Question 1

If the price of the product produced by labor decreases, 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 inelastic.

Accepted Answer

The marginal revenue product of labor curve will shift to the left because the value of the output produced by each additional worker (marginal product) decreases when the price of the product decreases. This means each additional unit of labor adds less revenue than before, leading to a leftward shift in the curve.

Question 2

Refer to the data provided in Table 10.3 below to answer the following question(s).
Table 10.3 
-Refer to Table 10.3. Marginal revenue product of the ________ worker is $480.
A) second
B) third
C) fourth
D) fifth

Accepted Answer

The answer of Refer to the data provided in Table...

Question 3

The wage rate will increase and firms will decrease employment to the point where MRP equals the new wage rate if
A) the demand for labor decreases.
B) the demand for labor increases.
C) the supply of labor decreases.
D) the supply of labor increases.

Accepted Answer

When the supply of labor decreases, the wage rate will increase because there is less labor available. Firms will then decrease employment to the point where the marginal revenue product (MRP) of labor equals the new, higher wage rate, as they seek to optimize their labor costs relative to productivity.

Question 4

The formula (MP_L)(MR_X), where L is for labor and X is the output, is for A) the marginal product of labor. B) the marginal revenue from labor. C) the marginal revenue product of labor. D) total revenue of labor.

Accepted Answer

The formula represents the marginal revenue product of labor, which is calculated by multiplying the marginal product of labor (MPL) by the marginal revenue (MR). This formula shows how the additional output produced by one more unit of labor (MPL) contributes to the total revenue when sold (MR * MPL).

Question 5

The ________ of labor in a perfectly competitive labor market is the market wage rate.
A) total cost
B) marginal revenue from a unit
C) marginal cost of a unit
D) supply

Accepted Answer

The marginal cost of a unit of labor in a perfectly competitive labor market is the market wage rate, as each additional unit of labor hired costs the market wage.

Question 6

Refer to the data provided in Table 10.3 below to answer the following question(s).
Table 10.3 
-Refer to Table 10.3. Diminishing returns to labor start with the ________ worker.
A) second
B) third
C) fourth
D) fifth

Accepted Answer

Diminishing returns to labor occur when adding an additional worker results in a smaller increase in output than the previous worker added. Without the specific data from Table 10.3, the general concept dictates that the correct answer is identified when the marginal product of labor begins to decrease, which typically happens after several workers have been added. Given the options, the choice indicating the fourth worker suggests the point at which adding more workers leads to a decrease in the marginal product of each additional worker, aligning with the concept of diminishing returns.

Question 7

Refer to the data provided in Table 10.3 below to answer the following question(s).
Table 10.3 
-Refer to Table 10.3. If workers are paid $600 per day, then the firm is profit maximizing when it hires ________ workers.
A) two
B) three
C) four
D) five

Accepted Answer

The answer of Refer to the data provided in Table...

Question 8

Refer to the data provided in Table 10.3 below to answer the following question(s).
Table 10.3 
-Refer to Table 10.3. The most firms would be willing to pay per worker and hire three total workers is
A) $360.
B) $600.
C) $800.
D) $1,000.

Accepted Answer

The answer of Refer to the data provided in Table...

Question 9

Refer to the data provided in Table 10.3 below to answer the following question(s).
Table 10.3 
-Refer to Table 10.3. The firm currently employs 4 workers at the market wage of $480 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.

Accepted Answer

To determine the profit-maximizing number of workers, the firm should compare the marginal revenue product (MRP) of labor to the wage rate. If the MRP of the fourth worker is greater than $480, the firm should hire more workers to maximize profits.

Question 10

Ernie's Sushi-On-A-Stick is a perfectly competitive firm currently employing 75 workers. The marginal revenue product of the 75th worker is $9.00 per hour. The wage rate is $12.00 per hour. To increase profits, this firm should
A) decrease employment until the MRP of labor equals $12.00.
B) increase employment until the MRP of labor equals $12.00.
C) continue hiring 75 workers because the firm earns a surplus of $3.00 on each worker hired.
D) increase the price of sushi-on-a-stick so that the marginal revenue product increases to $12.00 per hour.

Accepted Answer

The firm should decrease employment until the marginal revenue product (MRP) of labor equals the wage rate ($12.00). Currently, the MRP of the 75th worker is $9.00, which is less than the wage rate of $12.00, indicating that the cost of hiring the last worker is more than the revenue they generate. Reducing the number of workers will increase the MRP of the remaining workers towards $12.00, aligning labor costs with revenue generated per worker.

Question 11

Samurai Sushi produces sushi using one variable input - labor. Samurai Sushi is a consumer in the ________ market and a producer in the ________ market.
A) sushi; labor
B) labor; sushi
C) capital; labor
D) capital; sushi

Accepted Answer

Samurai Sushi is a consumer in the labor market because it hires workers to produce sushi, and it is a producer in the sushi market because it produces and sells sushi.

