Question 1

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 B)

Question 2

Other things being equal, the monopolist will

Accepted Answer

A)   hire more workers than if the industry were perfectly competitive.
B)   hire the same number of workers as a perfectly competitive industry would.
C)   hire fewer workers than if the industry were perfectly competitive.
D)   have lower profits than if the industry were perfectly competitive.E) B) and C)
F) None of the above

Question 3

Which of the following statements describes the long-run effects of global outsourcing?

Accepted Answer

A)   Wages for U.S. workers will decrease but wages in other countries will increase.
B)   Wages in all countries will remain the same as before the outsourcing.
C)   Wages and employment will increase globally.
D)   Wages will increase globally and employment will stay the same.E) A) and C)
F) B) and C)

Question 4

Which of the following statements is TRUE about the market demand curve for labor?

Accepted Answer

A)   The market demand curve is the sum of the individual firm's demand curve.
B)   The market demand curve will be perfectly inelastic since firms need labor.
C)   The market demand curve shows the quantities of labor demanded by all firms in the industry at various marginal products.
D)   The market demand curve depends upon labor productivity, the wage rate and the price of the final product.E) C) and D)
F) All of the above

Question 5

The wage rate for widget makers is currently $25 per hour and Ajax hires 20 widget makers. If the wage rate were decreased to $20, what would happen to the marginal revenue product for labor at Ajax?

Accepted Answer

A)   It would remain the same.
B)   It would increase since Ajax's demand for labor curve will shift.
C)   It would increase since the price of widgets would decrease.
D)   It would decrease since Ajax will hire more workers.E) C) and D)
F) A) and B)

Question 6

Ajax Corporation has just decided to let managers work from home one day a week. This decision will make working conditions better and will

Accepted Answer

A)   cause the demand curve for labor for managers to increase.
B)   increase the elasticity of demand for labor for managers.
C)   lead to an increase in the supply curve of labor for managers.
D)   leave the supply curve of labor unchanged.E) A) and B)
F) C) and D)

Question 7

Which of the following would cause the price elasticity of demand for a variable input to be greater?

Accepted Answer

A)   the smaller the price elasticity of demand for the final product
B)   the longer the time period being considered
C)   the smaller the proportion of total costs accounted for by the variable input
D)   the harder it is for a variable input to be substituted for by other inputsE) A) and B)
F) C) and D)

Question 8

Marginal factor cost is

Accepted Answer

A)   the change in the value of output from using an additional unit of the factor.
B)   the cost of an additional unit of output.
C)   the total value of factor cost divided by the one cost that is being held constant.
D)   the cost of using an additional unit of an input.E) None of the above
F) All of the above

Question 9

Which of the following statements about a perfectly competitive market are TRUE? I. The perfectly competitive industry faces an upward sloping labor supply curve.
II)  The individual firm in a perfectly competitive industry faces a perfectly elastic labor supply curve.

Accepted Answer

A)   I only
B)   II only
C)   both I and II
D)   neither I nor IIE) A) and B)
F) A) and C)

Question 10

-In the above table, if this is a perfectly competitive firm and the market price of the product is $10, what is the marginal revenue product of worker 4?

Accepted Answer

A)   $210
B)   $100
C)   $411
D)   $120E) B) and C)
F) A) and B)

Question 11

-In the above table, what is the marginal physical product of worker 2?

