Deck 10: Input Demand: the Labor and Land Markets

Question 1

If the marginal product of a worker for a calculator manufacturer is 10 calculators, and the price of a calculator is $10, the firm's marginal revenue product is

A) $1.00.
B) $10.00.
C) $100.00.
D) $1,000.00.

Answer 1

$100.00.

Question 2

Refer to the data provided in Table 10.1 below to answer the following question(s).
Table 10.1 $$\begin{array}{l}\text { Total Labor Units } \quad \text { Total Product } \quad \text { Marginal Product of Price per }\\\begin{array} { c c c c } \text { (employees) } & \text { (T-shirts per day) } & \text { Labor (per day) } & \text { T-shirt } \\\hline 0 & 0 & - & - \\1 & 20 & 20 & \$ 5 \\2 & 50 & 30 & 5 \\3 & 75 & 25 & 5 \\4 & 95 & 20 & 5 \\5 & 110 & 15 & 5\end{array}\end{array}$$

-Refer to Table 10.1. The maximum payment to labor per day that this profit-maximizing T-shirt manufacturer would be willing to pay to hire three workers per day is

A) $15.
B) $75.
C) $125.
D) $200.

Answer 2

$125.

Question 3

Marginal revenue product

A) is calculated as the marginal product of labor divided by the price of output.
B) eventually increases as labor input increases.
C) measures the benefit to the firm from hiring an additional unit of labor.
D) increases when marginal product decreases.

Answer 3

measures the benefit to the firm from hiring an additional unit of labor.

Question 4

When a large amount of output is produced per unit of the input, the input is said to exhibit

A) high productivity.
B) low productivity.
C) marginal productivity.
D) derived productivity.

Question 5

Refer to the data provided in Table 10.1 below to answer the following question(s).
Table 10.1 $$\begin{array}{l}\text { Total Labor Units } \quad \text { Total Product } \quad \text { Marginal Product of Price per }\\\begin{array} { c c c c } \text { (employees) } & \text { (T-shirts per day) } & \text { Labor (per day) } & \text { T-shirt } \\\hline 0 & 0 & - & - \\1 & 20 & 20 & \$ 5 \\2 & 50 & 30 & 5 \\3 & 75 & 25 & 5 \\4 & 95 & 20 & 5 \\5 & 110 & 15 & 5\end{array}\end{array}$$

-Refer to Table 10.1. If the payment to labor per day is $100, this T-shirt manufacturer is maximizing profits if he will hire ________ employee(s).

A) one
B) two
C) four
D) five

Question 6

The Package Store hires workers to wrap packages. The store sells this service for $5. The marginal revenue product of this store's fifth worker is $50. The marginal product of the fifth worker is

A) 0.01 package.
B) 1 package.
C) 10 packages.
D) indeterminate from this information.

Question 7

The demand for inputs is a derived demand because

A) it does not come from competitive markets.
B) it depends on the demand for outputs.
C) it is derived from nature.
D) it is derived from production.

Question 8

The Ernie Egg Store hires workers to paint eggs. The store sells the eggs for $3. The marginal revenue product of this store's fifth worker is $21. The marginal product of the fifth worker is

A) 0.14 eggs.
B) 7 eggs.
C) 36 eggs.
D) indeterminate from this information.

Question 9

Refer to the data provided in Table 10.1 below to answer the following question(s).
Table 10.1 $$\begin{array}{l}\text { Total Labor Units } \quad \text { Total Product } \quad \text { Marginal Product of Price per }\\\begin{array} { c c c c } \text { (employees) } & \text { (T-shirts per day) } & \text { Labor (per day) } & \text { T-shirt } \\\hline 0 & 0 & - & - \\1 & 20 & 20 & \$ 5 \\2 & 50 & 30 & 5 \\3 & 75 & 25 & 5 \\4 & 95 & 20 & 5 \\5 & 110 & 15 & 5\end{array}\end{array}$$

-Refer to Table 10.1. The marginal revenue product of the fourth worker is

A) $5.
B) $20.
C) $100.
D) $475.