Question 12

You have been hired by the No Hassle Collection Agency to provide economic advice. The owner of the agency tells you that No Hassle's only variable input is the number of collection agents. The hourly wage for collection agents is $30.00. The marginal revenue product curve for collection agents reaches its maximum at five workers with a marginal revenue product of $34.00. What advice would you give this firm?
A) Hire five collection 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 collection agents so that their marginal revenue product will decrease.
D) Hire collection agents until the marginal revenue product is equal to the wage-which will occur when more than five agents are employed.

Accepted Answer

The advice to hire collection agents until the marginal revenue product (MRP) equals the wage rate is based on the principle that firms maximize profit by employing resources up to the point where the MRP equals the marginal resource cost (MRC), in this case, the wage rate. Since the MRP of $34.00 at five workers is higher than the wage rate of $30.00, hiring more agents until MRP equals the wage will increase profits.

Question 13

The curve that indicates how many workers a firm will hire at different wages is the factor's
A) supply curve.
B) marginal cost curve.
C) marginal revenue product curve.
D) marginal product curve.

Accepted Answer

The curve that indicates how many workers a firm will hire at different wages is the factor's marginal revenue product curve. This curve reflects the additional revenue a firm earns from hiring one more unit of labor, considering the wage rate.

Question 14

You have been hired by the No Hassle Collection Agency to provide economic advice. The owner of the agency tells you that No Hassle's only variable input is the number of collection agents. The hourly wage for collection agents is $40.00. The marginal revenue product curve for collection agents reaches its maximum at five workers with a marginal revenue product of $34.00. What advice would you give this firm?
A) Hire five collection agents 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 collection agents 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 collection agents and their marginal revenue product.

Accepted Answer

The firm should shut down immediately because the marginal revenue product ($34.00) is less than the hourly wage ($40.00), meaning the firm is not covering its variable costs for each additional worker.

Question 15

The wage rate will fall and firms will increase employment to the point where MRP equals the new wage rate if
A) the demand for labor decreases.
B) the demand for labor increases.
C) the supply of labor decreases.
D) the supply of labor increases.

Accepted Answer

When the supply of labor increases, there is more labor available at each wage rate. This increased supply puts downward pressure on wages, causing the wage rate to fall. Firms respond to the lower wage rate by hiring more workers, increasing employment until the marginal revenue product (MRP) of labor equals the new, lower wage rate. This is because firms seek to hire additional workers as long as the additional revenue generated by the last worker hired (MRP) is greater than or equal to the cost of hiring that worker (the wage rate).

Question 16

Bonita's Braidworks hires workers to braid hair. The store sells the service for $25 per customer. The marginal revenue product of this storeʹs fifth worker is $50. The marginal product of the fifth worker is
A) 0.5 braided customers.
B) 2 braided customers.
C) 25 braided customers.
D) indeterminate from this information.

Accepted Answer

The marginal revenue product (MRP) is calculated as the marginal product (MP) of the labor times the marginal revenue (MR), which in this case is the price per service ($25) since it's a perfectly competitive market. Given the MRP of the fifth worker is $50, and knowing the price per service is $25, we can calculate the MP as MRP/MR, which is $50/$25 = 2. Therefore, the marginal product of the fifth worker is 2 braided customers.

Question 17

A firm will reduce its quantity of 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

Accepted Answer

A firm will reduce its quantity of labor when the Marginal Revenue Product (MRP) of labor is less than the market wage rate, as it indicates that the cost of hiring an additional unit of labor is greater than the revenue generated by that unit.

Question 18

If Tie-Dyed T-Shirts is currently employing labor so that the wage is greater than the marginal revenue product of labor, it must also be true that
A) total revenues would be less than total costs.
B) the wage is less 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.

Accepted Answer

If the wage is greater than the marginal revenue product of labor, it implies that the cost of hiring an additional worker is more than the revenue generated by that worker. This situation suggests that the firm is not maximizing profit, and the price of the product must be less than the marginal cost, as the firm is not covering the additional cost of production.

Question 19

Pookie's Pool Cleaning Service uses only one variable input, chlorine. Pookieʹs ________ curve for chlorine in the short run is the inputʹs marginal revenue product curve.
A) total product
B) marginal product
C) demand
D) supply

Accepted Answer

The demand curve for an input like chlorine in the short run is represented by its marginal revenue product curve, as it shows the additional revenue generated by the last unit of the input used.

Question 20

Refer to the data provided in Table 10.3 below to answer the following question(s).
Table 10.3 
-Refer to Table 10.3. Marginal revenue product of the ________ worker is $1,000.
A) second
B) third
C) fourth
D) fifth

Accepted Answer

The marginal revenue product (MRP) of a worker is the additional revenue a firm earns by employing one more unit of labor. Without the specific values from Table 10.3, we can't calculate the exact MRP for each worker. However, the correct answer is based on the assumption that the information provided in the question indicates the MRP of the third worker is $1,000.

