Question 1

Which of the following statements is not true?

Accepted Answer

A) Assuming a perfectly competitive labor market, a firm selling in a monopolistic product market will have a lower marginal revenue product curve than a firm in a perfectly competitive product market. 
B) The intersection of market-labor supply with market-labor demand establishes equilibrium in a perfectly competitive labor market. 
C) In monopsonistic labor markets, an individual firm faces a positively sloped labor-supply curve. 
D) In a perfectly competitive labor market, an individual firm can hire as many workers as it needs at the equilibrium wage rate 
E) In a monopsonistic labor market, marginal revenue product is equal to the value of marginal product. 
A) Assuming a perfectly competitive labor market, a firm selling in a monopolistic product market will have a lower marginal revenue product curve than a firm in a perfectly competitive product market. 
B) The intersection of market-labor supply with market-labor demand establishes equilibrium in a perfectly competitive labor market. 
C) In monopsonistic labor markets, an individual firm faces a positively sloped labor-supply curve. 
D) In a perfectly competitive labor market, an individual firm can hire as many workers as it needs at the equilibrium wage rate 
E) In a monopsonistic labor market, marginal revenue product is equal to the value of marginal product.

Question 2

Suppose output of a firm hiring workers in a competitive labor market increases by three units when an additional worker is hired.This firm will hire more laborers if the market price of its product is $4 and the wage rate is $9.[Hint: Marginal revenue product of a resource is equal to the product of marginal product of the resource and the marginal revenue of the firm.]

Accepted Answer

A) True 
 B)False

Question 3

The profit-maximizing number of workers for a monopsony to employ is derived at the point where the marginal-revenue product of labor is equal to the marginal-factor cost of labor.

Accepted Answer

A) True 
 B)False

Question 4

A firm is said to be a monopsonist if it is the sole seller of a commodity in the market.

Accepted Answer

A) True 
 B)False

Question 5

Goods which are demanded to produce something else are said to have a(n):

Accepted Answer

A) direct demand. 
B) composite demand. 
C) derived demand. 
D) joint demand. 
E) inelastic demand. 
A) direct demand. 
B) composite demand. 
C) derived demand. 
D) joint demand. 
E) inelastic demand.

Question 6

The negative slope of the demand curve of a resource indicates an inverse relationship between the price of the resource and the quantity demanded.

Accepted Answer

A) True 
 B)False

Question 7

The value of the marginal product of a resource is equal to:

Accepted Answer

A) the marginal revenue of the firm, if the product market is perfectly competitive. 
B) the market price of the product divided by the price of the resource. 
C) the market price of the product divided by the marginal product of the resource. 
D) the marginal revenue product of the resource, if the product market is perfectly competitive. 
E) the marginal product of the resource divided by the price of the resource. 
A) the marginal revenue of the firm, if the product market is perfectly competitive. 
B) the market price of the product divided by the price of the resource. 
C) the market price of the product divided by the marginal product of the resource. 
D) the marginal revenue product of the resource, if the product market is perfectly competitive. 
E) the marginal product of the resource divided by the price of the resource.

Question 8

Under perfect competition in the resource market, the marginal factor cost curve:

Accepted Answer

A) is positively sloped. 
B) is vertical. 
C) is negatively sloped. 
D) is horizontal. 
E) does not exist. 
A) is positively sloped. 
B) is vertical. 
C) is negatively sloped. 
D) is horizontal. 
E) does not exist.

Question 9

The figure given below shows the marginal revenue product (MRP)of accountants in a firm. Figure 28.2   MRP = MP ´ MR
According to Figure 28.2, the:

Accepted Answer

A) value of the resource to the firm declines after the second unit of the resource is used. 
B) marginal-physical product diminishes at every resource level if we consider the product market to be competitive. 
C) law of diminishing marginal product does not apply in this case. 
D) optimal number of units of the resource to be used is 2. 
E) optimal number of units of the resource to be used is 7. 
A) value of the resource to the firm declines after the second unit of the resource is used. 
B) marginal-physical product diminishes at every resource level if we consider the product market to be competitive. 
C) law of diminishing marginal product does not apply in this case. 
D) optimal number of units of the resource to be used is 2. 
E) optimal number of units of the resource to be used is 7.

Question 10

Transfer earnings of a factor is equal to its:

Accepted Answer

A) economic rent. 
B) explicit cost. 
C) actual earnings. 
D) overhead cost. 
E) opportunity cost. 
A) economic rent. 
B) explicit cost. 
C) actual earnings. 
D) overhead cost. 
E) opportunity cost.

Question 11

The following table shows output per hour produced by the different units of labor. Table 28.1
  The marginal revenue product of a resource is equal to the product of the marginal product of an input and marginal revenue.
According to Table 28.1, if the wage rate is $9 per hour, how many workers should this firm hire?

Accepted Answer

A) 1 
B) 5 
C) 4 
D) 2 
E) 3 
A) 1 
B) 5 
C) 4 
D) 2 
E) 3

Question 12

Which of the following statements best illustrates the relationship between the market for products and the market for resources?

Accepted Answer

A) An increase in the price of cameras will decrease the demand for film. 
B) As income rises, people demand relatively smaller amounts of food. 
C) An increase in demand for textiles will increase the demand for textile workers. 
D) An increase in the price of butter will cause more people to buy margarine. 
E) A decrease in demand for tea will increase the demand for coffee. 
A) An increase in the price of cameras will decrease the demand for film. 
B) As income rises, people demand relatively smaller amounts of food. 
C) An increase in demand for textiles will increase the demand for textile workers. 
D) An increase in the price of butter will cause more people to buy margarine. 
E) A decrease in demand for tea will increase the demand for coffee.

Exam 49: Resource Markets

Which of the following statements is not true?

The profit-maximizing number of workers for a monopsony to employ is derived at the point where the marginal-revenue product of labor is equal to the marginal-factor cost of labor.

A firm is said to be a monopsonist if it is the sole seller of a commodity in the market.

Goods which are demanded to produce something else are said to have a(n):

The negative slope of the demand curve of a resource indicates an inverse relationship between the price of the resource and the quantity demanded.

The value of the marginal product of a resource is equal to:

Under perfect competition in the resource market, the marginal factor cost curve:

The figure given below shows the marginal revenue product (MRP)of accountants in a firm. Figure 28.2 MRP = MP ´ MR According to Figure 28.2, the:

Transfer earnings of a factor is equal to its:

Which of the following statements best illustrates the relationship between the market for products and the market for resources?

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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