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- 1. Multiple Choice
What is the rule to profit maximize when hiring workers?
MR = MC
MRC = MRS
MRP = MRC
S = D
- 2. Multiple Choice
What is the shape of the Supply curve for workers in a p.C. Firm?
horizontal
perfectly horizontal
Vertical
Downward sloping
- 3. Multiple Choice
What is MRC?
Marginal Revenue Cost
Marginal Resource Counting
Marginal Resource Cost
Mad, Risky, Customers
- 4. Multiple Choice
Factor Markets designate
productivity
input
price
output
- 5. Multiple Choice
Factor Markets determine how (please pick 2)
Many items to produce
many workers to hire
Wage to be paid
Price to charge for products
- 6. Multiple Choice
The two types of factor markets are
Monopoly
Oligopoly
Monopolistic Competition
Perfect Competition & Monopsony
- 7. Multiple Choice
A monopsony pays _____ & hires ____ than a P.C. Firm
much more & tons of workers
more & more
less & less
the same & fewer
- 8. Multiple ChoiceIn a perfectly competitive labor market, an increase in an effective minimum wage will result in:an increase in the supply of workersa decrease in the supply of workersa decrease in the demand for workersfewer workers being hired
- 9. Multiple ChoiceThe table shows the production function of an auto parts manufacturer. Assume that the firm can hire as many workers as it wants at the market wage rate of $600 per week per worker and sell as many auto parts as it wants at the price of $10 per part. To maximize profits, the firm should hire:1 worker3 workers5 workers7 workers
- 10. Multiple ChoiceAssume that firms sell their output in a perfectly competitive product market and hire labor in a perfectly competitive labor market. If all other factors remain constant, an increase in the demand for the firms’ product will result in which of the following changes in the labor market?The demand curve for labor will shift to the right.The supply curve for labor will shift to the right.The supply curve for labor will shift to the left.The demand curve for labor will shift to the left.
- 11. Multiple ChoiceIf a large number of unskilled workers enter the labor market, which of the following is most likely to occur in the labor market for unskilled workers?The supply curve will shift to the right and the wage rate will decrease.The supply curve will shift to the left and the wage rate will increase.The demand curve will shift to the right and the wage rate will increase.The demand curve will shift to the left and the wage rate will decrease.
- 12. Multiple ChoiceAssume that a profit-maximizing, perfectly competitive firm hires labor in a perfectly competitive labor market. If the market wage is $12 per hour and the price of the product is $3 per unit, the firm will:hire more workers if each worker can produce 3 units per hourhire another worker if the output per hour of the additional worker exceeds 4 unitshire fewer workers, since the hourly wage exceeds the cost of producing one unit of outputnot hire any workers, since the cost of labor is greater than the price of the output
- 13. Multiple ChoiceThe last worker currently employed by a firm has a marginal product of 3 units per hour and is paid $20 per hour. Assuming that both the
labor market and product market are perfectly competitive and that the product’s price is $5 per unit, the firm should do which of the following?Increase the product’s priceIncrease wages
Employ more workers
Employ fewer workers
- 14. Multiple ChoiceA profit-maximizing firm will continue to hire workers until the marginal revenue product of labor is equal to the:marginal product of labordemand for labormarginal factor costprice of the good that labor is producing
- 15. Multiple ChoiceA perfectly competitive firm hires three workers in a perfectly competitive labor market. The marginal products of the three workers are shown in the table. Which of the following will be true?Each worker will receive a wage based on the marginal product of the last worker hired.Each worker will receive a wage based on the marginal product of the first worker hired.Each worker will receive a wage based on the average of the marginal products of the workers.Worker 1 will receive the highest wage.
- 16. Multiple Choice
Which of the following would cause the wage for computer programmers to increase?
A decrease in the amount of physical capital per computer programmer
An improvement in the education of computer programmers
An increase in the social prestige associated with being a computer programmer
A decrease in the value that computer programmers place on leisure
A minimum wage set below the equilibrium wage in the market for computer programmers
- 17. Multiple Choice
Which of the following is a firm’s demand for labor?
the firm’s marginal factor cost (MFC) curve
the firm’s long-run average total cost (LRATC) curve
the firm’s marginal revenue product of labor (MRPL) curve
the firm’s marginal revenue (MR) curve
the firm’s marginal revenue product of capital (MRPK) curve
- 18. Multiple Choice
The table below shows the marginal revenue product of labor (MRPL) of a firm producing pillows. The firm uses various amounts of labor, and it can sell as many pillows as it wants for $10.
