product of the factor. 
C) equal to the marginal factor cost. 
D) greater than the marginal factor cost. 
E) less than the marginal revenue product of the factor. 
A) equal to the marginal revenue product of the factor. 
B) greater than the marginal revenue product of the factor. 
C) equal to the marginal factor cost. 
D) greater than the marginal factor cost. 
E) less than the marginal revenue product of the factor.

Question 4

Firms are consumers and households are the producers in the _____.

Accepted Answer

A) stock market 
B) bond market 
C) labor market 
D) product market 
E) underground market 
A) stock market 
B) bond market 
C) labor market 
D) product market 
E) underground market

Question 5

The following figure represents the equilibrium in the labor markets. Figure 28.4   In the figure,
MFC: Marginal Factor Cost curve
D: Demand or the Marginal Revenue Product curve
S: Supply curve
According to Figure 28.4, if the government imposes a minimum wage of W1, what quantity of labor will a competitive labor market hire?

Accepted Answer

A) Q1 
B) Q2 
C) Q3 
D) Less than Q2 
E) Greater than Q3 
A) Q1 
B) Q2 
C) Q3 
D) Less than Q2 
E) Greater than Q3

Question 6

If government-assured medical and other benefits increase the labor costs, everything else remaining constant, then firms will tend to hire more of the other resources instead of labor.

Accepted Answer

A) True 
 B)False

Question 7

The figure given below represents equilibrium in the labor market. Figure 28.5   In the figure,
VMP: Value of marginal product curve
MRP: Marginal revenue product curve
MFC: Marginal factor cost
S: Supply curve of labor
According to Figure 28.5, what is the equilibrium level of employment?

Accepted Answer

A) 0 units 
B) L1 units. 
C) L2 units. 
D) L3 units. 
E) L4 units. 
A) 0 units 
B) L1 units. 
C) L2 units. 
D) L3 units. 
E) L4 units.

Question 8

A monopolist hiring labor in a perfectly competitive resource market is faced with a:

Accepted Answer

A) perfectly elastic demand curve for labor. 
B) horizontal marginal factor cost curve. 
C) perfectly inelastic demand curve for labor. 
D) perfectly inelastic supply curve of labor. 
E) positively sloped marginal factor cost curve. 
A) perfectly elastic demand curve for labor. 
B) horizontal marginal factor cost curve. 
C) perfectly inelastic demand curve for labor. 
D) perfectly inelastic supply curve of labor. 
E) positively sloped marginal factor cost curve.

Question 9

The following table shows the marginal productivity of different units of labor for producing a product. Table 28.4
  In the table,
MR: Marginal Revenue
MPP: Marginal Physical Product
According to Table 28.4, what is the highest MRP the firm can reach? (MRP = MPP ´ MPP)

Accepted Answer

A) 5 
B) 6 
C) 15 
D) 18 
E) 25 
A) 5 
B) 6 
C) 15 
D) 18 
E) 25

Question 10

The following table shows the marginal revenue of a firm and the marginal physical product of different units of labor in a perfectly competitive labor market. Table 28.5
  Note: Marginal revenue product of a resource is the product of MPP and MR.
In Table 28.5, at what wage rate would one worker be hired by a profit-maximizing firm?

Accepted Answer

A) $10 
B) $25 
C) $30 
D) $50 
E) $100 
A) $10 
B) $25 
C) $30 
D) $50 
E) $100

Question 11

Scenario 28.1 A worker in Firm A earns an income of $5, 000 per month.He has been offered a job in Firm B where he will be paid a salary of $7, 000 per month.
Refer to Scenario 28.1.If the worker joins Firm B, his opportunity cost is:

Accepted Answer

A) $7, 000. 
B) $5, 000. 
C) $2, 000. 
D) more than $5, 000 but less than $7, 000. 
E) less than $2, 000. 
A) $7, 000. 
B) $5, 000. 
C) $2, 000. 
D) more than $5, 000 but less than $7, 000. 
E) less than $2, 000.

Question 12

As the total quantity of land is fixed the payment for land is termed as economic rent.

Accepted Answer

A) True 
 B)False

Question 13

The market-supply-of-resource curve slopes upward, indicating that as the price of a resource rises, the quantity supplied of the resource rises, everything else held constant.

Accepted Answer

A) True 
 B)False

Question 14

Tools and equipments used in production are:

Accepted Answer

A) natural resources. 
B) entrepreneurial resources. 
C) human capital. 
D) capital resources. 
E) labor resources. 
A) natural resources. 
B) entrepreneurial resources. 
C) human capital. 
D) capital resources. 
E) labor resources.

Question 15

Other things being equal, the marginal revenue product for labor hired by a firm that is a monopolist in the output market:

Accepted Answer

A) is represented by an upward sloping curve. 
B) is equal to the marginal revenue product for labor hired by a perfectly competitive firm. 
C) is less than the marginal revenue product for labor hired by a perfectly competitive firm. 
D) is greater than the marginal revenue product for labor hired by a perfectly competitive firm. 
E) is equal to the value of marginal product of labor. 
A) is represented by an upward sloping curve. 
B) is equal to the marginal revenue product for labor hired by a perfectly competitive firm. 
C) is less than the marginal revenue product for labor hired by a perfectly competitive firm. 
D) is greater than the marginal revenue product for labor hired by a perfectly competitive firm. 
E) is equal to the value of marginal product of labor.

