Deck 13: How Factor Markets Work

Question 1

The marginal revenue product of labour is the change in the value of the firm's output resulting from

A)a change in the product's price.
B)an increase in the marginal physical product of labour.
C)a change in the wage rate paid to labour.
D)producing one more unit of output.
E)hiring one more unit of labour input.

Answer 1

hiring one more unit of labour input.

Question 2

Consider the following production and cost schedule for a firm.The first column shows the number of units of a variable factor of production employed by the firm.
TABLE 13-1
Refer to Table 13-1.Diminishing marginal returns are present for which units of the factor of production?

A)10th unit only
B)11th unit only
C)12th unit only
D)13th unit only
E)all units shown in the table

Answer 2

all units shown in the table

Question 3

Consider labour that is hired for $18 per hour.If the last hour of labour hired produces 8 units of output which sells for $10 per unit,that labour-hour's marginal revenue product is

A)$1.20.
B)$4.44.
C)$64.
D)$80.
E)$144.

Answer 3

$80.

Question 4

Consider the following production and cost schedule for a firm.The first column shows the number of units of a variable factor of production employed by the firm.
TABLE 13-1
Refer to Table 13-1.The marginal revenue product of the 14th unit of the factor is

A)-$60.
B)$60.
C)$140.
D)$700.
E)$840.

Question 5

For any firm in any market structure,a factor's marginal revenue product is

A)the average product of the factor multiplied by the price of the output.
B)the change in revenue caused by the sale of the product contributed by an additional unit of input.
C)the change in revenue caused by the sale of an additional unit of output.
D)the increase in output resulting from the use of an additional unit of the factor multiplied by the cost of that factor.
E)marginal revenue multiplied by total product.

Question 6

Consider labour hired for $1000 per week.If the last week of labour hired produces 0.25 units of output which sells for $5000 per unit,________ labour should be hired in this situation since the wage is ________ MRP.

A)more; greater than
B)more; less than
C)less; greater than
D)less; less than
E)no; equal to

Question 7

Consider the following production and cost schedule for a firm.The first column shows the number of units of a variable factor of production employed by the firm.
TABLE 13-1
Refer to Table 13-1.The marginal product of the 12th unit of the factor of production is

A)4.
B)14.
C)20.
D)44.
E)64.

Question 8

Suppose the last unit of a factor of production employed has a marginal product of 12.The factor's price is $8,and the product's competitive market price is $6.This factor's marginal revenue product is

A)$6.
B)$36.
C)$48.
D)$72.
E)$96.

Question 9

Consider a small firm that is producing winter jackets.It can lease an additional sewing machine for one month for $1200.With this additional machine,the firm can produce an additional 7 jackets during that time period that it sells for $250 each.Hiring the marginal machine adds ________ to the firm's profit and so it should ________ the machine.

A)-$1200; not lease
B)$0; be indifferent as to whether to lease
C)$1200; lease
D)$550; lease
E)$1750; lease

Question 10

Consider the following production and cost schedule for a firm.The first column shows the number of units of a variable factor of production employed by the firm.
TABLE 13-1
Refer to Table 13-1.The total revenue of the output produced by 12 units of the factor is

A)$120.
B)$520.
C)$640.
D)$768.
E)$1440.

Question 11

Consider the following production and cost schedule for a firm.The first column shows the number of units of a variable factor of production employed by the firm.
TABLE 13-1
Refer to Table 13-1.The marginal revenue product of the 15th unit of the factor is

A)-$20.
B)$20.
C)$60.
D)$150.
E)$820.

Question 12

Consider a small firm that is producing winter jackets.It can lease an additional sewing machine for one month for $2400.With this additional machine,the firm can produce an additional 4 jackets during that time period that it sells for $550 each.Hiring the marginal machine adds ________ to the firm's profit and so it should ________ the machine.

A)-$2400; not lease
B)-$200; not lease
C)$0; be indifferent as to whether to lease
D)$200; lease
E)$2400; lease

Question 13

A condition for the profit-maximizing use of any factor of production is (where MP = marginal product,w = the price of a factor of production,p = price of one unit of the firm's output,MR = marginal revenue,MC = marginal cost,MRP = marginal revenue product):

A)MRP = MP × p
B)MR =
C)MC = MR × w
D)w = MP × p
E)MRP = MR × MC

Question 14

Consider labour that is hired for $18 per hour.If the last hour hired produces 8 units of output which sells for $2 per unit,that labour-hour adds ________ to the firm's profit and so ________ labour should be hired.

