Question 1

For a firm buying factors of production in a perfectly competitive factor market:

Accepted Answer

A)  factors are hired where marginal revenue product is less than marginal factor cost.
B)  its marginal revenue product curve for a factor is its factor supply curve.
C)  the price of a factor will be greater than its marginal revenue product.
D)  the price of a factor will equal its marginal factor cost.E) B) and C)
F) A) and B)

Question 2

The amount that an additional unit of a factor adds to a firm's total revenue is called:

Accepted Answer

A)  marginal revenue.
B)  marginal cost.
C)  additional revenue product.
D)  marginal revenue product.E) All of the above
F) B) and D)

Question 3

Reference: 1297 1 is the firm's demand curve of labor. D) MRP1 iis the marginal ratio product curve." class="answers-bank-image d-inline" rel="preload" >
-(Exhibit: Wage Determination in Perfect Competition) In Panel (b) :

Accepted Answer

A)  the firm accepts the wage as given by the market.
B)  the quantity of labor hired is determined where MRP of labor is greater than the MFC of labor.
C)  s1 is the firm's demand curve of labor.
D)  MRP1 iis the marginal ratio product curve.E) A) and B)
F) None of the above

Question 4

Since the 1970s, wage rates in the United States have _______ more _______ than they did in the previous two decades.

Accepted Answer

A)  decreased; slowly
B)  increased; slowly
C)  decreased; rapidly
D)  increased; rapidlyE) A) and C)
F) A) and B)

Question 5

In a perfectly competitive labor market, the price of a resource to a firm is the same as the firm's marginal factor cost.

Accepted Answer

A) True 
 B)False

Question 6

Perfectly competitive factor and output markets are similar in that when both are present both generate:

Accepted Answer

A)  an underproduction of output.
B)  an efficient allocation of resources.
C)  market prices that are greater than opportunity costs.
D)  market prices that are less than opportunity costs.E) C) and D)
F) All of the above

Question 7

Reference: 12127 
-(Exhibit: Demand and Supply of Bricklayers in a Perfectly Competitive Labor Market) If the price for "bricks laid in the wall" by a bricklayer is $.10 a brick, the marginal product of the second bricklayer is _______ bricks.

Accepted Answer

A)  1,500
B)  1,400
C)  1,300
D)  1,200E) A) and C)
F) B) and C)

Question 8

Reference: 1297 1 is the MFC of labor. D) D1 is the demand for leisure." class="answers-bank-image d-inline" rel="preload" >
-(Exhibit: Wage Determination in Perfect Competition) In Panel (a) :

Accepted Answer

A)  wages in the market are determined by the intersection of demand and supply curves.
B)  the wage is determined where MRP of labor is equal to the MFC of labor.
C)  S1 is the MFC of labor.
D)  D1 is the demand for leisure.E) A) and D)
F) All of the above

Question 9

The trade-off between work and leisure underlying the supply of labor involves the income effect and the:

Accepted Answer

A)  substitution effect.
B)  elasticity effect.
C)  production effect.
D)  wage effect.E) A) and B)
F) None of the above

Question 10

The price paid by a firm for a factor of production in a perfectly competitive market:

Accepted Answer

A)  increases with the quantity of input demanded.
B)  decreases with the quantity of input demanded.
C)  is equal to the market price of the factor.
D)  is less than the market price of the factor.E) A) and C)
F) All of the above

Question 11

If the _______ of labor is increased, ceteris paribus, eventually the _______ will ________ .

Accepted Answer

A)  price; supply of labor; increase
B)  quantity; marginal product of labor; fall
C)  quantity; marginal product of labor; rise
D)  quantity; marginal revenue product of labor , riseE) All of the above
F) A) and B)

Question 12

Reference: 12114 L. D) firm's marginal revenue curve." class="answers-bank-image d-inline" rel="preload" >
-(Exhibit: Demand and Supply in a Perfectly Competitive Labor Market) Curve A is the:

Accepted Answer

A)  supply curve of labor faced by a firm.
B)  firm's demand for labor.
C)  MFCL.
D)  firm's marginal revenue curve.E) A) and B)
F) A) and C)

Question 13

The fact that a(n) _______ in the _______ tends to _______ wages explains efforts by some groups to reduce labor _______ .

Accepted Answer

A)  increase; supply of labor; reduce; demand
B)  decrease; supply of labor; increase; supply
C)  increase; demand for labor; increase; supply
D)  decrease; demand; increase; demandE) A) and B)
F) A) and C)

Question 14

Which of the following statements is false?

