Question 1

When the demand curve for an input is a derived demand this means that

Accepted Answer

A)  the demand curve is derived from the demand for the final product being produced.
B)  the demand curve depends upon the MFC.
C)  the law of diminishing marginal product does not hold.
D)  the demand curve slopes upward.E) B) and C)
F) None of the above

Question 2

The supply of labor to an industry will decrease when

Accepted Answer

A)  the price of leisure falls.
B)  the income effect dominates the substitution effect.
C)  the demand for labor falls in the industry.
D)  workers receive better employment opportunities in other industries.E) B) and D)
F) A) and C)

Question 3

Some companies are having their technical support calls answered by people located in India.This is an example of

Accepted Answer

A)  a factor that shifts the supply of labor curve in the U.S.
B)  insourcing.
C)  outsourcing.
D)  a change in the demand for the final product that labor produces.E) B) and D)
F) A) and D)

Question 4

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

Accepted Answer

A)  the MRP curve shifts to the right.
B)  the MPP curve shifts to the right.
C)  the MFC curve shifts to the right.
D)  the MFC curve shifts to the left.E) A) and B)
F) C) and D)

Question 5

Whenever an input makes up a large percentage of a good's final cost,an increase in that input's price will

Accepted Answer

A)  affect total cost relatively more.
B)  not affect total revenues.
C)  affect only accounting profits.
D)  cause the firm to shutdown.E) All of the above
F) C) and D)

Question 6

Labor Input  (workers/day)   Total Physical Product  (output/day)  1050011600126901376014800\begin{array} { c c } \begin{array} { c } 	ext { Labor Input } \	ext { (workers/day)  }\end{array} & \begin{array} { c } 	ext { Total Physical Product } \	ext { (output/day)  }\end{array} \\hline 10 & 500 \11 & 600 \12 & 690 \13 & 760 \14 & 800\\hline\end{array} Labor Input  (workers/day)  ​1011121314​ Total Physical Product  (output/day)  ​500600690760800​​ 
-Refer to the above table.If the price of the good produced is $7,the marginal revenue product of the 11th worker is

Accepted Answer

A)  $700
B)  $4200
C)  $630
D)  $3500 E) A) and B)
F) A) and D)

Question 7

Cost minimization suggests that two inputs should be employed to the point where

Accepted Answer

A)  the marginal cost of each input is identical.
B)  the marginal revenue product of each input is identical.
C)  the marginal physical product per dollar spent on each input is identical.
D)  the extra contribution to physical output of the inputs is identical.E) B) and C)
F) All of the above

Question 8

-In the above figure,the marginal revenue product is represented by line

Accepted Answer

A)  "a."
B)  "b."
C)  "c."
D)  "d."E) None of the above
F) A) and D)

Question 9

If the wage rate doesn't change but a profit-maximizing competitive firm hires fewer workers,we know that

Accepted Answer

A)  the price of the product increased.
B)  technical change occurred that increased labor productivity,reducing the firm's demand for labor.
C)  demand for the product fell or there has been a reduction in labor productivity.
D)  marginal factor cost increased.E) A) and B)
F) A) and C)

Question 10

The monopolist's input demand curve is the

Accepted Answer

A)  marginal revenue curve.
B)  marginal revenue product curve.
C)  marginal physical product curve.
D)  marginal factor cost.E) B) and D)
F) None of the above

Question 11

The demand for computers increases.As a result,

Accepted Answer

A)  the quantity demanded of workers increases,the wage rate rises,and the supply of labor increases.
B)  the demand for workers increases,hiring increases,but wages stay the same since each firm faces a horizontal supply curve of labor.
C)  the wage rate increases in the industry and the quantity demanded of workers falls.
D)  the wage rate increases in the industry and the quantity supplied of workers increases.E) B) and C)
F) All of the above

Question 12

Other things equal,a monopolist will hire

Accepted Answer

A)  more workers than a perfectly competitive industry.
B)  fewer workers than a perfectly competitive industry.
C)  more workers than a perfectly competitive firm.
D)  the same number of workers as a perfectly competitive industry would.E) A) and B)
F) B) and D)

Question 13

When MFC = MRP,a firm in a competitive market will

Accepted Answer

A)  stop hiring.
B)  hire more workers.
C)  earn additional profits.
D)  layoff workers.E) B) and C)
F) None of the above

Question 14

What is marginal factor cost? How is it related to the supply curve of an input?

Accepted Answer

Marginal factor cost is the cost of usin...

Question 15

Quantity  of Workers  Total  Product  Marginal  Physical Product  Marginal  Revenue Product 00−−17218330440548\begin{array} { c c c c } \begin{array} { c } 	ext { Quantity } \	ext { of Workers }\end{array} & \begin{array} { c } 	ext { Total } \	ext { Product }\end{array} & \begin{array} { c } 	ext { Marginal } \	ext { Physical Product }\end{array} & \begin{array} { c } 	ext { Marginal } \	ext { Revenue Product }\end{array} \\hline 0 & 0 & - & - \1 & 7 & & \2 & 18 & & \3 & 30 & & \4 & 40 & & \5 & 48 & & \\hline\end{array} Quantity  of Workers ​012345​ Total  Product ​0718304048​ Marginal  Physical Product ​−​ Marginal  Revenue Product ​−​​ 
-In the above table,what is the marginal physical product of worker 2?