A)-$128; more
B)-$2; less
C)$16; less
D)$16; more
E)$0; no

Question 15

Consider a small firm that is producing winter jackets.It can lease an additional sewing machine for one month for $750.With this additional machine,the firm can produce an additional 6 jackets during that time period that it sells for $125 each.Hiring the marginal machine adds ________ to the firm's profit and so it should ________ the machine.

A)-$750; not lease
B)-$750; lease
C)$0; be indifferent as to whether to lease
D)$750; not lease
E)$750; lease

Question 16

Consider labour hired for $18 per hour.If the last hour of labour hired produces 8 units of output which sells for $10 per unit,________ labour should be hired in this situation since the wage is ________ MRP.

A)more; greater than
B)more; less than
C)less; greater than
D)less; less than
E)no; equal to

Question 17

Consider the following production and cost schedule for a firm.The first column shows the number of units of a variable factor of production employed by the firm.
TABLE 13-1
Refer to Table 13-1.The total revenue of the output produced by 15 units of the factor is

A)$860.
B)$150.
C)$640.
D)$780.
E)$1440.

Question 18

Consider labour that is hired for $18 per hour.If the last hour of labour hired produces 8 units of output which sells for $10 per unit,that labour-hour adds ________ to the firm's profit and so ________ labour should be hired.

A)$80; more
B)-$80; less
C)$62; less
D)$62; more
E)$0; no

Question 19

Consider the following production and cost schedule for a firm.The first column shows the number of units of a variable factor of production employed by the firm.
TABLE 13-1
Refer to Table 13-1.The marginal product of the 15th unit of the factor of production is

A)-2.
B)0.
C)2.
D)82.
E)84.

Question 20

Consider labour that is hired for $18 per hour.If the last hour hired produces 8 units of output which sells for $2 per unit,________ labour should be hired in this situation since the wage is ________ MRP.

A)more; greater than
B)more; less than
C)less; greater than
D)less; less than
E)no; equal to

Question 21

Consider the following table for a firm.The first column shows the number of units of a variable factor of production employed by the firm.
TABLE 13-2
Refer to Table 13-2.The marginal product of the 7th unit of the factor is

A)-8.
B)0.
C)8.
D)162.
E)170.

Question 22

The shape of the marginal revenue product curve for a perfectly competitive firm would be ________ its marginal product curve because ________.

A)the same as; MR is constant as output increases
B)steeper than; MR decreases as output increases
C)steeper than; its product's price increases as output increases
D)flatter than; its product's price decreases as output increases
E)flatter than; it must pay a higher wage to the variable factor as output increases

Question 23

If a firm is a perfect competitor in its product market,the marginal product of a factor multiplied by the product's price equals

A)marginal cost.
B)marginal profit.
C)total revenue.
D)marginal revenue.
E)marginal revenue product.

Question 24

Consider the following table for a firm.The first column shows the number of units of a variable factor of production employed by the firm.
TABLE 13-2
Refer to Table 13-2.Suppose the firm is a perfect competitor and faces a given price of the product equal to $2 per unit.The marginal revenue product of the 5th unit of the factor is

A)$128.
B)$148.
C)$20.
D)$40.
E)$2.

Question 25

Consider the following production and cost schedule for a firm.The first column shows the number of units of a variable factor of production employed by the firm.
TABLE 13-3
Refer to Table 13-3.The total revenue obtained if the 5th unit of the factor of production is hired is

A)$160.
B)$180.
C)$192.
D)$202.
E)$210.

Question 26

Consider the following table for a firm.The first column shows the number of units of a variable factor of production employed by the firm.
TABLE 13-2
Refer to Table 13-2.This firm begins to experience diminishing marginal productivity when it hires the ________ unit of the factor.

A)3rd
B)4th
C)5th
D)6th
E)7th

Question 27

Which of the following is the best definition of the marginal revenue product (MRP)of a factor of production?