Accepted Answer

A)  It is likely that supply curves for labor in individual labor markets are upward sloping.
B)  As wages in one industry rise relative to wages in other industries, workers shift their labor to the relatively high-wage one.
C)  The mobility of labor between competitive labor markets is likely to prevent the total number of hours worked from falling as the wage rate increases.
D)  Workers in one industry seldom pay attention to the wage rate(s) in other industries or labor markets.E) C) and D)
F) B) and C)

Question 15

The supply curve facing a firm for a factor of production in a perfectly competitive market is:

Accepted Answer

A)  upward sloping.
B)  downward sloping.
C)  vertical.
D)  horizontal.E) B) and D)
F) None of the above

Question 16

A change in the quantity demanded of peanuts, a factor of production used to produce chocolate-covered peanuts, will occur if:

Accepted Answer

A)  the price of peanuts decreases.
B)  the price of chocolate-covered peanuts increases.
C)  the demand for chocolate-covered peanuts decreases.
D)  a new, improved chocolate-covered-peanut-making machine is purchased by candy companies.E) A) and B)
F) C) and D)

Question 17

Reference: 12127 
-(Exhibit: Demand and Supply of Bricklayers in a Perfectly Competitive Labor Market) If the equilibrium wage in the market for bricklayers is $100 a day, but a minimum wage for bricklayers of $130 a day is set by the government:

Accepted Answer

A)  6 workers will now be hired by the firm.
B)  3 workers who otherwise would have been employed are now unemployed.
C)  all bricklayers are better off.
D)  the firm will shut down.E) None of the above
F) A) and D)

Question 18

A wage increase raises the quantity of labor supplied through the substitution effect.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements is true?

Accepted Answer

A)  The market demand curve for labor is found by adding the supply curves for labor of individual firms.
B)  A firm's demand for labor is the upward-sloping portion of the MRP curve for labor.
C)  The market demand for labor will change as a result of a change in the use of a complementary factor or a substitute factor.
D)  The market demand curve for labor is vertical at the profit-maximizing wage.E) None of the above
F) All of the above

Question 20

Marginal factor cost is the:

Accepted Answer

A)  amount a factor adds to a firm's total revenue per period.
B)  change in the quantity of the factor divided by the change in total cost.
C)  change in total cost divided by the change in the quantity of the factor.
D)  same as marginal fixed cost.E) B) and C)
F) A) and C)

Exam 12: Wages and Employment in Perfect Competition

Since the 1970s, wage rates in the United States have _______ more _______ than they did in the previous two decades.

Correct AnswerverifiedShow Answer

Reference: 12127 -(Exhibit: Demand and Supply of Bricklayers in a Perfectly Competitive Labor Market) If the equilibrium wage in the market for bricklayers is $100 a day, but a minimum wage for bricklayers of $130 a day is set by the government:

Correct AnswerverifiedShow Answer

Perfectly competitive factor and output markets are similar in that when both are present both generate:

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Reference: 1297 -(Exhibit: Wage Determination in Perfect Competition) In Panel (a) :

Correct AnswerverifiedShow Answer

The supply curve facing a firm for a factor of production in a perfectly competitive market is:

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A wage increase raises the quantity of labor supplied through the substitution effect.

Correct AnswerverifiedShow Answer

In a perfectly competitive labor market, the price of a resource to a firm is the same as the firm's marginal factor cost.

Correct AnswerverifiedShow Answer

If the _______ of labor is increased, ceteris paribus, eventually the _______ will ________ .

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Marginal factor cost is the:

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Reference: 12127 -(Exhibit: Demand and Supply of Bricklayers in a Perfectly Competitive Labor Market) If the price for "bricks laid in the wall" by a bricklayer is $.10 a brick, the marginal product of the second bricklayer is _______ bricks.

Correct AnswerverifiedShow Answer

The price paid by a firm for a factor of production in a perfectly competitive market:

Correct AnswerverifiedShow Answer

A change in the quantity demanded of peanuts, a factor of production used to produce chocolate-covered peanuts, will occur if:

Correct AnswerverifiedShow Answer

Reference: 1297 -(Exhibit: Wage Determination in Perfect Competition) In Panel (b) :

Correct AnswerverifiedShow Answer

The trade-off between work and leisure underlying the supply of labor involves the income effect and the:

Correct AnswerverifiedShow Answer

The fact that a(n) _______ in the _______ tends to _______ wages explains efforts by some groups to reduce labor _______ .

Correct AnswerverifiedShow Answer

Which of the following statements is false?

Correct AnswerverifiedShow Answer

For a firm buying factors of production in a perfectly competitive factor market:

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Which of the following statements is true?

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Reference: 12114 -(Exhibit: Demand and Supply in a Perfectly Competitive Labor Market) Curve A is the:

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The amount that an additional unit of a factor adds to a firm's total revenue is called:

Correct AnswerverifiedShow Answer

Since the 1970s, wage rates in the United States have _ more _ than they did in the previous two decades.

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If the ___ of labor is increased, ceteris paribus, eventually the _ will ______ .

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The fact that a(n) ___ in the _ tends to _ wages explains efforts by some groups to reduce labor ___ .

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