Question 10

The marginal revenue product of labor is

A) the additional revenue a firm earns by employing one additional unit of labor.
B) the additional profit a firm earns by employing one additional unit of labor.
C) the marginal product of capital times the price of labor.
D) the additional revenue the firm makes by selling one unit of labor.

Question 11

Refer to the data provided in Table 10.1 below to answer the following question(s).
Table 10.1 $$\begin{array}{l}\text { Total Labor Units } \quad \text { Total Product } \quad \text { Marginal Product of Price per }\\\begin{array} { c c c c } \text { (employees) } & \text { (T-shirts per day) } & \text { Labor (per day) } & \text { T-shirt } \\\hline 0 & 0 & - & - \\1 & 20 & 20 & \$ 5 \\2 & 50 & 30 & 5 \\3 & 75 & 25 & 5 \\4 & 95 & 20 & 5 \\5 & 110 & 15 & 5\end{array}\end{array}$$

-Refer to Table 10.1. The marginal revenue product of the fifth worker is

A) $15.
B) $75.
C) $90.
D) $550.

Question 12

Demand for the lithium ion batteries used in the production of Tesla automobiles is

A) perfectly elastic.
B) unrelated to their productivity.
C) an output demand.
D) derived from the demand for Tesla automobiles.

Question 13

Refer to the data provided in Table 10.1 below to answer the following question(s).
Table 10.1 $$\begin{array}{l}\text { Total Labor Units } \quad \text { Total Product } \quad \text { Marginal Product of Price per }\\\begin{array} { c c c c } \text { (employees) } & \text { (T-shirts per day) } & \text { Labor (per day) } & \text { T-shirt } \\\hline 0 & 0 & - & - \\1 & 20 & 20 & \$ 5 \\2 & 50 & 30 & 5 \\3 & 75 & 25 & 5 \\4 & 95 & 20 & 5 \\5 & 110 & 15 & 5\end{array}\end{array}$$

-Refer to Table 10.1. The marginal revenue product of the ________ worker is $150.

A) second
B) third
C) fourth
D) fifth

Question 14

Refer to the data provided in Table 10.1 below to answer the following question(s).
Table 10.1 $$\begin{array}{l}\text { Total Labor Units } \quad \text { Total Product } \quad \text { Marginal Product of Price per }\\\begin{array} { c c c c } \text { (employees) } & \text { (T-shirts per day) } & \text { Labor (per day) } & \text { T-shirt } \\\hline 0 & 0 & - & - \\1 & 20 & 20 & \$ 5 \\2 & 50 & 30 & 5 \\3 & 75 & 25 & 5 \\4 & 95 & 20 & 5 \\5 & 110 & 15 & 5\end{array}\end{array}$$

-Refer to Table 10.1. The marginal revenue product of the third worker is

A) $5.
B) $25.
C) $125.
D) $375.

Question 15

Salaries of NFL quarterbacks, like Tom Brady, are

A) too high.
B) related to the additional revenues team owners expect to enjoy as a result of having them on the team roster.
C) the result of perfectly competitive markets.
D) All of the above are correct.

Question 16

If a pet grooming salon hires an additional groomer, that worker can groom 4 additional pets per day. The average grooming fee is $25. The most the salon would be willing to pay that groomer is

A) $4 per day.
B) $25 per day.
C) $100 per day.
D) indeterminate with the given information.

Question 17

Refer to the data provided in Table 10.1 below to answer the following question(s).
Table 10.1 $$\begin{array}{l}\text { Total Labor Units } \quad \text { Total Product } \quad \text { Marginal Product of Price per }\\\begin{array} { c c c c } \text { (employees) } & \text { (T-shirts per day) } & \text { Labor (per day) } & \text { T-shirt } \\\hline 0 & 0 & - & - \\1 & 20 & 20 & \$ 5 \\2 & 50 & 30 & 5 \\3 & 75 & 25 & 5 \\4 & 95 & 20 & 5 \\5 & 110 & 15 & 5\end{array}\end{array}$$

-Refer to Table 10.1. If the payment to labor per day is $125, this T-shirt manufacturer is maximizing profits if he will hire ________ employees.