A)the average product of the factor multiplied by the price of the output
B)the change in revenue generated by the sale of the product produced by an additional unit of input
C)the change in revenue caused by the sale of an additional unit of output
D)the increase in output resulting from the use of an additional unit of the factor multiplied by the cost of that factor
E)marginal revenue multiplied by total product

Question 28

Consider the following production and cost schedule for a firm.The first column shows the number of units of a variable factor of production employed by the firm.
TABLE 13-1
Refer to Table 13-1.How many units of this factor of production would the profit-maximizing firm choose to hire?

A)11
B)12
C)13
D)14
E)It is not possible to determine with the data provided.

Question 29

The table below shows the total production for varying numbers of hours worked producing yo-yos.The firm sells its product and hires its workers in competitive markets.
TABLE 13-4
Refer to Table 13-4.What is the MRP for the 13^th hour worked?

A)$78
B)$84
C)$5
D)$30
E)$10

Question 30

Consider the following table for a firm.The first column shows the number of units of a variable factor of production employed by the firm.
TABLE 13-2
Refer to Table 13-2.Suppose this firm is a perfect competitor and faces a given price of the product equal to $15 per unit.The marginal revenue product of the 5th unit of the factor is

A)$30.
B)$100.
C)$75.
D)$300.
E)$2220.

Question 31

Profit-maximizing firms increase production up to the point at which the last unit of the variable factor employed adds

A)nothing to marginal cost.
B)nothing to marginal revenue.
C)positive economic profits.
D)just as much to revenue as to profit.
E)just as much to revenue as to cost.

Question 32

Consider the following production and cost schedule for a firm.The first column shows the number of units of a variable factor of production employed by the firm.
TABLE 13-3
Refer to Table 13-3.A profit-maximizing firm would never hire more than the ________ unit of this factor of production.

A)3rd
B)4th
C)5th
D)6th
E)7th

Question 33

Consider the following production and cost schedule for a firm.The first column shows the number of units of a variable factor of production employed by the firm.
TABLE 13-3
Refer to Table 13-3.The total revenue obtained if the 7th unit of the factor of production is hired is

A)$160.
B)$180.
C)$192.
D)$202.
E)$210.

Question 34

Consider the following production and cost schedule for a firm.The first column shows the number of units of a variable factor of production employed by the firm.
TABLE 13-3
Refer to Table 13-3.The marginal product of the 4th unit of the factor of production is

A)4.
B)6.
C)8.
D)26.
E)30.

Question 35

The table below shows the total production for varying numbers of hours worked producing yo-yos.The firm sells its product and hires its workers in competitive markets.
TABLE 13-4
Refer to Table 13-4.What is the marginal cost of the variable factor employed by this firm?

A)$0
B)$5
C)$10
D)$20
E)$30

Question 36

Consider the following production and cost schedule for a firm.The first column shows the number of units of a variable factor of production employed by the firm.
TABLE 13-3
Refer to Table 13-3.The marginal product of the 6th unit of the factor of production is

A)-2.
B)2.
C)4.
D)8.
E)32.

Question 37

Consider the following production and cost schedule for a firm.The first column shows the number of units of a variable factor of production employed by the firm.
TABLE 13-3
Refer to Table 13-3.The increase in total revenue generated by hiring the 5th unit of the factor of production is

A)-$11.00.
B)-$2.00.
C)$2.00.
D)$7.50.
E)$11.00.

Question 38

The marginal revenue product curve for a monopolist would be ________ its marginal product curve because ________.

A)steeper than; its MR decreases as output increases
B)steeper than; its product's price increases as output increases
C)flatter than; it must pay a higher wage to labour
D)flatter than; its product's price decreases as output increases
E)the same as; the MRP curve always has the same shape as the MP curve

Question 39

Consider the following table for a firm.The first column shows the number of units of a variable factor of production employed by the firm.
TABLE 13-2
Refer to Table 13-2.Suppose this firm is a perfect competitor and faces a given price of the product equal to $10 per unit.The marginal revenue product of the 3rd unit of the factor is

A)$30.
B)$100.
C)$110.
D)$1000.
E)$1100.