What is the marginal product of the fourth worker?
10 pillows
20 pillows
50 pillows
1 pillow
15 pillows
- 19. Multiple Choice
If the wage rate decreases, which of the following is the most likely outcome?
people decide to equalize their leisure and labor usage
people decrease their leisure and increase their supply of labor
people don’t change the quantity of labor supplied; firms increase the quantity of labor demanded
people increase the quantity of labor supplied; firms decrease the quantity of labor demanded
people decrease the quantity of labor supplied; firms increase the quantity of labor demanded
- 20. Multiple Choice
Blammo Inc. produces greeting cards in a perfectly competitive market. The table below shows the total number of greeting cards produced using different amounts of labor. The market price for a greeting card is $4.
What is the marginal revenue product of labor (MRPL) of the fifth worker?
$4
$60
$160
$400
$0
- 21. Multiple Choice
Which of the following best describes a firm’s marginal revenue product of capital (MRPK)?
the marginal product of capital multiplied by the marginal revenue gained
the horizontal sum of every firm’s demand for capital
the additional revenue gained from the sale of one more unit
the additional cost associated with using an additional unit of capital
the additional output gained from using one more unit of capital
- 22. Multiple Choice
The table gives output, marginal product, and average product of a firm producing novelty T-shirts using different numbers of workers. The firm produces t-shirts in a perfectly competitive market where the price of a t-shirt is $10.
What is the marginal revenue product of labor (MRPL) of the fourth worker?
$700
$1,300
$400
$100
$500
- 23. Multiple ChoiceJennifer Lopez is seen wearing a new short and sleek dress. People now want this dress. Which demand determinant is this most likely to fall under?Change in Consumer IncomeChange in Consumer TastesChange in Price of Substitute GoodChange in Consumer Price Expectations
- 24. Multiple ChoiceOreo cookies are now extremely expensive to purchase. Instead of buying Oreo cookies, I now want to buy Chips Ahoy. What determinant of demand does this likely fall under?Change in Price of Complementary GoodChange in Price of Substitute GoodChange in Consumer Price ExpectationsChange in Number of Consumers in the Market
- 25. Multiple ChoiceI know that the iPhone 8 is coming out next year but really need a phone badly. I'm thinking about buying an iPhone 7 when the new iPhone comes to the market because it will be much cheaper than today's price. What determinant of demand does this suggest?Change in Price of Complementary GoodChange in Consumer Price ExpectationsChange in Number of Consumers in the MarketChange in Consumer Income
- 26. Multiple ChoiceTakis have been taking the market by storm! Everyone and their mom wants in on selling this delicious treats! Companies that never thought about selling Takis-like products are now selling their version of a hot chip. What supply factor is this?Change in TechnologyGovernment ActionChange in Number of Sellers in the Market
- 27. Multiple ChoiceThe government has put a ban on all items that are unhealthy. No store can legally sell soda over 24 ounces. The supply of anything over 24 ounces becomes non-existent. What supply factor is this?Change in TechnologyChange in Cost of Factors of ProductionGovernment Action
- 28. Multiple ChoiceIdentify the correct determinant of supply.