A) two
B) three
C) four
D) five

Question 18

The idea that the demand for auto workers stems from the demand for automobiles is

A) the value of the marginal product of auto workers.
B) derived demand.
C) indirect demand.
D) output demand.

Question 19

A decrease in the wage rate will change

A) only the amount of labor hired.
B) the amount of labor employed, and it may also change the amount of other inputs employed.
C) the price the firm charges for the product, but it will not affect the demand for any of the inputs.
D) the firm's profit-maximizing level output, but not its usage of inputs.

Question 20

The demand for ________ is a ʺderived demand.ʺ

A) ice cream cones on a hot day
B) tax-free municipal bonds
C) a hair stylist by a salon owner
D) a birthday cake for your brother

Question 21

You have been hired by a data processing firm to provide economic advice. The owner of the firm tells you that the firm's only variable input is the number of data-entry operators. The hourly wage for data-entry operators is $10.00. The marginal revenue product curve for data-entry operators reaches its maximum at three workers with a marginal revenue product of $12.00. What advice would you give this firm?

A) Hire three data-entry operators so as to maximize profits.
B) Shut down immediately, as the firm is not able to cover all of its variable costs.
C) Decrease the wage rate paid to data-entry operators so that their marginal revenue product will decrease.
D) Hire data-entry operators until the marginal revenue product is equal to the wage-which will occur when more than three operators are employed.

Question 22

Firms will employ an input up to the point where

A) the wage rate equals the productivity of capital.
B) its marginal cost equals its marginal product.
C) the input's price equals its marginal revenue product.
D) the input's price equals its marginal product.

Question 23

Tony's Lawn Service uses only one variable input, fertilizer. The firm's demand curve for fertilizer in the short run is the input's

A) total product curve.
B) marginal product curve.
C) marginal revenue product curve.
D) total cost curve.

Question 24

Refer to the data provided in Table 10.2 below to answer the following question(s).
Table 10.2 $$\begin{array} { c c c } \begin{array} { c } \text { Total Labor Units } \\\text { (employees) }\end{array} & \begin{array} { c } \text { Total Product } \\\text { (frames per day) }\end{array} & \begin{array} { c } \text { Price per } \\\text { Frame }\end{array} \\\hline 0 & 0 & \$ 10 \\1 & 10 & \$ 10 \\2 & 30 & \$ 10 \\3 & 55 & \$ 10 \\4 & 70 & \$ 10 \\5 & 82 & \$ 10\end{array}$$

-Refer to Table 10.2. Diminishing returns to labor start with the ________ worker.

A) second
B) third
C) fourth
D) fifth

Question 25

Refer to the information provided in Figure 10.1 below to answer the question(s) that follow. Figure 10.1
Refer to Figure 10.1. This firm is currently hiring 15 workers and paying a wage of $10. This firm should

A) do nothing because it is maximizing profits.
B) reduce employment to 15 workers to increase profits.
C) reduce employment to 14 workers to increase profits.
D) increase employment to 17 workers to increase profits.

Question 26

Sally's Sandwiches produces sandwiches using one variable input-labor. Sally's Sandwiches is a ________ in the labor market and a ________ in the sandwich market.

