Exam4 - Economics 302 Test 4 Spring 2009 Name(1 pt Score...

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Economics 302 Test 4 Spring 2009 Name_________________________________________________________ (1 pt) Score ____________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the  question. 1) What can account for the negative slope of the marginal revenue product curve? B) Diminishing marginal returns Scenario 14.1: You are the manager of a firm producing green chalk. The marginal product of labor is: MPL = 24L-1/2 Suppose that the firm is a competitor in the green chalk market. The price of green chalk is $1 per unit. Further suppose that the firm is a competitor in the labor market. The wage rate is $12.00 per hour. 2) Given the information in Scenario 14.1, what is the marginal revenue product of labor? A) 0.5L-1/2 B) 2L-1/2 C) 12L-1/2 D) 24L-1/2 3) Given the information in Scenario 14.1, how much labor will be hired to maximize profit? D) 4 4) When compared to the demand curve for only one variable input, the demand curve for a factor input when several inputs are variable is 5) When the factor market is purely competitive, the firm s average expenditure curve for a ʹ factor of production is 6) A firm purchases a factor of production in a competitive market. At the current purchase rate the MRP of the factor is greater than the marginal expenditure for the factor. Thus, the firm
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Figure 14.1 A consumer s original utility maximizing combination of income and leisure is shown in the ʹ diagram above as point A. After a wage increase, the consumer s utility maximizing combination changes to point C. ʹ
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