Question 1

If the price of an input is constant, the marginal cost of the input is equal to its price.

Accepted Answer

This statement is true according to the definition of marginal cost, which is the additional cost incurred by producing one more unit of output. If the price of the input is constant, the additional cost will be equal to the price of the input.

Question 2

The marginal revenue product of input a is equal to the marginal revenue received from selling the additional units of output the firm can produce by adding one more unit of input a multiplied by the marginal product of input
a.
False

Accepted Answer

False

Question 3

In a monopsonistic input market, the firm buying the input knows that the price of the input will be determined by the quantity that it purchases.

Accepted Answer

In a monopsonistic input market, the firm has market power and is the sole buyer of the input. Therefore, the quantity of input it purchases determines the price it pays for the input.

Question 4

The marginal product of input a is the additional output that the firm can produce by adding one more unit of input a multiplied by the marginal revenue of input
a.
False

Accepted Answer

The marginal product of input a is the additional output that the firm can produce by adding one more unit of input a. The marginal revenue of input a is the additional revenue generated by adding one more unit of input a. These are two separate concepts and are not multiplied together.

Question 5

The profit-maximizing rule for employment of a variable input is to employ that input until its marginal revenue product is equal to the marginal cost of the input, as long as the marginal cost of the input would be at least equal to or above the marginal revenue product of the input for a greater quantity of the input.

Accepted Answer

This statement accurately represents the profit-maximizing rule for employment of a variable input. The marginal revenue product (MRP) is the additional revenue earned from each additional unit of the input, and the marginal cost (MC) is the additional cost incurred from each additional unit of the input. The firm will continue to hire more of the input as long as MRP is greater than or equal to MC, but will stop hiring additional units when MRP is less than MC. This is because the firm will not earn additional profits from hiring more of the input if the cost is greater than the revenue generated.

Question 6

The marginal cost of an input is equal to the increase in the firm's total cost that results from employing one more unit of the input.

Accepted Answer

This is the definition of marginal cost.

Question 7

The profit-maximizing rule for employment of a variable input is to employ that input until its marginal revenue product is less than the marginal cost of the input, as long as the marginal cost of the input would be less than or at most equal to the marginal revenue product of the input for a greater quantity of the input.

Accepted Answer

The profit-maximizing rule for employment of a variable input is to employ that input until its marginal revenue product equals the marginal cost of the input, not until the marginal revenue product is less than the marginal cost.

Question 8

Oligopsony is the term we use to describe a market structure where there are few buyers, or a few dominant buyers of some particular product or service.

Accepted Answer

This is the correct definition of oligopsony.

Question 9

In a monopsonistic input market the marginal cost of another unit of an input is greater than its price because it is assumed that the firm has to pay a higher price to get an additional unit of input per time period.

Accepted Answer

In a monopsonistic input market, the firm's demand curve for the input is upward-sloping, meaning that the price it has to pay for an additional unit of input increases as it purchases more. This results in the marginal cost of another unit of input being greater than its price.

Question 10

The marginal product of input a is the additional output that the firm can produce by adding one more unit of input
a.
True

Accepted Answer

This is the actual definition of marginal product.

Question 11

The net marginal revenue of input a is equal to the marginal revenue received from selling one more unit of output less the cost of raw materials and intermediate products required for it.

Accepted Answer

This statement accurately describes the net marginal revenue of input a.

Question 12

The marginal revenue product of input a is equal to the net marginal revenue of input a multiplied by the marginal product of input
a.
True

Accepted Answer

This statement is true based on the formula for calculating the marginal revenue product (MRP): MRP = MPP x MRC, where MPP is the marginal physical product of input a, and MRC is the marginal revenue (or price) of the output produced by input a. Net marginal revenue refers to the additional revenue gained from using one more unit of input a, after accounting for any additional costs (such as labor or materials) required to produce that unit. Therefore, multiplying net marginal revenue by MPP will give us the MRP of input a.

Question 13

The net marginal revenue of input a is equal to the marginal revenue received from selling one more unit of output.