A) producer; consumer
B) consumer; producer
C) consumer; consumer
D) producer; producer

Question 27

Refer to the data provided in Table 10.2 below to answer the following question(s).
Table 10.2 $$\begin{array} { c c c } \begin{array} { c } \text { Total Labor Units } \\\text { (employees) }\end{array} & \begin{array} { c } \text { Total Product } \\\text { (frames per day) }\end{array} & \begin{array} { c } \text { Price per } \\\text { Frame }\end{array} \\\hline 0 & 0 & \$ 10 \\1 & 10 & \$ 10 \\2 & 30 & \$ 10 \\3 & 55 & \$ 10 \\4 & 70 & \$ 10 \\5 & 82 & \$ 10\end{array}$$

-Refer to Table 10.2. Marginal revenue product of the ________ worker is $120.

A) second
B) third
C) fourth
D) fifth

Question 28

A firm will continue hiring labor as long as the MRP of labor ________ the market wage rate.

A) is greater than or equal to
B) is less than
C) is equal to
D) determines

Question 29

Refer to the data provided in Table 10.2 below to answer the following question(s).
Table 10.2 $$\begin{array} { c c c } \begin{array} { c } \text { Total Labor Units } \\\text { (employees) }\end{array} & \begin{array} { c } \text { Total Product } \\\text { (frames per day) }\end{array} & \begin{array} { c } \text { Price per } \\\text { Frame }\end{array} \\\hline 0 & 0 & \$ 10 \\1 & 10 & \$ 10 \\2 & 30 & \$ 10 \\3 & 55 & \$ 10 \\4 & 70 & \$ 10 \\5 & 82 & \$ 10\end{array}$$

-Refer to Table 10.2. If workers are paid $150 per day, then the firm is profit maximizing when it hires ________ workers.

A) two
B) three
C) four
D) five

Question 30

If the supply of labor decreases, which of the following events will occur?

A) The wage rate will fall and firms will increase employment up until the point where MRP equals the new wage rate.
B) The wage rate will fall and firms will decrease employment to the point where MRP equals the new wage rate.
C) The wage rate will increase and firms will decrease employment to the point where MRP equals the new wage rate.
D) The wage rate will increase and firms will increase employment up until the point where MRP equals the new wage rate.

Question 31

Refer to the information provided in Figure 10.1 below to answer the question(s) that follow. Figure 10.1
Refer to Figure 10.1. This firm is currently hiring 16 workers and paying a wage of $10. This firm should

A) do nothing because it is maximizing profits.
B) reduce employment to 15 workers to increase profits.
C) reduce employment to 14 workers to increase profits.
D) increase employment to 17 workers to increase profits.

Question 32

Refer to the data provided in Table 10.2 below to answer the following question(s).
Table 10.2 $$\begin{array} { c c c } \begin{array} { c } \text { Total Labor Units } \\\text { (employees) }\end{array} & \begin{array} { c } \text { Total Product } \\\text { (frames per day) }\end{array} & \begin{array} { c } \text { Price per } \\\text { Frame }\end{array} \\\hline 0 & 0 & \$ 10 \\1 & 10 & \$ 10 \\2 & 30 & \$ 10 \\3 & 55 & \$ 10 \\4 & 70 & \$ 10 \\5 & 82 & \$ 10\end{array}$$

-Refer to Table 10.2. Marginal revenue product of the ________ worker is $250.

A) second
B) third
C) fourth
D) fifth

Question 33

Refer to the data provided in Table 10.1 below to answer the following question(s).
Table 10.1 $$\begin{array}{l}\text { Total Labor Units } \quad \text { Total Product } \quad \text { Marginal Product of Price per }\\\begin{array} { c c c c } \text { (employees) } & \text { (T-shirts per day) } & \text { Labor (per day) } & \text { T-shirt } \\\hline 0 & 0 & - & - \\1 & 20 & 20 & \$ 5 \\2 & 50 & 30 & 5 \\3 & 75 & 25 & 5 \\4 & 95 & 20 & 5 \\5 & 110 & 15 & 5\end{array}\end{array}$$

-Refer to Table 10.1. The maximum payment to labor per day that this profit-maximizing T-shirt manufacturer would be willing to pay to hire five workers per day is

A) $15.
B) $75.
C) $125.
D) $200.