Question 16

The figure given below represents equilibrium in the labor market with the demand and supply curves of labor. Figure 28.6   In the figure,
D = MRP implies demand for labor = Marginal Revenue Product
MFC represents Marginal Factor Cost curve
S represents the supply curve of labor
Refer to Figure 28.6.Calculate the quantity of labor hired by a monopsonist.

Accepted Answer

A) 125 laborers 
B) 75 laborers 
C) 25 laborers 
D) 250 laborers 
E) 50 laborers 
A) 125 laborers 
B) 75 laborers 
C) 25 laborers 
D) 250 laborers 
E) 50 laborers

Question 17

The following figure represents the equilibrium in the labor markets. Figure 28.4   In the figure,
MFC: Marginal Factor Cost curve
D: Demand or the Marginal Revenue Product curve
S: Supply curve
Refer to Figure 28.4.If the government imposes a minimum wage of W2, how many units of labor will a monopsonist hire?

Accepted Answer

A) Q2 
B) Between Q2 and Q3 
C) Q1 
D) Q3 
E) Between Q1 and Q2 
A) Q2 
B) Between Q2 and Q3 
C) Q1 
D) Q3 
E) Between Q1 and Q2

Question 18

The following table shows total output produced by different units of capital. Table 28.3
  The marginal revenue product of a resource is the product of the marginal product of the resource and the marginal revenue.
In Table 28.3, if there exists perfect competition in the capital market and the price per unit of capital is ten times the price of the product, the marginal factor cost at the profit maximizing level of employment is:

Accepted Answer

A) $60. 
B) $50. 
C) $40 
D) $30 
E) $20 
A) $60. 
B) $50. 
C) $40 
D) $30 
E) $20

Question 19

If a dollar spent on capital yields less marginal revenue product than labor, the profit of the firm is reduced if it hires less capital than labor.

Accepted Answer

A) True 
 B)False

Question 20

Scenario 28.1 A worker in Firm A earns an income of $5, 000 per month.He has been offered a job in Firm B where he will be paid a salary of $7, 000 per month.
Refer to Scenario 28.1.If the worker joins Firm B, his economic rent is:

Accepted Answer

A) $5, 000. 
B) $7, 000. 
C) less than $7, 000 but more than $2, 000. 
D) $2, 000. 
E) less than $2, 000. 
A) $5, 000. 
B) $7, 000. 
C) less than $7, 000 but more than $2, 000. 
D) $2, 000. 
E) less than $2, 000.

Exam 49: Resource Markets

After hiring 151 units of the variable input (say labor)a firm determines the MFC to be $0.33 and the MRP to be $0.30.The firm should:

If the resource market is perfectly competitive:

A monopsonist firm pays a price to a factor that is:

Firms are consumers and households are the producers in the _____.

If government-assured medical and other benefits increase the labor costs, everything else remaining constant, then firms will tend to hire more of the other resources instead of labor.

The figure given below represents equilibrium in the labor market. Figure 28.5 In the figure, VMP: Value of marginal product curve MRP: Marginal revenue product curve MFC: Marginal factor cost S: Supply curve of labor According to Figure 28.5, what is the equilibrium level of employment?

A monopolist hiring labor in a perfectly competitive resource market is faced with a:

The following table shows the marginal productivity of different units of labor for producing a product. Table 28.4 In the table, MR: Marginal Revenue MPP: Marginal Physical Product According to Table 28.4, what is the highest MRP the firm can reach? (MRP = MPP ´ MPP)

Scenario 28.1 A worker in Firm A earns an income of $5, 000 per month.He has been offered a job in Firm B where he will be paid a salary of $7, 000 per month. Refer to Scenario 28.1.If the worker joins Firm B, his opportunity cost is:

As the total quantity of land is fixed the payment for land is termed as economic rent.

The market-supply-of-resource curve slopes upward, indicating that as the price of a resource rises, the quantity supplied of the resource rises, everything else held constant.

Tools and equipments used in production are:

Other things being equal, the marginal revenue product for labor hired by a firm that is a monopolist in the output market:

If a dollar spent on capital yields less marginal revenue product than labor, the profit of the firm is reduced if it hires less capital than labor.

Scenario 28.1 A worker in Firm A earns an income of $5, 000 per month.He has been offered a job in Firm B where he will be paid a salary of $7, 000 per month. Refer to Scenario 28.1.If the worker joins Firm B, his economic rent is:

Economics: The World Around You

Choice, Opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

National Income Accounting

an Introduction to the Foreign Exchange Market and the Balance of Payments

Consumer Choice

Supply: The Costs of Doing Business

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Profit Maximization

Aggregate Expenditures

Perfect Competition

Income and Expenditures Equilibrium

Monopoly

Fiscal Policy

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Money and Banking

Market Failures, Government Failures, and Rent Seeking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Resource Markets

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

The Labor Market

Capital Markets

Economic Growth

Development Economics

the Land Market and Natural Resources

Aging, Social Security and Health Care

Globalization

Elasticity: Demand and Supply

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

Consumer Choice

International Trade Restrictions

World Trade Equilibrium

Exchange Rates and Financial Links Between Countries

International Trade Restrictions

Supply: the Costs of Doing Business

Exchange Rates and Financial Links Between Countries

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

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