unit_4_test - UNIT 4 Microeconomics MULTIPLE-CHOICE SAMPLE...

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Advanced Placement Economics Microeconomics: Student Activities © National Council on Economic Education, New York, N.Y. 253 Circle the letter of each correct answer. 1. Derived demand is (A) demand for an input used to produce a product. (B) demand derived from the satisfaction of a buyer for the product. (C) caused by monopoly control of the inputs. (D) derived from government policy. (E) dependent on the demand for a substitute or a complementary input. Use the following information to answer questions 2, 3 and 4. Number Number of Pizzas That of Chefs Can Be Made in an Hour 0 0 1 10 2 18 3 24 4 28 5 30 6 29 2. The law of diminishing marginal returns occurs after hiring which chef? (A) First (B) Second (C) Third (D) Fourth (E) Fifth 3. The marginal productivity of the third chef is (A) 24 pizzas (B) 18 pizzas (C) 10 pizzas (D) 8 pizzas (E) 6 pizzas 4. If the price per pizza is $10 and if each chef receives $20 an hour, how many chefs will the owner hire to maximize profits? (A) 2 (B) 3 (C) 4 (D) 5 (E) 6 5. Which of the following would determine the marginal revenue product of an input used in a perfectly competitive output market? I. Dividing the change in total revenue by the change in the input II. Dividing the change in marginal revenue by the change in the output III. Multiplying the marginal revenue product by the marginal revenue of the output IV. Multiplying marginal revenue by the price of the output (A) I only (B) II only (C) III only (D) I and III only (E) II and IV only 6. Which of the following explains why the mar- ginal revenue product of an input in a perfectly competitive market decreases as a firm increases the quantity of an input used? (A) The law of diminishing marginal returns (B) The law of diminishing marginal utility (C) The homogeneity of the product (D) The free mobility of resources (E) The total immobility of resources 7. A profit-maximizing firm should hire an input as long as the (A) firm can increase its total revenue. (B) price of the input doesn t exceed the price of the other inputs used in the firm s production. (C) marginal revenue product of the input is less than the cost of hiring the input. (D) marginal revenue product of the input is
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unit_4_test - UNIT 4 Microeconomics MULTIPLE-CHOICE SAMPLE...

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