Question 34

You have been hired by a data processing firm to provide economic advice. The owner of the firm tells you that the firm's only variable input is the number of data-entry operators. The hourly wage for data-entry operators is $15.00. The marginal revenue product curve for data-entry operators reaches its maximum at three workers with a marginal revenue product of $12.00. What advice would you give this firm?

A) Hire three data-entry operators so as to minimize the amount of money the firm will lose.
B) Shut down immediately, as the firm is not able to cover all of its variable costs.
C) Increase the wage rate paid to data-entry operators so that their marginal revenue product will increase.
D) Produce as much as possible so as to maximize the difference between the wage paid to data-entry operators and their marginal revenue product.

Question 35

If the price of the product produced by labor increases, the marginal revenue product of labor curve will

A) be unaffected because productivity of labor has not changed.
B) shift to the left.
C) shift to the right.
D) become more elastic.

Question 36

The marginal cost of a unit of labor in a perfectly competitive labor market is

A) its average MRP.
B) equal to product price.
C) the market wage rate.
D) equal to MRP.

Question 37

Refer to the data provided in Table 10.2 below to answer the following question(s).
Table 10.2 $$\begin{array} { c c c } \begin{array} { c } \text { Total Labor Units } \\\text { (employees) }\end{array} & \begin{array} { c } \text { Total Product } \\\text { (frames per day) }\end{array} & \begin{array} { c } \text { Price per } \\\text { Frame }\end{array} \\\hline 0 & 0 & \$ 10 \\1 & 10 & \$ 10 \\2 & 30 & \$ 10 \\3 & 55 & \$ 10 \\4 & 70 & \$ 10 \\5 & 82 & \$ 10\end{array}$$

-Refer to Table 10.2. The most firms would be willing to pay per worker and hire three total workers is

A) $120.
B) $150.
C) $200.
D) $250.

Question 38

Liu's Potato Chips is a perfectly competitive firm currently employing 30 workers. The marginal revenue product of the 30th worker is $7.00 per hour. The wage rate is $8.00 per hour. To increase profits, this firm should

A) decrease employment until the MRP of labor equals $8.00.
B) increase employment until the MRP of labor equals $8.00.
C) continue hiring 30 workers because the firm earns a surplus of $1.00 on each worker hired.
D) increase the price of potato chips so that the marginal revenue product increases to $8.00 per hour.

Question 39

The formula for the marginal revenue product of labor (L is for labor, X is the output) is

A) MP_L/P_X.
B) P_X/MP_L.
C) (MP_L)(MR_X).
D) MP_L + P_X.

Question 40

Refer to the data provided in Table 10.2 below to answer the following question(s).
Table 10.2 $$\begin{array} { c c c } \begin{array} { c } \text { Total Labor Units } \\\text { (employees) }\end{array} & \begin{array} { c } \text { Total Product } \\\text { (frames per day) }\end{array} & \begin{array} { c } \text { Price per } \\\text { Frame }\end{array} \\\hline 0 & 0 & \$ 10 \\1 & 10 & \$ 10 \\2 & 30 & \$ 10 \\3 & 55 & \$ 10 \\4 & 70 & \$ 10 \\5 & 82 & \$ 10\end{array}$$

-Refer to Table 10.2. The firm currently employs 4 workers at the market wage of $120 per worker per day. If the firm wants to maximize its profits, it should

A) hire fewer workers
B) hire more workers.
C) make no adjustments as it is already employing the profit-maximizing number of workers.
D) shut down since it is incurring a loss.

Question 41

The demand for any factor of production in a competitive industry depends on

A) its productivity and upon the value of its output in the marketplace.
B) its productivity and the productivity of all other inputs.
C) the productivity of all the other inputs and how these inputs are valued in the marketplace.
D) the amount of the factor that is used and the amounts of all the other factors that are used.