Question 40

Consider the following production and cost schedule for a firm.The first column shows the number of units of a variable factor of production employed by the firm.
TABLE 13-3
Refer to Table 13-3.The rise in total revenue generated by hiring the 4th unit of the factor of production is

A)-$11.00.
B)$2.00.
C)$3.67.
D)$7.50.
E)$28.00.

Question 41

The diagram below shows the MRP curve for a firm producing copper plumbing pipe.The factor of production being considered here is hours of labour. FIGURE 13-1
Refer to Figure 13-1.Assume that the firm is a perfect competitor and the price of the firm's output is fixed.We know that the firm's MRP curve is

A)the same shape as the firm's marginal product curve for labour.
B)the same shape as the firm's marginal revenue curve.
C)horizontal,if the firm is perfectly competitive.
D)steeper than the firm's marginal product curve for labour.
E)flatter than the firm's marginal product curve for labour.

Question 42

The diagram below shows the MRP curve for a firm producing copper plumbing pipe.The factor of production being considered here is hours of labour. FIGURE 13-1
Refer to Figure 13-1.Suppose this firm has the marginal revenue product curve MRP₁.At a wage rate of $12,the profit-maximizing firm will hire ________ units of labour.

A)100
B)120
C)140
D)160
E)180

Question 43

The table below shows the total production for varying numbers of hours worked producing yo-yos.The firm sells its product and hires its workers in competitive markets.
TABLE 13-4
Refer to Table 13-4.Which of the following statements best describes the situation of this firm when it is employing 12 hours of labour? The 12th hour of labour hired

A)adds $10 to revenue and costs $10 to hire,so this firm is maximizing its profit at 12 hours of labour.
B)adds $5 to revenue,but costs $10 to hire,so this firm should hire less labour.
C)adds $30 to revenue,but only costs $10 to hire,so this firm should hire more labour.
D)adds $8 to revenue,but costs $10 to hire,so this firm should hire less labour.
E)adds $40 to revenue,but only costs $10 to hire,so this firm should hire more labour.

Question 44

The table below shows the total production for varying numbers of hours worked producing yo-yos.The firm sells its product and hires its workers in competitive markets.
TABLE 13-4
Refer to Table 13-4.How many worker-hours should this profit-maximizing firm hire?

A)11
B)12
C)13
D)14
E)15

Question 45

The demand curve for a variable factor is always

A)that factor's marginal cost curve.
B)that factor's MRP curve.
C)that factor's MP curve.
D)steeper than that factor's MRP curve.
E)flatter than that factor's MRP curve.

Question 46

The table below shows the total production for varying numbers of hours worked producing yo-yos.The firm sells its product and hires its workers in competitive markets.
TABLE 13-4
Refer to Table 13-4.Which of the following statements best describes the situation of this firm when it is employing 15 hours of labour? The 15th hour of labour hired

A)adds $5 to revenue,but costs $10 to hire,so this firm should hire less labour.
B)adds $20 to revenue,but only costs $10 to hire,so this firm should hire more labour.
C)adds $10 to revenue and costs $10 to hire,so this firm is maximizing its profit at 15 hours of labour.
D)adds $50 to revenue,but only costs $10 to hire,so this firm should hire more labour.
E)adds $2 to revenue,but costs $10 to hire,so this firm should hire less labour.

Question 47

In a perfectly competitive labour market,a profit-maximizing firm will employ labour until the

A)MPP = MRP.
B)wage = MP.
C)MRP = the product's price.
D)wage = MRP.
E)wage = the product's price.

Question 48

Which of the following is the best example of a derived demand?

A)an increase in the wage for yoga instructors causes an increase in the demand for yoga classes
B)a decrease in the price of Pilates classes causes an increase in the demand for yoga classes
C)an increase in demand for yoga classes causes an increase in demand for yoga instructors
D)a decrease in the demand for yoga mats causes a decrease in demand for yoga classes
E)an increase in awareness about fitness causes an increase in demand for yoga classes

Question 49

The demand for a factor will be more elastic if

A)there is little substitutability between factors.
B)it is easier to substitute between this factor and others.
C)that factor determines a small percentage of total cost.
D)the demand for the good being produced is inelastic.
E)the supply of the factor is elastic.

Question 50

Consider a firm's demand curve for labour.If a technological change makes it easier to substitute capital for labour,the demand curve for labour

A)shifts parallel to the right.
B)shifts parallel to the left.
C)becomes more inelastic.
D)becomes more elastic.
E)is not affected.

