Question 1

The four different types of factors of production include, land, labor, capital, and:

Accepted Answer

Entrepreneurship is considered one of the four main factors of production in economics, alongside land, labor, and capital. Entrepreneurs are crucial as they combine the other three factors to produce goods or services, take risks, and innovate, driving economic growth and development.

Question 2

Which one of the following does NOT fall in the category of factors of production?

Accepted Answer

Land and natural resources are often considered the same in the context of factors of production, as land includes all natural resources. Therefore, natural resources do not stand out as a separate category from land. Factors of production typically include land, labor, capital, and entrepreneurship.

Question 3

Because the demand for a factor of production depends on the demand for the good or service that the factor produces, factor demand is referred to as _____ demand.

Accepted Answer

Factor demand is referred to as derived demand because it is dependent on the demand for the goods or services that the factor helps to produce.

Question 4

The term _____ demand is used to refer to demand for factors of production because their demand is based on the demand for the good or service that they are used to produce.

Accepted Answer

Derived demand refers to the demand for factors of production (such as labor, raw materials) that arises from the demand for the final goods or services that these factors are used to produce.

Question 5

A firm's demand for labor is determined by the:

Accepted Answer

The demand for labor by a firm is determined by the maximum amount that the firm is willing to pay for each unit of labor, which reflects the value of the marginal product of labor to the firm.

Question 6

The marginal product of labor refers to the extra:

Accepted Answer

The marginal product of labor is defined as the additional output produced as a result of hiring one more worker, making choice B the correct answer.

Question 7

According to the law of diminishing returns, all else equal, an increase in the number of workers leads to:

Accepted Answer

The law of diminishing returns states that if one factor of production (number of workers, in this case) is increased while other factors (like machinery or workspace) are held constant, the marginal product of additional workers will eventually decrease. This means each additional worker contributes less to output than the previous one.

Question 8

The contribution of an additional worker to the total revenue of a firm is known as the:

Accepted Answer

The marginal revenue product (MRP) refers to the additional revenue generated by employing one more unit of a factor, such as labor. It is calculated by multiplying the marginal product of the factor by the marginal revenue generated from selling the additional output produced by that factor.

Question 9

A firm's labor demand curve is equivalent to its marginal _____ curve.

Accepted Answer

A firm's labor demand curve is equivalent to its marginal revenue product curve because it represents the additional revenue generated by employing one more unit of labor.

Question 10

A firm will be willing to hire additional workers if the _____ is greater than the:

Accepted Answer

A firm will be willing to hire additional workers if the marginal revenue product (the additional revenue the firm earns from hiring one more worker) is greater than the wage it has to pay for that worker. This ensures that hiring the worker is profitable for the firm.

Question 11

A firm will be willing to hire additional workers if the marginal _____ is _____ than the wage.

Accepted Answer

A firm will be willing to hire additional workers if the marginal revenue product (the additional revenue generated by employing one more unit of labor) is greater than the wage. This means the firm is making more money from the work done by the employee than it costs to employ them.

Question 12

Irrespective of the type of market, the marginal revenue product curve of a firm is:

Accepted Answer

The marginal revenue product curve of a firm is downward sloping because as more units of a factor of production (like labor) are employed, the additional output produced by each additional unit tends to decrease, assuming other factors remain constant. This reflects the law of diminishing returns.

Question 13

A firm in a perfectly competitive market is looking to hire an additional worker. The price of the good produced by the firm is $6, and the marginal product of the worker is 12. Therefore, the marginal revenue product of the worker is:

Accepted Answer

The marginal revenue product (MRP) is calculated by multiplying the marginal product of the worker (12) by the price of the good ($6), resulting in $72.

Question 14

A firm in a perfectly competitive market is looking to hire an additional worker. The marginal revenue from selling the good produced by the worker is $3, and the marginal product of the worker is 12. Therefore, the marginal revenue product of the worker is:

Accepted Answer

The marginal revenue product (MRP) is calculated by multiplying the marginal product (MP) of the worker by the marginal revenue (MR) from selling the good. Therefore, MRP = MR * MP = $3 * 12 = $36.

Question 15

All else equal, an increase in the marginal product of workers will lead to _____ in the marginal revenue product of the firm, and the firm will hire _____ workers.

Accepted Answer

An increase in the marginal product of workers means each additional worker is producing more output. This typically increases the marginal revenue product (the additional revenue the firm earns from hiring one more worker), leading the firm to hire more workers because they are now more productive.

Question 16

Use Table: Marginal Revenue Product. The table lists the number of workers and the marginal revenue product per hour that is generated by each worker for a firm in a perfectly competitive market. If the hourly wage of workers is $12 per hour, then the firm will hire _____ workers.

Accepted Answer

The answer of Use Table: Marginal Revenue Product. The table...

Question 17

Use Table: Marginal Revenue Product. The table lists the number of workers and the marginal revenue product per hour that is generated by each worker for a firm in a perfectly competitive market. If the hourly wage of workers is $10 per hour, then the firm will hire _____ workers.
​

Accepted Answer

The answer of Use Table: Marginal Revenue Product. The table...

Question 18

Use Table: Marginal Revenue Product. The table lists the number of workers and the marginal revenue product per hour that is generated by each worker for a firm in a perfectly competitive market. If the marginal product of the fourth worker is 6, then we can conclude that the price of the good is:
 ​

Accepted Answer

The answer of Use Table: Marginal Revenue Product. The table...