Question 42

Refer to the information provided in Figure 10.2 below to answer the question(s) that follow. Figure 10.2
Refer to Figure 10.2. This firmʹs marginal cost curve has shifted from MC₁ to MC₀ A profit-maximizing firm should ________ the amount of output produced and ________ its demand for labor.

A) increase; increase
B) increase; decrease
C) decrease; decrease
D) keep constant; increase

Question 43

MP_L multiplied by P_X is the ________, where L denotes labor and X denotes output.

A) cost of a marginal unit of labor
B) value of labor's marginal product
C) marginal revenue of a unit of output
D) marginal cost of a unit of output

Question 44

The law of ________ explains why a marginal revenue product schedule eventually declines.

A) diminishing marginal opportunity costs
B) increasing marginal returns
C) increasing marginal opportunity costs
D) diminishing marginal returns

Question 45

A wheat farmer sells wheat in a perfectly competitive market and hires labor in a perfectly competitive market. The market price of wheat is $2 a bushel, the wage rate is $10, the farmer employs five workers and the marginal product of the fifth worker is 10 bushels. What would you advise this farmer to do?

A) Do nothing because the wage rate and the marginal product of the last worker hired are equal.
B) Reduce employment because the wage paid is less than the marginal revenue product.
C) Increase employment because the wage paid is less than the marginal revenue product.
D) Reduce the product price so that the wage and marginal revenue product will be equal.

Question 46

If the wage rate is less than the marginal revenue product of labor, the firm should ________ to maximize profits.

A) hire less labor and produce less output
B) hire less labor and produce more output
C) hire more labor and produce less output
D) hire more labor and produce more output

Question 47

In the product market, changes in technology affect the marginal ________ of a unit of output. In the labor market, changes in technology affect the marginal ________ of a unit of labor input.

A) cost; cost
B) revenue; revenue
C) revenue product; cost
D) cost; revenue product

Question 48

If the supply of labor increases, which of the following events will occur?

A) The wage rate will fall and firms will increase employment up until the point where MRP equals the new wage rate.
B) The wage rate will fall and firms will decrease employment to the point where MRP equals the new wage rate.
C) The wage rate will increase and firms will decrease employment to the point where MRP equals the new wage rate.
D) The wage rate will increase and firms will increase employment up until the point where MRP equals the new wage rate.

Question 49

If Tie-Dyed T-Shirts is currently employing labor so that the wage is less than the marginal revenue product of labor, it must also be true that

A) total revenues would be greater than total costs.
B) the wage is greater than marginal cost.
C) the price of the product must be less than marginal cost.
D) the price of the product must be greater than marginal cost.

Question 50

Refer to the information provided in Figure 10.2 below to answer the question(s) that follow. Figure 10.2
Refer to Figure 10.2. This firmʹs marginal cost curve has shifted from MC₁ to MC₀. A likely explanation for this is that

A) the productivity of a variable input increased.
B) the price of a variable input increased.
C) the demand for the firmʹs product increased.
D) the supply of a variable input increased.

Question 51

An increase in technology will cause a marginal revenue product of labor curve to

A) be unaffected because the productivity of labor has not changed.
B) shift to the left.
C) shift to the right.
D) become more inelastic.

Question 52

A wheat farmer sells wheat in a perfectly competitive market and hires labor in a perfectly competitive market. The market price of wheat is $2 a bushel, the wage rate is $10, the farmer employs five workers and the marginal product of the fifth worker is 3 bushels. What would you advise this farmer to do?

A) Do nothing because the wage rate and the marginal product of the last worker hired are equal.
B) Reduce employment because the wage paid is more than the marginal revenue product.
C) Increase employment because the wage paid is less than the marginal revenue product.
D) Reduce the product price so that the wage and marginal revenue product will be equal.

Question 53

A firm's marginal cost curve in a perfectly competitive product market is the same as its ________ curve. Similarly, a firm's marginal revenue product curve in a perfectly competitive labor market is the same as its ________ curve.