Question 51

The diagram below shows the MRP curve for a firm producing copper plumbing pipe.The factor of production being considered here is hours of labour. FIGURE 13-1
Refer to Figure 13-1.Suppose this firm initially has the marginal revenue product curve MRP₁.One reason that the curve could shift to MRP₂ is

A)a decrease in demand for the firm's output,copper plumbing pipe.
B)an increase in the supply of labour.
C)a decrease in the wage rate.
D)a decrease in the market price of copper plumbing pipe.
E)an improvement in workers' human capital.

Question 52

Consider a firm's demand curve for labour.If a technological change makes it harder to substitute capital for labour,the demand curve for labour

A)shifts parallel to the right.
B)shifts parallel to the left.
C)becomes less elastic.
D)becomes more elastic.
E)is not affected.

Question 53

In a competitive labour market,an increase in the demand for labour might be due to an increase in the

A)supply of labour.
B)wage rate.
C)supply of the product that labour produces.
D)demand for the product that labour produces.
E)supply of the other factors.

Question 54

The diagram below shows the MRP curve for a firm producing copper plumbing pipe.The factor of production being considered here is hours of labour. FIGURE 13-1
Refer to Figure 13-1.This firm's MRP curve is the firm's

A)derived demand for copper plumbing pipe.
B)demand curve for labour.
C)market demand curve for copper plumbing pipe.
D)marginal product of labour curve.
E)total product curve for labour.

Question 55

Which of the following is the best example of a derived demand?

A)A decrease in interest rates increases the demand for housing.
B)An increase in the wage rate causes firms to substitute capital for labour.
C)An increase in demand for cars will increase the demand for auto workers.
D)A decrease in the price of internet connection will increase the demand for tablet computers.
E)An increase in the price of butter increases the demand for margarine.

Question 56

The table below shows the total production for varying numbers of hours worked producing yo-yos.The firm sells its product and hires its workers in competitive markets.
TABLE 13-4
Refer to Table 13-4.If plotted on a graph,the marginal revenue product curve for the "number of hours worked" would be the same as

A)the firm's marginal product curve,and would be downward sloping and concave to the origin.
B)the firm's marginal product curve,and would be downward sloping and convex to the origin.
C)the firm's demand curve for hours worked,and would be downward sloping and linear.
D)the firm's demand curve for yo-yos,and would be downward sloping and linear.
E)the firm's marginal revenue curve,and would be horizontal at $5 because this firm is operating in a competitive labour market.

Question 57

The table below shows the total production for varying numbers of hours worked producing yo-yos.The firm sells its product and hires its workers in competitive markets.
TABLE 13-4
Refer to Table 13-4.A profit-maximizing firm will continue to hire labour to produce yo-yos until they have equated

A)the price of yo-yos and the wage rate per hour.
B)the marginal product of an additional hour of labour and the price of the yo-yos.
C)the wage rate per hour and the value of the yo-yos produced by hiring one additional hour of labour.
D)the marginal revenue product of an additional hour of labour and the price of yo-yos.
E)the wage rate per hour and the marginal product of labour.

Question 58

The diagram below shows the MRP curve for a firm producing copper plumbing pipe.The factor of production being considered here is hours of labour. FIGURE 13-1
Refer to Figure 13-1.Suppose this firm initially has the marginal revenue product curve MRP₁.One reason that the curve could shift to MRP₃ is

A)an increase in demand for the firm's output,copper plumbing pipe.
B)a decrease in the market price of copper plumbing pipe.
C)a decrease in the supply of labour.
D)an increase in the wage rate.
E)an increase in the marginal product of labour.

Question 59

A demand for a factor of production is said to be "derived" because the factor's demand depends

A)entirely on the cost of the factor.
B)entirely on corporate advertising.
C)heavily on government policy.
D)heavily on public choice.
E)on the demand for the good or services it helps to make.

Question 60

The table below shows the total production for varying numbers of hours worked producing yo-yos.The firm sells its product and hires its workers in competitive markets.
TABLE 13-4
Refer to Table 13-4.If the market price of yo-yos drops to $2.50,how many worker-hours should this profit-maximizing firm hire?