Accepted Answer

The net marginal revenue of input a refers to the additional revenue generated from using one more unit of input a, while the marginal revenue from selling one more unit of output refers to the additional revenue from selling that extra unit, not specifically related to input a alone.

Question 14

The profit-maximizing rule for employment of a variable input in a monopsonistic input market is to employ that input until its marginal revenue product is equal to its marginal cost.

Accepted Answer

The profit-maximizing rule for employment of a variable input in a monopsonistic input market is to employ that input until its marginal revenue product is equal to its marginal cost.

Question 15

Monopsony is the label we attach to a market structure that is characterized by one buyer of some particular product or service.

Accepted Answer

Monopsony is indeed the label we attach to a market structure that is characterized by one buyer of some particular product or service.

Question 16

Monopsonistic competition is the term we use to describe a market structure where there are many buyers of a differentiated product.

Accepted Answer

The answer of Monopsonistic competition is the term we use...

Question 17

The marginal revenue product of input a is equal to the gross marginal revenue of input a multiplied by the marginal product of input
a.
False

Accepted Answer

The answer of The marginal revenue product of input a...

Question 18

A bilateral monopoly is a market where there is only one buyer and one seller of an input.

Accepted Answer

A bilateral monopoly is a market where a single buyer faces a single seller.

Question 19

In a monopsonistic input market the marginal cost of another unit of an input is equal to its price because it is assumed that as the firm has to pay a higher price for one more unit of input, it must pay the same price for all units of input.

Accepted Answer

In a monopsonistic input market, the firm has market power as the sole buyer of a specific input. Therefore, as the firm purchases additional units of the input, it raises the price of the input for all units it buys, not just the additional ones. This means that the marginal cost of another unit of input is greater than its price.

Question 20

The marginal cost of an input is equal to the change in the firm's total cost that results from employing the number of units of the input necessary to produce one more unit of output.

Accepted Answer

The answer of The marginal cost of an input is...

Quiz 12: Factor Markets

If the price of an input is constant, the marginal cost of the input is equal to its price.

The marginal revenue product of input a is equal to the marginal revenue received from selling the additional units of output the firm can produce by adding one more unit of input a multiplied by the marginal product of input a. False

In a monopsonistic input market, the firm buying the input knows that the price of the input will be determined by the quantity that it purchases.

The marginal product of input a is the additional output that the firm can produce by adding one more unit of input a multiplied by the marginal revenue of input a. False

The marginal cost of an input is equal to the increase in the firm's total cost that results from employing one more unit of the input.

Oligopsony is the term we use to describe a market structure where there are few buyers, or a few dominant buyers of some particular product or service.

In a monopsonistic input market the marginal cost of another unit of an input is greater than its price because it is assumed that the firm has to pay a higher price to get an additional unit of input per time period.

The marginal product of input a is the additional output that the firm can produce by adding one more unit of input a. True

The net marginal revenue of input a is equal to the marginal revenue received from selling one more unit of output less the cost of raw materials and intermediate products required for it.

The marginal revenue product of input a is equal to the net marginal revenue of input a multiplied by the marginal product of input a. True

The net marginal revenue of input a is equal to the marginal revenue received from selling one more unit of output.

The profit-maximizing rule for employment of a variable input in a monopsonistic input market is to employ that input until its marginal revenue product is equal to its marginal cost.

Monopsony is the label we attach to a market structure that is characterized by one buyer of some particular product or service.

Monopsonistic competition is the term we use to describe a market structure where there are many buyers of a differentiated product.

The marginal revenue product of input a is equal to the gross marginal revenue of input a multiplied by the marginal product of input a. False

A bilateral monopoly is a market where there is only one buyer and one seller of an input.

In a monopsonistic input market the marginal cost of another unit of an input is equal to its price because it is assumed that as the firm has to pay a higher price for one more unit of input, it must pay the same price for all units of input.

The marginal cost of an input is equal to the change in the firm's total cost that results from employing the number of units of the input necessary to produce one more unit of output.