A) demand; supply
B) supply; demand
C) demand; demand
D) supply; supply

Question 54

A firm competing in a perfectly competitive labor market desires to maximize

A) marginal profit, not total profit.
B) total profit, not marginal profit.
C) marginal profit, not average profit.
D) average profit, not marginal profit.

Question 55

Assume that labor is the only variable input and that the payment made to labor is denoted as W. The marginal product of labor can be stated as

A) (W) × (MC).
B) W/MC.
C) MC/W.
D) TC/W.

Question 56

Refer to the information provided in Figure 10.2 below to answer the question(s) that follow. Figure 10.2
Refer to Figure 10.2. This firm's marginal cost curve has shifted from MC₀ to MC₁. A profit-maximizing firm should ________ the amount of output produced and ________ its demand for labor.

A) increase; increase
B) increase; decrease
C) decrease; decrease
D) keep constant; increase

Question 57

To get a profit-maximizing firm in a perfectly competitive labor market to hire another worker, the firm will need to

A) lower the wage rate paid to that last worker hired and also to all previous workers hired.
B) raise the wage rate paid to that last worker hired and also to all previous workers hired.
C) lower the wage rate paid to the last worker hired only.
D) raise the wage rate paid to the last worker hired only.

Question 58

A wheat farmer sells wheat in a perfectly competitive market and hires labor in a perfectly competitive market. The market price of wheat is $2 a bushel, the wage rate is $10, and the farmer employs five workers. If the farmer is maximizing his profits, then the marginal product of the fifth worker is

A) 0.2 bushels.
B) 5 bushels.
C) 20 bushels.
D) indeterminate from the given information

Question 59

Refer to the information provided in Figure 10.2 below to answer the question(s) that follow. Figure 10.2
Refer to Figure 10.2. This firm's marginal cost curve has shifted from MC₀ to MC₁. A likely explanation for this is that

A) the productivity of a variable input declined.
B) the price of a variable input decreased.
C) the demand for the firm's product decreased.
D) the supply of a variable input decreased.

Question 60

Suppose the supply of labor schedule increases in a perfectly competitive labor market while the market demand schedule remains unchanged. A profit-maximizing representative firm will

A) hire more workers.
B) hire fewer workers.
C) hire the same number of workers.
D) substitute capital for labor.

Question 61

An increase in the wage rate will change

A) only the amount of labor hired.
B) the amount of labor employed, and it may also change the amount of other inputs employed.
C) the price the firm charges for the product, but it will not affect the demand for any of the inputs.
D) the firmʹs profit-maximizing level output, but not its usage of inputs.

Question 62

Which of the following is related to the additional revenues business owners expect to enjoy as a result of hiring the employee?

A) the salary of Dallas Mavericks' player Dirk Nowitski
B) the wages for Wendy Peffercorn, a cashier at the Piggly Wiggly
C) the signing bonus for Saul Goodman, a new attorney at the Hamlin, Hamlin, and McGill law firm
D) All of the above are correct.

Question 63

If a product's demand decreases as its supply simultaneously increases, the marginal revenue product curve will

A) shift to the right.
B) shift to the left.
C) remain unchanged.
D) either shift to the left, shift to the right, or remain unchanged depending upon what happens to product price.

Question 64

Related to the Economics in Practice on page 216: According to the survey discussed in the Economics in Practice,

A) most people were not willing to give up wages to get flex time at work.
B) people were only willing to give up wages if they had 100 percent flex time at work.
C) more than 50 percent of people were willing to give up wages to get flex time at work.
D) almost everyone was willing to give up wages, but almost none were willing to give up other benefits, to get flex time at work.

Question 65

Assuming that labor is the only variable input, if society values a good ________ it costs firms to hire the workers to produce that good, the good ________ be produced.