A)11
B)12
C)13
D)14
E)15

Question 61

Other things being equal,if it becomes more difficult to substitute capital for labour in the production of cell phones,the demand curve for labour in that industry

A)will shift parallel to the left.
B)will shift parallel to the right.
C)will remain unchanged.
D)will become more elastic.
E)will become more inelastic.

Question 62

The demand and supply curves shown below apply to a competitive market for a factor used in the production of widgets. FIGURE 13-2
Refer to Figure 13-2.This factor market is in equilibrium at point B.What is the marginal revenue product of the 40th unit of the factor employed?

A)$8 multiplied by the price of the product
B)$320
C)$8
D)the marginal product of the 40th unit employed multiplied by the wage
E)$8 multiplied by the marginal revenue of the 40th unit employed

Question 63

Consider the following production and cost schedule for a firm.The first column shows the number of units of a variable factor of production employed by the firm.
TABLE 13-1
Refer to Table 13-1.How many units of this factor of production would the profit-maximizing firm hire if the price of each unit of the factor was $200?

A)10
B)11
C)12
D)13
E)It is not possible to determine with the data given.

Question 64

Consider a perfectly competitive labour market for video-game designers.Which of the following will shift the demand curve for these workers to the right?
1)an increase in the equilibrium wage rate for video-game designers;
2)a decrease in the market price of video games;
3)new software that improves the design process.

A)1 only
B)2 only
C)3 only
D)1 and 2
E)2 and 3

Question 65

Consider the following production and cost schedule for a firm.The first column shows the number of units of a variable factor of production employed by the firm.
TABLE 13-1
Refer to Table 13-1.How many units of this factor of production would the profit-maximizing firm hire if the price of each unit of the factor was $30?

A)12
B)13
C)14
D)15
E)It is not possible to determine with the data given.

Question 66

The diagram below shows the MRP curve for a firm producing copper plumbing pipe.The factor of production being considered here is hours of labour. FIGURE 13-1
Refer to Figure 13-1.Suppose this firm is facing MRP₁,a wage rate of $12 per hour and is employing 150 units of labour.At this level of employment,

A)the last unit of labour is adding less to the firm's cost than it is adding to the firm's revenue,so it should increase the use of labour.
B)the last unit of labour contributes as much to the firm's costs as to the firm's revenues and so the firm should not change its use of labour.
C)the last unit of labour is adding more to the firm's cost than it is adding to the firm's revenue,so it should reduce the use of labour.
D)the firm has shifted the MRP curve to MRP₂.
E)the firm has shifted the MRP curve to MRP₃.

Question 67

Which of the following statements concerning factor mobility is FALSE?

A)Land is a mobile resource in an economic sense,because it has many alternative uses.
B)Once it is in place,a factory designed and built for a specific purpose is highly mobile.
C)The allocation of labour tends to depend more on non-monetary considerations than does the allocation of either land or capital.
D)The elasticity of the supply of labour to any particular use is likely to be greater in the long run than in the short run.
E)Factor mobility is an important determinant of economic rent.

Question 68

Consider the following production and cost schedule for a firm.The first column shows the number of units of a variable factor of production employed by the firm.
TABLE 13-1
Refer to Table 13-1.In order to determine this firm's profit-maximizing number of units of the variable factor of production,what necessary information is missing from the table?

A)the price per unit of the factor
B)the per unit price of the output
C)the marginal product of the factor
D)the marginal revenue product of the factor
E)the total output for the firm

Question 69

The diagram below shows the MRP curve for a firm producing copper plumbing pipe.The factor of production being considered here is hours of labour. FIGURE 13-1
Refer to Figure 13-1.Suppose this profit-maximizing firm is facing MRP₁ and a wage rate of $12 per hour.Now suppose there is,simultaneously,an increase in demand for copper plumbing pipe (such that MRP shifts to MRP₂),and an increase in the wage rate to $16 per hour.The firm should

A)employ 20 more units of labour.
B)employ 40 more units of labour.
C)employ the same number of units of labour.
D)employ 40 fewer units of labour
E)employ 20 fewer units of labour.