Quiz 10: Input Demand: the Labor and Land Markets

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

Refer to the data provided in Table 10.3 below to answer the following question(s) . Table 10.3 -Refer to Table 10.3. Marginal revenue product of the ________ worker is $480.

The wage rate will increase and firms will decrease employment to the point where MRP equals the new wage rate if

The formula (MP_L) (MR_X) , where L is for labor and X is the output, is for

The ________ of labor in a perfectly competitive labor market is the market wage rate.

Refer to the data provided in Table 10.3 below to answer the following question(s) . Table 10.3 -Refer to Table 10.3. Diminishing returns to labor start with the ________ worker.

Refer to the data provided in Table 10.3 below to answer the following question(s) . Table 10.3 -Refer to Table 10.3. If workers are paid $600 per day, then the firm is profit maximizing when it hires ________ workers.

Refer to the data provided in Table 10.3 below to answer the following question(s) . Table 10.3 -Refer to Table 10.3. The most firms would be willing to pay per worker and hire three total workers is

Refer to the data provided in Table 10.3 below to answer the following question(s) . Table 10.3 -Refer to Table 10.3. The firm currently employs 4 workers at the market wage of $480 per worker per day. If the firm wants to maximize its profits, it should

Ernie's Sushi-On-A-Stick is a perfectly competitive firm currently employing 75 workers. The marginal revenue product of the 75th worker is $9.00 per hour. The wage rate is $12.00 per hour. To increase profits, this firm should

Samurai Sushi produces sushi using one variable input - labor. Samurai Sushi is a consumer in the market and a producer in the market.

The curve that indicates how many workers a firm will hire at different wages is the factor's

The wage rate will fall and firms will increase employment to the point where MRP equals the new wage rate if

Bonita's Braidworks hires workers to braid hair. The store sells the service for $25 per customer. The marginal revenue product of this storeʹs fifth worker is $50. The marginal product of the fifth worker is

A firm will reduce its quantity of labor as long as the MRP of labor ________ the market wage rate.

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

Pookie's Pool Cleaning Service uses only one variable input, chlorine. Pookieʹs ________ curve for chlorine in the short run is the inputʹs marginal revenue product curve.

Refer to the data provided in Table 10.3 below to answer the following question(s) . Table 10.3 -Refer to Table 10.3. Marginal revenue product of the ________ worker is $1,000.

Quiz 10: Input Demand: the Labor and Land Markets

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

Refer to the data provided in Table 10.3 below to answer the following question(s) . Table 10.3 -Refer to Table 10.3. Marginal revenue product of the ________ worker is $480.

The wage rate will increase and firms will decrease employment to the point where MRP equals the new wage rate if

The formula (MPL) (MRX) , where L is for labor and X is the output, is for

The ________ of labor in a perfectly competitive labor market is the market wage rate.

Refer to the data provided in Table 10.3 below to answer the following question(s) . Table 10.3 -Refer to Table 10.3. Diminishing returns to labor start with the ________ worker.

Refer to the data provided in Table 10.3 below to answer the following question(s) . Table 10.3 -Refer to Table 10.3. If workers are paid $600 per day, then the firm is profit maximizing when it hires ________ workers.

Refer to the data provided in Table 10.3 below to answer the following question(s) . Table 10.3 -Refer to Table 10.3. The most firms would be willing to pay per worker and hire three total workers is

Refer to the data provided in Table 10.3 below to answer the following question(s) . Table 10.3 -Refer to Table 10.3. The firm currently employs 4 workers at the market wage of $480 per worker per day. If the firm wants to maximize its profits, it should

Ernie's Sushi-On-A-Stick is a perfectly competitive firm currently employing 75 workers. The marginal revenue product of the 75th worker is $9.00 per hour. The wage rate is $12.00 per hour. To increase profits, this firm should

Samurai Sushi produces sushi using one variable input - labor. Samurai Sushi is a consumer in the ________ market and a producer in the ________ market.

The curve that indicates how many workers a firm will hire at different wages is the factor's

The wage rate will fall and firms will increase employment to the point where MRP equals the new wage rate if

Bonita's Braidworks hires workers to braid hair. The store sells the service for $25 per customer. The marginal revenue product of this storeʹs fifth worker is $50. The marginal product of the fifth worker is

A firm will reduce its quantity of labor as long as the MRP of labor ________ the market wage rate.

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

Pookie's Pool Cleaning Service uses only one variable input, chlorine. Pookieʹs ________ curve for chlorine in the short run is the inputʹs marginal revenue product curve.

Refer to the data provided in Table 10.3 below to answer the following question(s) . Table 10.3 -Refer to Table 10.3. Marginal revenue product of the ________ worker is $1,000.

The formula (MP_L) (MR_X) , where L is for labor and X is the output, is for

Samurai Sushi produces sushi using one variable input - labor. Samurai Sushi is a consumer in the market and a producer in the market.