Example: As the demand for DVDs decreased due to consumer preference for streaming movies, the market price for DVDs fell. This lower market price caused sellers to leave the DVD market and supply decreased.Government regulationChange in number of sellersChange in incomeChange in expectations - 29. Multiple ChoiceThe sellers of Twinkies also sell healthy foods. With all the health regulations we have now, the sellers of Twinkies want to sell more healthy foods. The supply of Twinkies will decrease. What supply factor does this best relate to?Change in TechnologyChange in Number of Sellers in the MarketChange in Profit Opportunities Producing other Products
- 30. Multiple ChoiceIn order to hire the least-cost combination of labor and capital, the firm must do which of the following?Find the combination of labor and capital where the marginal product of labor is equal to the marginal product of capitalFind the combination of labor and capital where the ratio of the marginal product of labor to the marginal product of capital is equal to oneFind the combination of labor and capital where the marginal product of labor divided by the price of labor is equal to the marginal product of capital divided by the price of
capitalFind the combination of labor and capital where the price of labor is equal to the price of capital - 31. Multiple ChoiceA firm produces truffles by using labor and capital. The price of labor is $10 per unit, and the price of capital is $20 per unit. At current output level, the marginal product of labor is 40 truffles and the marginal product of capital is 60 truffles. To reduce the total cost of producing the current quantity, how should the firm change its spending on labor and capital?Labor: no change
Capital: increaseLabor: no change
Capital: no changeLabor: increase
Capital: decreaseLabor: decrease
Capital: increase - 32. Multiple ChoiceIn the monopsonistic labor market shown in the diagram, which of the following indicates the number of workers the firm will hire and the wage rate it will pay, respectively?L1, W1L1, W3L2, W2L1, W2
- 33. Multiple ChoiceIn the diagram, what would be the competitive quantity of workers hired and wages, respectively?L2, W4L1, W3L2, W2L1, W2
- 34. Multiple ChoiceThe graph shows the conditions that a monopsonist faces in a labor market. How many workers would this monopsonist hire and what wage rate would it pay, respectively?5, $37.5010, $3010, $2014, $24
- 35. Multiple ChoiceA coffee entrepreneur is employing labor and capital to run a coffee kiosk. At the current mix of inputs, the marginal product of labor is 50 cups per hour and the marginal product of capital is 150 cups per hour. The price of labor is $10 per hour and the price of capital is $30 per hour. To minimize costs without changing the output, the firm should:make no changesemploy less labor and less capitalemploy more labor and less capitalemploy less labor and more capital
- 36. Multiple ChoiceAn entrepreneur is employing labor and capital to produce a product. The wage rate is $8 per unit and the rent for capital is $10 per unit. The marginal product of labor is 40 units and the marginal product of capital is 60 units. To minimize costs without changing its output, the firm should:make no changesemploy less labor and less capitalemploy more labor and less capitalemploy less labor and more capital
- 37. Multiple ChoiceIf a monopsony labor market suddenly were transformed into a perfectly competitive labor market, how would the wage and the number of workers employed change?Both would decrease
Both would increase
The wage would fall, but employment would increase
The wage would rise, but employment would decrease - 38. Multiple Choice
What is the quantity of labor a monopsony firm would hire, and what is the wage it will pay?
qL1 , wu
qL1 , wx
qL2 , wt
qL2 , wy
qL2 , wx
- 39. Multiple Choice
What is the marginal factor cost of the fifth worker?
$70
$10
$250
$90
$50
- 40. Multiple Choice
Which of the following best describes a monopsony market?
many buyers, many sellers
many buyers, a few sellers
a few buyers, many sellers
one buyer, many sellers
many buyers, one seller
- 41. Multiple Choice
A single large hospital system hires all nurses in a city. Assume that this is a for-profit hospital system.
Which of the following can we predict about this market?
The marginal factor cost of labor is less than the supply of labor.
More nurses will be hired than in a competitive labor market.
The quantity of labor hired will be allocatively efficient.
Nurses are paid less than they would be paid in a competitive labor market.
The hospital system will hire the quantity of labor where the supply of labor equals the marginal revenue product of labor.
- 42. Multiple Choice
The market supply of college instructors is given here. What is the marginal factor cost of the second instructor?
$90,000
$70,000
$50,000
$10,000
$120,000
- 43. Multiple Choice
What area represents deadweight loss in this monopsony labor market?
wazQ10
vzy
vxy
wbvxwd
wbvQ10
- 44. Multiple Choice
What wage and quantity combination will this firm choose to maximize profits?
600 workers, $70 per day
600 workers, $35 per day
400 workers, $25 per day
400 workers, $35 per day
400 workers, $55 per day
- 45. Multiple Choice
What happens if a minimum wage is imposed in a monopsony labor market?
The marginal factor cost becomes horizontal at the minimum wage until it hits the labor supply curve.
The marginal factor cost curve is less than the labor supply curve.
The demand for labor becomes vertical.
The labor supply curve becomes vertical at the amount of labor hired in a competitive market.
The demand for labor becomes horizontal.
- 46. Multiple Choice
What combination of wage and quantity of labor will Hogwarts choose to maximize profits?
Q1 , wa
Q2 , wd
Q1 , wc
Q2 , wb
Q2 , wc
- Answer choicesTagsAnswer choicesTags