Question 1

The marginal product of labor

Accepted Answer

A)   measures the contribution to total output of the average worker
B)   is a characteristic of production,not of an individual worker
C)   measures the personal productivity of the last worker hired
D)   measures the extra revenue generated by the last worker hired
E)   measures the extra cost attributed to the last worker hired

Question 2

-Figure 12-7 shows the number of calculators that can be assembled each day by various numbers of workers.If calculators sell in a perfectly competitive market where the price per calculator is $20,what is the marginal revenue product (MRP) of hiring the second worker?

Accepted Answer

A)   $20
B)   $2,000
C)   $100
D)   $1,600
E)   $3,200

Question 3

A firm's labor demand curve is derived from the supply of the goods and services it produces.

Accepted Answer

A) True 
 B)False

Question 4

The wage rate is constant along a firm's labor demand curve.

Accepted Answer

A) True 
 B)False

Question 5

For a firm producing in a perfectly competitive product market,the marginal revenue product of labor eventually

Accepted Answer

A)   falls due to diminishing marginal returns to labor
B)   rises due to diminishing marginal returns to labor
C)   falls due to a falling product price
D)   falls due to a rising product price
E)   rises due to falling marginal productivity of labor

Question 6

Jordan and Jennifer are musicians in New Orleans.Ezra is a musician thinking about moving to New Orleans.Which of the following statements is correct?

Accepted Answer

A)   The wage needed to keep Jordan and Jennifer in the New Orleans music industry in the long run will be lower than the wage needed to keep them in the industry in the short run.
B)   The costs of entering the New Orleans music industry are sunk costs for Jordan,Jennifer,and Ezra.
C)   The costs of entering the New Orleans music industry are sunk costs for Ezra but not for Jordan and Jennifer.
D)   The wage needed to induce Ezra to enter the New Orleans music industry will be lower than the wage needed to keep him in the industry after he enters.
E)   The costs of entering the music industry in New Orleans are sunk costs for Jordan and Jennifer,but not for Ezra.

Question 7

As applied to labor demand,the marginal approach to profit

Accepted Answer

A)   is irrelevant
B)   requires setting marginal cost equal to the wage rate
C)   requires setting marginal revenue equal to the wage rate
D)   says that a firm should increase employment if doing so adds more to revenue than it adds to cost
E)   says that a firm should decrease employment if doing so adds more to cost than it adds to revenue

Question 8

Assume that the labor market for auto mechanics is initially in equilibrium.Which of the following would lead to an increase in both the wage rate and employment for auto mechanics?

Accepted Answer

A)   a decrease in the price of a substitutable input
B)   a decrease in the price of a complementary input
C)   an increase in training costs for auto mechanics
D)   a decrease in wages in an alternate labor market
E)   a decrease in demand for the output of firms employing auto mechanics

Question 9

Wally's Wheat Farm sells its output and hires its labor in perfectly competitive markets.In the short run,Wally can vary only one input-labor.In short-run equilibrium,all of the following conditions,except one,will be satisfied.Which is the exception?

Accepted Answer

A)   The marginal revenue product of labor equals the wage rate.
B)   The marginal revenue product of labor would decrease if more labor is hired.
C)   Marginal revenue equals the price of the firm's output.
D)   The marginal product of labor would decrease if more labor is hired.
E)   The firm's total revenue will decrease if more labor is hired.

Question 10

In a perfectly competitive labor market,the supply of labor curve facing a firm will be

Accepted Answer

A)   horizontal
B)   vertical
C)   upward sloping
D)   downward sloping
E)   equal to its marginal revenue product curve

Question 11

If both the market for a firm's output and the market in which it hires its labor are perfectly competitive,the firm's labor demand curve will be perfectly elastic.

Accepted Answer

A) True 
 B)False

Question 12

-Which of the following could explain a movement from point F to point G in Figure 12-1?

Accepted Answer

A)   an increase in the average reservation wage
B)   a shift in tastes toward working in this labor market
C)   an increase in the market wage in this labor market
D)   an improvement in technology
E)   an increase in the cost of training needed to work in this labor market

Question 13

An increase in tuition rates for astronomy students would

Accepted Answer

A)   decrease the wage rate for astronomers
B)   cause the demand curve for astronomers to shift to the right
C)   cause the demand curve for astronomers to shift to the left
D)   lead to future reductions in the labor supply of astronomers
E)   lead to a rise in the marginal revenue product of astronomers

Question 14

The term marginal revenue product (MRP)refers to the change in output if an additional worker is employed.