Question 70

The diagram below shows the MRP curve for a firm producing copper plumbing pipe.The factor of production being considered here is hours of labour. FIGURE 13-1
Refer to Figure 13-1.Suppose this firm is facing MRP₁,a wage rate of $16 per hour and is employing 100 units of labour.At this level of employment,

A)the last unit of labour is adding less to the firm's cost than it is adding to the firm's revenue,so it should increase the use of labour.
B)the last unit of labour contributes as much to the firm's costs as to the firm's revenues and so the firm should not change its use of labour.
C)the last unit of labour is adding more to the firm's cost than it is adding to the firm's revenue,so it should reduce the use of labour.
D)the firm has shifted the MRP curve to MRP₂.
E)the firm has shifted the MRP curve to MRP₃.

Question 71

The elasticity of supply of computer-game programmers will generally be greater if we are analyzing the amount supplied to

A)the whole economy in the short run.
B)the whole economy in the long run.
C)a particular industry in the short run.
D)a particular industry in the long run.
E)a specific firm.

Question 72

Consider a firm's demand for a factor of production.A monopolist will continue to increase production until the marginal cost of the variable factor is

A)greater than the marginal revenue of the firm's output.
B)less than the marginal revenue of the firm's output.
C)equal to zero.
D)equal to the marginal revenue product of the factor.
E)equal to the marginal revenue of the firm's output.

Question 73

The aggregate quantity of labour supplied will generally rise when there is an increase in
1) immigration;
2) labour-force participation rates;
3) the retirement age.

A) 1 and 2
B) 1 and 3
C) 2 and 3
D) 1, 2, and 3
E) 1 only

Question 74

The demand and supply curves shown below apply to a competitive market for a factor used in the production of widgets. FIGURE 13-2
Refer to Figure 13-2.If the supply and demand curves for the factor are as shown in the diagram,but the wage being paid is $9,and the market is at point C,

A)the wage is higher than the factor's marginal revenue product,and firms will reduce the amount of the factor employed.
B)the wage is higher than the factor's marginal product,and firms will reduce the amount of the factor employed.
C)the marginal revenue product is not equal to the marginal cost of the factor and firms will increase the amount of the factor employed.
D)the demand curve will shift to the right until equilibrium factor price and quantity are re-established.
E)the demand curve will shift to the left until equilibrium factor price and quantity are re-established.

Question 75

Consider the following production and cost schedule for a firm.The first column shows the number of units of a variable factor of production employed by the firm.
TABLE 13-1
Refer to Table 13-1.How many units of this factor of production would the profit-maximizing firm hire if the price of each unit of the factor was $140?

A)11
B)12
C)13
D)14
E)It is not possible to determine with the data given.

Question 76

The three diagrams below each show a supply curve for oil tankers over a relatively short period of time. FIGURE 13-3
Refer to Figure 13-3.Consider the supply of oil tankers to an individual Canadian shipping firm,the North American shipping industry,and the world shipping industry.Which diagram best shows the supply of oil tankers that is relevant to the North American shipping industry?

A)diagram 1
B)diagram 2
C)diagram 3
D)diagrams 2 or 3
E)diagrams 1 or 2

Question 77

Consider computer programmers as a factor of production.Their factor mobility is quite ________,and so to any specific firm the supply of this factor is quite ________.

A)low; inelastic
B)low; elastic
C)high; inelastic
D)high; elastic

Question 78

Consider a firm's demand for a factor of production.A perfectly competitive firm will continue to increase production until the marginal cost of the variable factor is

A)greater than the marginal revenue of the firm's output.
B)less than the marginal revenue of the firm's output.
C)equal to zero.
D)equal to the marginal revenue product of the factor.
E)equal to the marginal revenue of the firm's output.

Question 79

If small changes in incentives can induce a factor to shift between alternative uses,we say that the factor is

A)efficient.
B)mobile.
C)inelastic.
D)declining.
E)flighty.

Question 80

Assume that the market for farmland in the fruit-growing region of southwestern Ontario is perfectly competitive.Which of the following will shift the demand curve for this land to the left?
1)a decrease in demand for Canadian-grown fruit;
2)a change in consumer preferences toward eating more fruit;
3)scientific reports that confirm a reduction in water supply to the region.

A)1 and 2
B)2 and 3
C)1 and 3
D)1 only
E)3 only