Accepted Answer

A)   10
B)   18
C)   11
D)   9E) A) and D)
F) A) and C)

Question 12

-Refer to the above table. If the price of the good produced is $5, the marginal revenue product of the 7th worker is

Accepted Answer

A)   $125.
B)   $275.
C)   $5000.
D)   $55.E) C) and D)
F) A) and D)

Question 13

The MRP curve for a monopolist in the product market is

Accepted Answer

A)   the same as the MRP curve for a perfectly competitive firm in the product market.
B)   to the left and below the MRP curve for a perfectly competitive firm in the product market.
C)   to the right and above the MRP curve for a perfectly competitive firm in the product market.
D)   upward sloping and below the MFC curve for a perfectly competitive firm in the product market.E) C) and D)
F) A) and B)

Question 14

If the price elasticity of demand is less than 1, then consumer demand is

Accepted Answer

A)   unrelated to the elasticity of demand.
B)   inelastic.
C)   elastic.
D)   unitary elastic.E) B) and C)
F) A) and B)

Question 15

A short-run decrease in the price of a firm's output will typically

Accepted Answer

A)   lead to a movement along the firm's demand for labor curve.
B)   lead to lower employment of labor in the competitive firm.
C)   not impact the hiring of labor.
D)   make the demand for labor more inelastic.E) None of the above
F) A) and C)

Question 16

When 5 units of labor are employed, total product is 9 units; when 6 units of labor are employed, total product is 11 units of output. If the price of output is $5 per unit, what is the marginal revenue product of the 6th unit of labor?

Accepted Answer

A)   $10
B)   $5
C)   $15
D)   $55E) C) and D)
F) All of the above

Question 17

Goods A and B are substitutes. If the price of good A falls, the marginal revenue product of good B

Accepted Answer

A)   will not change.
B)   will shift out.
C)   will become more inelastic.
D)   will shift in.E) All of the above
F) B) and C)

Question 18

The marginal physical product (MPP)  is calculated by

Accepted Answer

A)   dividing total physical product by labor.
B)   dividing the change in total physical product by the change in the input.
C)   dividing the change in total cost by the change in labor.
D)   the difference between the output of skilled and unskilled workers.E) A) and B)
F) All of the above

Question 19

Derived demand is

Accepted Answer

A)   a derivative of the demand curve.
B)   the demand for goods and services produced by companies using scarce resources.
C)   the demand for advertising to increase the sales of the product.
D)   the demand for the factors of production that are used to produce goods and services.E) None of the above
F) All of the above

Question 20

-According to the above table, if the wage rate is $400 a week and the price of the good produced is $5, the perfectly competitive firm should hire

Accepted Answer

A)   3 workers.
B)   4 workers.
C)   5 workers.
D)   6 workers.E) C) and D)
F) A) and D)

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

If the price elasticity of demand is less than 1, then consumer demand is

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Marginal factor cost is

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

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The MRP curve for a monopolist in the product market is

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The marginal physical product (MPP) is calculated by

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Goods A and B are substitutes. If the price of good A falls, the marginal revenue product of good B

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-In the above table, if this is a perfectly competitive firm and the market price of the product is $10, what is the marginal revenue product of worker 4?

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-In the above table, what is the marginal physical product of worker 2?

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The wage rate for widget makers is currently $25 per hour and Ajax hires 20 widget makers. If the wage rate were decreased to $20, what would happen to the marginal revenue product for labor at Ajax?

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When 5 units of labor are employed, total product is 9 units; when 6 units of labor are employed, total product is 11 units of output. If the price of output is $5 per unit, what is the marginal revenue product of the 6th unit of labor?

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Which of the following statements describes the long-run effects of global outsourcing?

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Which of the following would cause the price elasticity of demand for a variable input to be greater?

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Ajax Corporation has just decided to let managers work from home one day a week. This decision will make working conditions better and will

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-Refer to the above table. If the price of the good produced is $5, the marginal revenue product of the 7th worker is

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A short-run decrease in the price of a firm's output will typically

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Which of the following statements is TRUE about the market demand curve for labor?

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-According to the above table, if the wage rate is $400 a week and the price of the good produced is $5, the perfectly competitive firm should hire

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Other things being equal, the monopolist will

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Which of the following statements about a perfectly competitive market are TRUE? I. The perfectly competitive industry faces an upward sloping labor supply curve. II) The individual firm in a perfectly competitive industry faces a perfectly elastic labor supply curve.

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Derived demand is

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