A) more than; will
B) less than; will
C) more than; will not
D) equal to what; will not

Question 66

The Pet Emporium hires workers to bathe cats. The Emporium sells this service for $20. The marginal revenue product of this storeʹs fifth worker is $100. The marginal product of the fifth worker is

A) 0.2 bathed cats.
B) 1 bathed cat.
C) 5 bathed cats.
D) indeterminate from this information.

Question 67

The demand for inputs is ________ because it depends on the demand for outputs.

A) a secondary demand
B) a derived demand
C) inconsequential
D) unrelated to cost

Question 68

Demand for the services of Los Angeles Dodgers' pitcher Clayton Kershaw is

A) horizontal.
B) unrelated to his true productivity.
C) an output demand.
D) derived from the demand for Los Angeles Dodgers' tickets when Kershaw plays.

Question 69

If product demand increases and product price increases

A) the marginal revenue product curve will shift to the right.
B) the marginal revenue product curve will shift to the left.
C) the firm will move up the marginal revenue product curve and hire fewer units of the input.
D) the firm will move down the marginal revenue product curve and hire more units of the input.

Question 70

A soybean farmer sells soybeans in a perfectly competitive market and hires labor in a perfectly competitive market. The market price of soybeans is $1 a bushel, the wage rate is $12, the farmer employs six workers and the marginal product of the sixth worker is 10. What would you advise this farmer to do?

A) Do nothing because the wage rate and the marginal product of the last worker hired are equal.
B) Reduce employment because the wage paid is greater than the marginal revenue product.
C) Increase employment because the wage paid is less than the marginal revenue product.
D) Reduce the product price so that the wage and marginal revenue product will be equal.

Question 71

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

A) Janice got a Samsung Galaxy Tab for her birthday, and now her best friend Tamika wants one for her birthday.
B) The demand for movie theater ushers increases when more consumers choose to go to movie theaters.
C) More peanut butter is demanded as the price of strawberry jam falls.
D) When the price of Honda Accords increased, the demand for Nissan Altimas went up.

Question 72

If the marginal product of a worker for a hearing aid manufacturer is 6 hearing aids, and the price of a hearing aid is $300, the firmʹs marginal revenue product is

A) $50.
B) $300.
C) $1,800.
D) $18,000.

Question 73

The ________ is the additional revenue a firm earns by employing one additional unit of labor.

A) marginal revenue product of labor
B) marginal labor cost
C) average labor revenue
D) per-worker net profit

Question 74

Related to the Economics in Practice on page 214: According to the Economics in Practice, firms where managers had more extensive training experienced

A) increasing wage rates.
B) a decrease in the marginal product of labor.
C) increased productivity.
D) a decrease in the marginal revenue product of labor.

Question 75

When a small amount of output is produced per unit of the input, the input is said to exhibit

A) high productivity.
B) low productivity.
C) marginal productivity.
D) derived productivity.

Question 76

The ________ is the product of the marginal product of labor and the price of the output.

A) marginal factor cost
B) total revenue
C) average revenue
D) marginal revenue product

Question 77

The demand for ________ is a ʺderived demand.ʺ

A) hot chocolate on a cold day
B) U.S. Treasury bonds
C) a dog groomer by a grooming shop
D) hot dogs on the 4th of July

Question 78

The marginal revenue product of labor curve will always shift to the right if

A) the wage rate rises.
B) product demand decreases and product price decreases.
C) product demand increases and product price increases.
D) the price of capital rises.

Question 79

If a nail salon hires an additional worker, that worker can service 8 additional customers per day. The average nail service fee is $30. The most the salon would be willing to pay that worker is

A) $8 per day.
B) $30 per day.
C) $240 per day.
D) indeterminate with the given information.

Question 80

Assume that automobiles are a normal good. An increase in income will

A) shift the marginal revenue product curve of auto workers to the left.
B) move a firm down the marginal revenue product curve of auto workers.
C) shift the marginal revenue product curve of auto workers to the right.
D) have no effect on the marginal revenue product curve of auto workers.