Accepted Answer

A)  10
B)  40
C)  11
D)  12 E) C) and D)
F) B) and C)

Question 16

To minimize total costs for a particular rate of output,a firm will equate

Accepted Answer

A)  the average cost of each factor.
B)  the marginal revenue of each factor.
C)  the marginal physical product per dollar spent on each factor.
D)  the marginal revenue product and variable marginal revenue for each factor.E) A) and B)
F) A) and D)

Question 17

If the marginal revenue product of an input exceeds the marginal factor cost of the input,the firm

Accepted Answer

A)  should hire less of the input.
B)  is maximizing profit.
C)  is not on its marginal cost curve.
D)  should increase its use of the input.E) A) and B)
F) A) and C)

Question 18

Which of the following will NOT shift the MRP curve for labor?

Accepted Answer

A)  a change in the productivity of labor
B)  a change in the price of the product being sold
C)  a change in the wage rate in the market
D)  a change in the demand for the product being producedE) All of the above
F) A) and D)

Question 19

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.E) A) and B)
F) A) and C)

Question 20

When manufacturing a car,parts must be soldered together.This work can be done by labor or by a robot (capital) .More robots will be hired when the price of labor increases.This is known as

Accepted Answer

A)  the effect of changing labor productivity.
B)  marginal revenue product.
C)  the complementary effect.
D)  the substitution effect.E) All of the above
F) B) and C)

Exam 15: The Labor Market: Demand, supply and Outsourcing

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

Correct Answer
verified

Cost minimization suggests that two inputs should be employed to the point where

Correct Answer
verified

If the wage rate doesn't change but a profit-maximizing competitive firm hires fewer workers,we know that

Correct Answer
verified

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

Correct Answer
verified

When manufacturing a car,parts must be soldered together.This work can be done by labor or by a robot (capital) .More robots will be hired when the price of labor increases.This is known as

Correct Answer
verified

When MFC = MRP,a firm in a competitive market will

Correct Answer
verified

The supply of labor to an industry will decrease when

Correct Answer
verified

What is marginal factor cost? How is it related to the supply curve of an input?

Correct Answer
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Marginal factor cost is the cost of usin...
View Answer

The monopolist's input demand curve is the

Correct Answer
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Some companies are having their technical support calls answered by people located in India.This is an example of

Correct Answer
verified

To minimize total costs for a particular rate of output,a firm will equate

Correct Answer
verified

Correct Answer
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When the demand curve for an input is a derived demand this means that

Correct Answer
verified

If the marginal revenue product of an input exceeds the marginal factor cost of the input,the firm

Correct Answer
verified

-In the above figure,the marginal revenue product is represented by line

Correct Answer
verified

Correct Answer
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Which of the following will NOT shift the MRP curve for labor?

Correct Answer
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Whenever an input makes up a large percentage of a good's final cost,an increase in that input's price will

Correct Answer
verified

Other things equal,a monopolist will hire

Correct Answer
verified

The demand for computers increases.As a result,

Correct Answer
verified

Exam 15: The Labor Market: Demand, supply and Outsourcing

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

Correct AnswerverifiedShow Answer

Cost minimization suggests that two inputs should be employed to the point where

Correct AnswerverifiedShow Answer

If the wage rate doesn't change but a profit-maximizing competitive firm hires fewer workers,we know that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When manufacturing a car,parts must be soldered together.This work can be done by labor or by a robot (capital) .More robots will be hired when the price of labor increases.This is known as

Correct AnswerverifiedShow Answer

When MFC = MRP,a firm in a competitive market will

Correct AnswerverifiedShow Answer

The supply of labor to an industry will decrease when

Correct AnswerverifiedShow Answer

What is marginal factor cost? How is it related to the supply curve of an input?

Correct AnswerverifiedMarginal factor cost is the cost of usin...View AnswerShow Answer

The monopolist's input demand curve is the

Correct AnswerverifiedShow Answer

Some companies are having their technical support calls answered by people located in India.This is an example of

Correct AnswerverifiedShow Answer

To minimize total costs for a particular rate of output,a firm will equate

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When the demand curve for an input is a derived demand this means that

Correct AnswerverifiedShow Answer

If the marginal revenue product of an input exceeds the marginal factor cost of the input,the firm

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-In the above figure,the marginal revenue product is represented by line

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following will NOT shift the MRP curve for labor?

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Whenever an input makes up a large percentage of a good's final cost,an increase in that input's price will

Correct AnswerverifiedShow Answer

Other things equal,a monopolist will hire

Correct AnswerverifiedShow Answer

The demand for computers increases.As a result,

Correct AnswerverifiedShow Answer

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Marginal factor cost is the cost of usin...
View Answer

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