Ch14 - CHAPTER 14 Markets For Factor Inputs MULTIPLE CHOICE...

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CHAPTER 14 Markets For Factor Inputs MULTIPLE CHOICE Section 14.1 easy 1. A firm should hire more labor when the marginal revenue product of labor a. equals the wage rate. b. exceeds the wage rate. c. is less than the wage rate. d. Any of these can be true. e. None of these are true. easy 2. The marginal revenue product of labor is equal to a. MP L - P. b. MP L / P. c. MP L * MR. d. MP L / MR e. MR / MP L easy 3. The marginal revenue product can be expressed as the a. additional revenue received from selling one more unit of product. b. increment to revenue received from one additional unit of input hired. c. marginal physical product of an input times the average revenue received from the sale of the product. d. average physical product of the input times the marginal revenue received from the sale of the final product. easy 4. Other things being equal, the marginal revenue product (MRP) curve for a competitive seller a. lies below the MRP curve for a monopolist. b. is identical to the MRP curve for a monopolist. c. lies above the MRP curve for a monopolist. d. is upward sloping whereas a monopolist has a downward sloping MRP curve. easy 5. What can account for the negative slope of the marginal revenue product curve? a. Diminishing marginal utility. b. Diminishing marginal returns. c. Monopsony power. d. All workers eventually begin slacking. e. None of the above. easy 6. In the competitive output market for good Q, marginal revenue product for an input X can be expressed as a. MP X / TR Q . b. MP Q MR X . c. AP X MR Q . d. MP X *P Q 242
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CHAPTER 14 TEST BANK MARKETS FOR FACTOR INPUTS SIXTH EDITION easy 7 If the market for labor is perfectly competitive, the profit maximizing level of labor occurs where a. MRP L < W (the wage). b. MRP L = P (the output price). c. MRP L just exceeds W. d. MRP L = W. e. none of the above. Scenario 1: You are the manager of a firm producing green chalk. The marginal product of labor is: MP L = 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. easy 8. Given the information in Scenario 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 moderate 9. Given the information in Scenario 1, how much labor will be hired to maximize profit? a. 1/16 b. 1/2 c. 1 d. 4 easy 10. If leisure is a normal good, then the income effect of a decrease in wage will a. decrease the number of hours worked. b. increase the number of hours worked. c. decrease the number of leisure hours. d. increase the sum of leisure plus hours worked. easy 11. The substitution effect of a decrease in the wage will a. decrease leisure, regardless of whether leisure is a normal or inferior good. b.
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This note was uploaded on 08/07/2011 for the course ECON 105 taught by Professor Prof.eco during the Spring '11 term at Indian School of Business.

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Ch14 - CHAPTER 14 Markets For Factor Inputs MULTIPLE CHOICE...

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