Question 1

Households will supply labor as long as the wage they receive is less than the value of their leisure time.

Accepted Answer

A) True 
 B)False

Question 2

Ernie's Sushi-On-A-Stick is a perfectly competitive firm currently employing 75 workers. The marginal revenue product of the 75th worker is $9.00 per hour. The wage rate is $12.00 per hour. To increase profits, this firm should

Accepted Answer

A)   decrease employment until the MRP of labor equals $12.00.
B)   increase employment until the MRP of labor equals $12.00.
C)   continue hiring 75 workers because the firm earns a surplus of $3.00 on each worker hired.
D)   increase the price of sushi-on-a-stick so that the marginal revenue product increases to $12.00 per hour.

Question 3

Which of the following would be the most likely result if high-speed rail service were introduced to an area and made commuting from that area easier?

Accepted Answer

A)   The cost of living far from one's workplace would rise, and the value of land would increase.
B)   The cost of living far from one's workplace would rise, and the value of land would decrease.
C)   The cost of living far from one's workplace would drop, and the value of land would increase.
D)   The cost of living far from one's workplace would drop, and the value of land would decrease.

Question 4

Because Picasso's painting Guernica is one-of-a-kind, its price is

Accepted Answer

A)   demand determined.
B)   supply determined.
C)   inelastic.
D)   independently determined.

Question 5

The demand for any factor of production in a competitive industry depends on

Accepted Answer

A)   its productivity and upon the value of its output in the marketplace.
B)   its productivity and the productivity of all other inputs.
C)   the productivity of all the other inputs and how these inputs are valued in the marketplace.
D)   the amount of the factor that is used and the amounts of all the other factors that are used.

Question 6

If the individual labor supply curves for all workers in a given location slope up, the market supply curves in that location

Accepted Answer

A)   will slope down.
B)   will also slope up.
C)   will be vertical.
D)   may slope up, down, or be vertical.

Question 7

If product demand increases and product price increases

Accepted Answer

A)   the marginal revenue product curve will shift to the right.
B)   the marginal revenue product curve will shift to the left.
C)   the firm will move up the marginal revenue product curve and hire fewer units of the input.
D)   the firm will move down the marginal revenue product curve and hire more units of the input.

Question 8

Refer to the data provided in Table 10.1 below to answer the following question(s) .
Table 10.1   Total Labor Units  Total Product  Marginal Product of Price per  (employees)   (T-shirts per day)   Labor (per day)   T-shirt 00−−12020$52503053752554952055110155\begin{array}{l}	ext { Total Labor Units } \quad 	ext { Total Product } \quad 	ext { Marginal Product of Price per }\\begin{array} { c c c c } 	ext { (employees)  } & 	ext { (T-shirts per day)  } & 	ext { Labor (per day)  } & 	ext { T-shirt } \\hline 0 & 0 & - & - \1 & 20 & 20 & \$ 5 \2 & 50 & 30 & 5 \3 & 75 & 25 & 5 \4 & 95 & 20 & 5 \5 & 110 & 15 & 5\end{array}\end{array} Total Labor Units  Total Product  Marginal Product of Price per  (employees)  012345​ (T-shirts per day)  020507595110​ Labor (per day)  −2030252015​ T-shirt −$55555​​​ 
-Refer to Table 10.1. The marginal revenue product of the fourth worker is

Accepted Answer

A)   $5.
B)   $20.
C)   $100.
D)   $475.

Question 9

A firm's marginal cost curve in a perfectly competitive product market is the same as its ________ curve. Similarly, a firm's marginal revenue product curve in a perfectly competitive labor market is the same as its ________ curve.

Accepted Answer

A)   demand; supply
B)   supply; demand
C)   demand; demand
D)   supply; supply

Question 10

An increase in the wage rate will change

Accepted Answer

A)   only the amount of labor hired.
B)   the amount of labor employed, and it may also change the amount of other inputs employed.
C)   the price the firm charges for the product, but it will not affect the demand for any of the inputs.
D)   the firmʹs profit-maximizing level output, but not its usage of inputs.

Question 11

Pure rent is the return to any factor of production that is in fixed supply.

Accepted Answer

A) True 
 B)False

Question 12

The law of ________ explains why a marginal revenue product schedule eventually declines.

Accepted Answer

A)   diminishing marginal opportunity costs
B)   increasing marginal returns
C)   increasing marginal opportunity costs
D)   diminishing marginal returns

Question 13

Input productivity refers to the amount of output produced per unit of the input.

Accepted Answer

A) True 
 B)False

Question 14

The wage rate will fall and firms will increase employment to the point where MRP equals the new wage rate if

Accepted Answer

A)   the demand for labor decreases.
B)   the demand for labor increases.
C)   the supply of labor decreases.
D)   the supply of labor increases.

Question 15

Related to the Economics in Practice on page 214: According to the Economics in Practice, firms where managers had more extensive training experienced

Accepted Answer

A)   increasing wage rates.
B)   a decrease in the marginal product of labor.
C)   increased productivity.
D)   a decrease in the marginal revenue product of labor.

Question 16

An increase in labor productivity would cause a rightward shift of the labor demand curve.

Accepted Answer

A) True 
 B)False

Question 17

The price of any factor of production in a competitive market depends on the value of the final product it is used to produce.

Accepted Answer

A) True 
 B)False

Question 18

The demand for ________ in a competitive industry depends on its productivity and upon how its product is valued in the marketplace.