Question 19

Use Table: Marginal Revenue Product. The table lists the number of workers and the marginal revenue product per hour that is generated by each worker for a firm in a perfectly competitive market. If we know that the firm is hiring five workers, then the wage of labor is greater than _____ and less than or equal to:
 ​

Accepted Answer

The answer of Use Table: Marginal Revenue Product. The table...

Question 20

All else equal, if a technological improvement increases the marginal product of workers, then the marginal revenue product of workers will _____, and the firms will hire _____ workers.

Accepted Answer

The marginal revenue product of workers increases because each worker is now more productive, leading firms to hire more workers to capitalize on the higher productivity.

Quiz 11: Factor Markets

The four different types of factors of production include, land, labor, capital, and:

Which one of the following does NOT fall in the category of factors of production?

Because the demand for a factor of production depends on the demand for the good or service that the factor produces, factor demand is referred to as _____ demand.

The term _____ demand is used to refer to demand for factors of production because their demand is based on the demand for the good or service that they are used to produce.

A firm's demand for labor is determined by the:

The marginal product of labor refers to the extra:

According to the law of diminishing returns, all else equal, an increase in the number of workers leads to:

The contribution of an additional worker to the total revenue of a firm is known as the:

A firm's labor demand curve is equivalent to its marginal _____ curve.

A firm will be willing to hire additional workers if the _____ is greater than the:

A firm will be willing to hire additional workers if the marginal _ is _ than the wage.

Irrespective of the type of market, the marginal revenue product curve of a firm is:

A firm in a perfectly competitive market is looking to hire an additional worker. The price of the good produced by the firm is $6, and the marginal product of the worker is 12. Therefore, the marginal revenue product of the worker is:

A firm in a perfectly competitive market is looking to hire an additional worker. The marginal revenue from selling the good produced by the worker is $3, and the marginal product of the worker is 12. Therefore, the marginal revenue product of the worker is:

All else equal, an increase in the marginal product of workers will lead to _ in the marginal revenue product of the firm, and the firm will hire _ workers.

Use Table: Marginal Revenue Product. The table lists the number of workers and the marginal revenue product per hour that is generated by each worker for a firm in a perfectly competitive market. If the hourly wage of workers is $12 per hour, then the firm will hire _____ workers.

Use Table: Marginal Revenue Product. The table lists the number of workers and the marginal revenue product per hour that is generated by each worker for a firm in a perfectly competitive market. If the hourly wage of workers is $10 per hour, then the firm will hire _____ workers.

Use Table: Marginal Revenue Product. The table lists the number of workers and the marginal revenue product per hour that is generated by each worker for a firm in a perfectly competitive market. If the marginal product of the fourth worker is 6, then we can conclude that the price of the good is:

All else equal, if a technological improvement increases the marginal product of workers, then the marginal revenue product of workers will _, and the firms will hire _ workers.

Quiz 11: Factor Markets

The four different types of factors of production include, land, labor, capital, and:

Which one of the following does NOT fall in the category of factors of production?

Because the demand for a factor of production depends on the demand for the good or service that the factor produces, factor demand is referred to as _____ demand.

The term _____ demand is used to refer to demand for factors of production because their demand is based on the demand for the good or service that they are used to produce.

A firm's demand for labor is determined by the:

The marginal product of labor refers to the extra:

According to the law of diminishing returns, all else equal, an increase in the number of workers leads to:

The contribution of an additional worker to the total revenue of a firm is known as the:

A firm's labor demand curve is equivalent to its marginal _____ curve.

A firm will be willing to hire additional workers if the _____ is greater than the:

A firm will be willing to hire additional workers if the marginal _____ is _____ than the wage.

Irrespective of the type of market, the marginal revenue product curve of a firm is:

A firm in a perfectly competitive market is looking to hire an additional worker. The price of the good produced by the firm is $6, and the marginal product of the worker is 12. Therefore, the marginal revenue product of the worker is:

A firm in a perfectly competitive market is looking to hire an additional worker. The marginal revenue from selling the good produced by the worker is $3, and the marginal product of the worker is 12. Therefore, the marginal revenue product of the worker is:

All else equal, an increase in the marginal product of workers will lead to _____ in the marginal revenue product of the firm, and the firm will hire _____ workers.

Use Table: Marginal Revenue Product. The table lists the number of workers and the marginal revenue product per hour that is generated by each worker for a firm in a perfectly competitive market. If the hourly wage of workers is $12 per hour, then the firm will hire _____ workers.

Use Table: Marginal Revenue Product. The table lists the number of workers and the marginal revenue product per hour that is generated by each worker for a firm in a perfectly competitive market. If the hourly wage of workers is $10 per hour, then the firm will hire _____ workers. ​

All else equal, if a technological improvement increases the marginal product of workers, then the marginal revenue product of workers will _____, and the firms will hire _____ workers.

A firm will be willing to hire additional workers if the marginal _ is _ than the wage.

All else equal, an increase in the marginal product of workers will lead to _ in the marginal revenue product of the firm, and the firm will hire _ workers.

Use Table: Marginal Revenue Product. The table lists the number of workers and the marginal revenue product per hour that is generated by each worker for a firm in a perfectly competitive market. If the hourly wage of workers is $10 per hour, then the firm will hire _____ workers.

All else equal, if a technological improvement increases the marginal product of workers, then the marginal revenue product of workers will _, and the firms will hire _ workers.