Question 1

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

Accepted Answer

The marginal revenue product of labor is the additional revenue generated from hiring one more unit of labor input. It measures the change in the firm's total revenue resulting from an increase in the quantity of labor 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?

Accepted Answer

Diminishing marginal returns are present for all units shown in the table because each additional unit of the factor of production results in a smaller increase in output.

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

Accepted Answer

The marginal revenue product (MRP) is calculated by multiplying the marginal product of labor (MPL) by the price of the output. Here, MPL is 8 units, and the price is $10 per unit, so MRP = 8 * $10 = $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

Accepted Answer

The marginal revenue product of the 14th unit of the factor is $60. This is because the total revenue product of the 14th unit is $840, and the total revenue product of the 13th unit is $780. The difference between these two values is $60, which is the marginal revenue product of the 14th unit.

Question 5

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

Accepted Answer

Marginal revenue product (MRP) is the change in revenue caused by the sale of the product contributed by an additional unit of input. This is because the MRP represents how much revenue the firm gains by producing one more unit of output with an additional unit of input, and therefore it is measured as the product of marginal product and marginal revenue (MRP = MP x MR). Choice A is incorrect because it uses average product instead of marginal product, and it only considers the price of the output rather than the change in revenue caused by an additional unit of input. Choice C is incorrect because it refers to the change in revenue caused by the sale of an additional unit of output, which is not necessarily related to the factor's contribution. Choice D is incorrect because it uses the cost of the factor instead of the marginal revenue. Choice E is incorrect because it multiplies marginal revenue by total product, which is not meaningful for measuring the contribution of a factor.

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.

Accepted Answer

The marginal revenue product (MRP) of the last week of labor can be calculated by multiplying the output produced by the selling price per unit:
MRP = 0.25 x $5000 = $1250
Since the wage paid is $1000 per week, the MRP is greater than the wage. This indicates that hiring more labor could increase profits. Therefore, "more" labor should be hired in this situation, and the wage paid is "less than" the MRP. Option B is the correct choice.

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

Accepted Answer

The marginal product is the additional output produced by adding one more unit of a factor of production. The 12th unit's marginal product is calculated by subtracting the total output at 11 units from the total output at 12 units, which is 20.

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

Accepted Answer

The answer of Suppose the last unit of a factor...

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.

Accepted Answer

By leasing the additional sewing machine, the firm can produce an additional 7 jackets, which it can sell for a total of 7 x $250 = $1750.

Leasing the machine costs $1200, so the net increase in profit is $1750 - $1200 = $550.

Therefore, the firm should lease the machine to maximize its profit.

Option D is the correct answer, as it states that hiring the marginal machine adds $550 to the firm's profit, and so it should lease the machine.

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

Accepted Answer

According to the table, when 12 units of the variable factor are employed, the firm produces 8 units of output, and the price per unit is $80. Therefore, the total revenue of output produced by 12 units of the factor is:
Total revenue = Price per unit x Quantity = $80 x 8 = $640.

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

Accepted Answer

The marginal revenue product (MRP) of a factor of production is the additional revenue generated by using one extra unit of that factor. In this case, the MRP of the 15th unit can be calculated by subtracting the total revenue generated by using 14 units from the total revenue generated by using 15 units. 
Total revenue with 14 units = $10 x 14 = $140 
Total revenue with 15 units = $10 x 15 = $150 
Therefore, MRP of the 15th unit = $150 - $140 = $10. 
Since the price of the output is constant at $10, the MRP of the 15th unit of the factor is also $10. Therefore, the correct answer is B) $20.

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.

Accepted Answer

The answer of Consider a small firm that is producing...

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):

Accepted Answer

The answer of A condition for the profit-maximizing use of...

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.

Accepted Answer

The answer of Consider labour that is hired for $18...

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.

Accepted Answer

The answer of Consider a small firm that is producing...

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.

Accepted Answer

The marginal revenue product (MRP) of the last hour of labor is 8 units * $10 = $80. Since the wage is $18, which is less than the MRP of $80, more labor should be hired.

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

Accepted Answer

The total revenue of the output produced by 15 units of the factor is $860. This is found by multiplying the marginal revenue product of the 15th unit, which is $57, by the number of units, which is 15.

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.

Accepted Answer

The last hour of labour hired generates a revenue of $80 (8 units*$10 per unit).

Since the labour cost is $18 per hour, the firm's profit from the last hired hour is $80-$18=$62.

Therefore, hiring more labour hours would add to the firm's profit, so less labour should not be hired. The correct answer is option D.

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

Accepted Answer

The marginal product of the 15th unit of the factor of production can be found by calculating the change in total product resulting from increasing the variable factor of production from 14 to 15. The total product for 14 units is 90 and the total product for 15 units is 92, so the marginal product of the 15th unit is 92-90=2.

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.

Accepted Answer

The wage ($18) is greater than the marginal revenue product (MRP) of labor, which is $16 (8 units * $2 per unit), indicating that less labor should be hired.

Quiz 13: How Factor Markets Work

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

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?

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

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

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

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.

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

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

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

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 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) :

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.

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.

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

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.

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

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.