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 s
A
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 t
A, E, D
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
D
Which of the following explains why the marginal
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 uti
A
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
E
The demand for labor will decrease in response
to which of the following?
(A) Increased productivity of labor
(B) Better training of all laborers
(C) A decrease in the supply of labor
(D) An increase in the supply of labor
(E) Decreased demand for goods a
E
A firm hiring inputs in a perfectly competitive
market will hire up to the point where
(A) marginal physical product of the input is
at a minimum.
(B) marginal physical product of the input is
at a maximum.
(C) the price of the input equals the price of
t
E
A firm is a competitive seller of output at a
market price of $3. The only resource it
requires to create its product is labor, which it
purchases competitively at a wage rate of $6
per hour. The last worker it employs increases
total output from 36 to 40
C
Use the following information to answer questions
11, 12 and 13.
Units of Workers Total Product Product Price
0 0 $3.80
1 10 $3.70
2 19 $3.60
3 27 $3.50
4 34 $3.40
5 40 $3.30
11. The marginal revenue product of the third
worker is approximately equal to
(
B,B,D
Which of the following will cause an increase
in the demand for labor?
I. Increase in the price of the output
II. Increase in worker productivity
III. Increase in wages
IV. Increase in the supply of workers
(A) I only (B) II only (C) III only
(D) I and II
D
A firm requires labor and capital to produce a
given output. Labor costs $8 per hour, and
capital costs $12 per hour. At the current
output level, the marginal physical product of
labor is 40 units, and the marginal physical
product of capital is 60 units
E
In a competitive industry, suppose the marginal
revenue product of the last donut baker
hired is $35 and the marginal revenue product
of the last bagel maker hired is $15. A bakery
must pay donut bakers $40 a day and bagel
makers $10 a day. Which of the f
B
Use the graph belowto answer questions 17, 18 and 19.
17. Under perfectly competitive conditions in the
product and labor markets, the wage rate will be
(A) W, and L1 workers will be hired.
(B) W1
, and L1 workers will be hired.
(C) W2
, and L1 workers wi
D,A,C
If the cost of labor, the only variable input, is
$20, and the marginal physical product of
labor is four units per hour, the marginal cost
of the first unit of output is
(A) $20. (B) $16. (C) $12.
(D) $10. (E) $5.
E
Pure economic rent refers to the
(A) capital gains received from the sale of
property.
(B) payment to any resource over and above
what is required to keep the resource in
supply at its current level in the long run.
(C) difference between the return to ow
B
One reason why the supply of carpenters is
greater than the supply of physicians is that
(A) carpenters demand less income.
(B) physicians do not belong to a union.
(C) physicians must make a greater investment
in human capital.
(D) carpenters belong to u
C
23. The level of employment in the monopsony
labor market shown above will be
(A) A.
(B) B.
(C) C.
(D) D.
(E) less than A
B
The labor market shown above is initially in
equilibrium. If a minimum wage level is set at
Wm
, employment will
(A) increase from A to B.
(B) increase from B to C.
(C) decrease from B to A.
(D) decrease from C to A.
(E) decrease from C to B.
C
. The monopsonistic labor market shown above
is initially in equilibrium. If a minimum wage
is set at W, the level of employment will
(A) decrease.
(B) increase.
(C) stay the same.
(D) increase or decrease depending on how the
supply curve shifts as a res
B