Accepted Answer

A)   only skilled labor
B)   only unskilled labor
C)   only labor in general
D)   any factor of production

Question 19

Assume that automobiles are a normal good. A decrease in income will

Accepted Answer

A)   shift the marginal revenue product curve of auto workers to the left.
B)   move a firm up the marginal revenue product curve of auto workers.
C)   shift the marginal revenue product curve of auto workers to the right.
D)   have no effect on the marginal revenue product curve of auto workers.

Question 20

The number of seats available in an arena is fixed at 20,000. The equilibrium price for a ticket to a basketball game at the arena is $75. The equilibrium price for a ticket to the circus at the arena is $25. Which of the following is true?

Accepted Answer

A)   Basketball games must be more expensive to produce than a circus performance.
B)   The demand for each basketball game must be more than the demand for each circus performance.
C)   The supply of circus performances must be less elastic than the supply of basketball games.
D)   The demand for each circus performance must be greater than the demand for each basketball game.

Exam 10: Input Demand: the Labor and Land Markets

The price of any factor of production in a competitive market depends on the value of the final product it is used to produce.

Correct Answer
verified

Input productivity refers to the amount of output produced per unit of the input.

Correct Answer
verified

If product demand increases and product price increases

Correct Answer
verified

Because Picasso's painting Guernica is one-of-a-kind, its price is

Correct Answer
verified

A firm's marginal cost curve in a perfectly competitive product market is the same as its curve. Similarly, a firm's marginal revenue product curve in a perfectly competitive labor market is the same as its curve.

Correct Answer
verified

Pure rent is the return to any factor of production that is in fixed supply.

Correct Answer
verified

Households will supply labor as long as the wage they receive is less than the value of their leisure time.

Correct Answer
verified

The demand for ________ in a competitive industry depends on its productivity and upon how its product is valued in the marketplace.

Correct Answer
verified

Assume that automobiles are a normal good. A decrease in income will

Correct Answer
verified

An increase in labor productivity would cause a rightward shift of the labor demand curve.

Correct Answer
verified

Correct Answer
verified

An increase in the wage rate will change

Correct Answer
verified

Ernie's Sushi-On-A-Stick is a perfectly competitive firm currently employing 75 workers. The marginal revenue product of the 75th worker is $9.00 per hour. The wage rate is $12.00 per hour. To increase profits, this firm should

Correct Answer
verified

If the individual labor supply curves for all workers in a given location slope up, the market supply curves in that location

Correct Answer
verified

The law of ________ explains why a marginal revenue product schedule eventually declines.

Correct Answer
verified

The demand for any factor of production in a competitive industry depends on

Correct Answer
verified

Related to the Economics in Practice on page 214: According to the Economics in Practice, firms where managers had more extensive training experienced

Correct Answer
verified

The number of seats available in an arena is fixed at 20,000. The equilibrium price for a ticket to a basketball game at the arena is $75. The equilibrium price for a ticket to the circus at the arena is $25. Which of the following is true?

Correct Answer
verified

The wage rate will fall and firms will increase employment to the point where MRP equals the new wage rate if

Correct Answer
verified

Which of the following would be the most likely result if high-speed rail service were introduced to an area and made commuting from that area easier?

Correct Answer
verified

Exam 10: Input Demand: the Labor and Land Markets

The price of any factor of production in a competitive market depends on the value of the final product it is used to produce.

Correct AnswerverifiedShow Answer

Input productivity refers to the amount of output produced per unit of the input.

Correct AnswerverifiedShow Answer

If product demand increases and product price increases

Correct AnswerverifiedShow Answer

Because Picasso's painting Guernica is one-of-a-kind, its price is

Correct AnswerverifiedShow Answer

A firm's marginal cost curve in a perfectly competitive product market is the same as its ________ curve. Similarly, a firm's marginal revenue product curve in a perfectly competitive labor market is the same as its ________ curve.

Correct AnswerverifiedShow Answer

Pure rent is the return to any factor of production that is in fixed supply.

Correct AnswerverifiedShow Answer

Households will supply labor as long as the wage they receive is less than the value of their leisure time.

Correct AnswerverifiedShow Answer

The demand for ________ in a competitive industry depends on its productivity and upon how its product is valued in the marketplace.

Correct AnswerverifiedShow Answer

Assume that automobiles are a normal good. A decrease in income will

Correct AnswerverifiedShow Answer

An increase in labor productivity would cause a rightward shift of the labor demand curve.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An increase in the wage rate will change

Correct AnswerverifiedShow Answer

Ernie's Sushi-On-A-Stick is a perfectly competitive firm currently employing 75 workers. The marginal revenue product of the 75th worker is $9.00 per hour. The wage rate is $12.00 per hour. To increase profits, this firm should

Correct AnswerverifiedShow Answer

If the individual labor supply curves for all workers in a given location slope up, the market supply curves in that location

Correct AnswerverifiedShow Answer

The law of ________ explains why a marginal revenue product schedule eventually declines.

Correct AnswerverifiedShow Answer

The demand for any factor of production in a competitive industry depends on

Correct AnswerverifiedShow Answer

Related to the Economics in Practice on page 214: According to the Economics in Practice, firms where managers had more extensive training experienced

Correct AnswerverifiedShow Answer

The number of seats available in an arena is fixed at 20,000. The equilibrium price for a ticket to a basketball game at the arena is $75. The equilibrium price for a ticket to the circus at the arena is $25. Which of the following is true?

Correct AnswerverifiedShow Answer

The wage rate will fall and firms will increase employment to the point where MRP equals the new wage rate if

Correct AnswerverifiedShow Answer

Which of the following would be the most likely result if high-speed rail service were introduced to an area and made commuting from that area easier?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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A firm's marginal cost curve in a perfectly competitive product market is the same as its curve. Similarly, a firm's marginal revenue product curve in a perfectly competitive labor market is the same as its curve.

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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