Accepted Answer

A) True 
 B)False

Question 15

A perfectly competitive firm should hire additional units of labor in a competitive labor market if

Accepted Answer

A)   marginal revenue is less than marginal cost
B)   the marginal revenue product exceeds the wage rate
C)   total revenue exceeds total cost
D)   the marginal product of labor exceeds the wage rate
E)   the marginal product of labor is less than the wage rate

Question 16

Each of the following conditions,except one,must be satisfied in a perfectly competitive labor market.Which is the exception?

Accepted Answer

A)   There are a large number of buyers of labor services.
B)   Wages are the sole source of household income.
C)   There are no barriers to entering the market.
D)   There are a large number of sellers of labor services.
E)   All workers appear the same to buyers of labor services.

Question 17

A change in the wage rate causes a firm's labor demand curve to shift.

Accepted Answer

A) True 
 B)False

Question 18

Three accountants can prepare 5 tax returns a day and four accountants can prepare 7 tax returns a day.If the marginal revenue product of hiring the fourth accountant is $300,then in a perfectly competitive product market the price of each tax return is

Accepted Answer

A)   $250
B)   $100
C)   $300
D)   $200
E)   $150

Question 19

In a perfectly competitive labor market,

Accepted Answer

A)   some workers may be prevented from leaving the labor market
B)   workers compete for employment opportunities
C)   workers usually receive wages that are greater than their marginal revenue product
D)   firms view all workers as being identical
E)   there are relatively few sellers of labor services

Question 20

The perfectly competitive model is most likely to apply to a labor market in which

Accepted Answer

A)   many well-informed firms must negotiate with one dominant labor union
B)   there are a few firms,and they are uninformed about the attributes of each worker
C)   there are many workers currently in the market who must negotiate with one dominant firm
D)   there are many well-informed workers and firms,and each worker appears the same to firms
E)   one dominant labor union must negotiate with one dominant firm

Exam 12: Labor Markets

Each of the following conditions,except one,must be satisfied in a perfectly competitive labor market.Which is the exception?

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Three accountants can prepare 5 tax returns a day and four accountants can prepare 7 tax returns a day.If the marginal revenue product of hiring the fourth accountant is $300,then in a perfectly competitive product market the price of each tax return is

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An increase in tuition rates for astronomy students would

Correct AnswerverifiedShow Answer

-Figure 12-7 shows the number of calculators that can be assembled each day by various numbers of workers.If calculators sell in a perfectly competitive market where the price per calculator is $20,what is the marginal revenue product (MRP) of hiring the second worker?

Correct AnswerverifiedShow Answer

In a perfectly competitive labor market,

Correct AnswerverifiedShow Answer

The term marginal revenue product (MRP)refers to the change in output if an additional worker is employed.

Correct AnswerverifiedShow Answer

A perfectly competitive firm should hire additional units of labor in a competitive labor market if

Correct AnswerverifiedShow Answer

Jordan and Jennifer are musicians in New Orleans.Ezra is a musician thinking about moving to New Orleans.Which of the following statements is correct?

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As applied to labor demand,the marginal approach to profit

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The marginal product of labor

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The perfectly competitive model is most likely to apply to a labor market in which

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The wage rate is constant along a firm's labor demand curve.

Correct AnswerverifiedShow Answer

In a perfectly competitive labor market,the supply of labor curve facing a firm will be

Correct AnswerverifiedShow Answer

A firm's labor demand curve is derived from the supply of the goods and services it produces.

Correct AnswerverifiedShow Answer

Assume that the labor market for auto mechanics is initially in equilibrium.Which of the following would lead to an increase in both the wage rate and employment for auto mechanics?

Correct AnswerverifiedShow Answer

Wally's Wheat Farm sells its output and hires its labor in perfectly competitive markets.In the short run,Wally can vary only one input-labor.In short-run equilibrium,all of the following conditions,except one,will be satisfied.Which is the exception?

Correct AnswerverifiedShow Answer

For a firm producing in a perfectly competitive product market,the marginal revenue product of labor eventually

Correct AnswerverifiedShow Answer

If both the market for a firm's output and the market in which it hires its labor are perfectly competitive,the firm's labor demand curve will be perfectly elastic.

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-Which of the following could explain a movement from point F to point G in Figure 12-1?

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A change in the wage rate causes a firm's labor demand curve to shift.

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