Econ1B03-qCh13 - 1Chapter 13 Factor Markets With Emphasis...

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1 Chapter 13 Factor Markets: With Emphasis on the Labor Market 1. A firm that is a price taker in a factor market faces a(n) __________ supply curve of factors. a. upward-sloping b. horizontal c. downward-sloping d. vertical ANS: b 2. The demand for factors (which arises from the demand for the products that the factors help produce) is called a(n) __________ demand. a. derived b. indirect c. secondary d. expressed ANS: a 3. The term “derived demand” refers to the idea that a change in the a. demand for one good, say, tennis racquets, will affect the demand for related goods, say, tennis balls. b. demand for a good is affected by the supply of that good. c. demand for a good will affect the demand for the factors used to produce that good. d. supply of a factor will affect the demand for that factor. ANS: c 4. Marginal revenue product (MRP) is the a. additional output generated by employing an additional factor unit. b. additional profit generated by employing an additional factor unit. c. additional revenue generated by employing an additional factor unit minus the additional cost. d. additional revenue generated by employing an additional factor unit. e. total revenue from the sale of a product divided by the total output of the product. ANS: d 5. Marginal revenue product is equal to marginal revenue multiplied by a. average fixed cost. b. marginal physical cost. c. marginal physical revenue. d. average total cost. e. none of the above ANS: e 159
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160 Chapter 13 6. Marginal revenue product is equal to marginal revenue multiplied by a. average physical product. b. marginal physical product. c. average total cost. d. marginal cost. ANS: b 7. Marginal factor cost (MFC) is a. the additional cost generated by producing an additional unit of output. b. the additional revenue generated by employing an additional factor unit. c. the additional cost generated by employing an additional factor unit. d. total cost from the production of a product divided by the total number of factor units used. ANS: c 8. For a factor price taker, the factor supply curve is __________, whereas the market factor supply curve is __________. a. horizontal; vertical b. vertical; horizontal c. upward sloping; horizontal d. horizontal; upward sloping e. upward sloping; upward sloping ANS: d Exhibit 13-1 (1) (2) (3) (4) Units of Factor X Quantity of Output Product Price Marginal Revenue Product 0 10 $10 1 19 $10 A 2 27 $10 B 3 34 $10 C 4 40 $10 D For questions 9-13, refer to Exhibit 13-1 above. 9. Refer to Exhibit 13-l. What goes in blank A? a. $190 b. $90 c. $10 d. $9 ANS: b
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Factor Markets: With Emphasis on the Labor Market 161 10. Refer to Exhibit 13-l. What goes in blank B? a. $80.00 b. $10.00 c. $2.70 d. $270.00 ANS: a 11. Refer to Exhibit 13-1. What goes in blank C? a. $340.00 b. $10.00 c. $0.294 d. $70.00 ANS: d 12. Refer to Exhibit 13-1. What goes in blank D? a. $60 b. $10 c. $6 d. $400 ANS: a 13. Refer to Exhibit 13-1. The data show that marginal revenue is __________ price, thus we are dealing with a __________ competitive firm.
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This note was uploaded on 04/17/2010 for the course ECONOMICS 1b03 taught by Professor Holmes during the Winter '10 term at McMaster University.

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Econ1B03-qCh13 - 1Chapter 13 Factor Markets With Emphasis...

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