Question 1

​In a perfectly competitive market, if ten cases of spring water are sold at a price of $6 each and the marginal product of the last unit of labor is 5 units, then the marginal revenue product of that last unit of labor is ______.
A)$60
B)$30
C)$50
D)$2
E)60 cents

Accepted Answer

The answer of ​In a perfectly competitive market, if ten...

Question 2

A firm sells staples in a perfectly competitive market and hires workers from a perfectly competitive labor market. Which of the following is true?​
A)The supply curve of staples is horizontal
B)The supply curve of workers is horizontal.
C)The firm's demand curve for labor is horizontal.
D)The firm's marginal cost is decreasing.
E)The marginal product of labor curve is horizontal.

Accepted Answer

The answer of A firm sells staples in a perfectly...

Question 3

Which of the following represents a firm's demand curve for a resource?​
A)Average total cost curve
B)Average variable cost curve
C)Marginal revenue product curve
D)Marginal resource cost curve
E)Average fixed cost curve

Accepted Answer

The marginal revenue product curve represents the additional revenue a firm generates from using an additional unit of a resource. The slope of this curve represents the firm's demand for the resource, as it shows how much the firm is willing to pay for each additional unit of the resource. Therefore, choice C is the correct answer. The other curves listed do not represent a firm's demand for a resource.

Question 4

​The Pat Summerall School of Diction is employing teachers. If the marginal revenue product of teachers exceeds the wage rate. The school will:
A)reduce its demand for teachers.
B)lay off teachers.
C)be losing money from those teachers employed.
D)hire more teachers.
E)increase the price of diction classes.

Accepted Answer

If the marginal revenue product of teachers exceeds the wage rate, it means that the school is generating more revenue from the additional output produced by the teachers than the cost of hiring them. Therefore, it would make sense for the school to hire more teachers to increase its output and profit.

Question 5

Suppose the marginal resource cost of the tenth worker hired by a firm is $4 and the wage of the tenth worker is $3. The firm will hire ten workers if the marginal revenue product of the tenth worker is _____.​
A)$1
B)less than $3
C)greater than or equal to $3
D)greater than or equal to $4
E)less than $4

Accepted Answer

The firm will hire the tenth worker if the marginal revenue product (MRP) of that worker is greater than or equal to the marginal resource cost (MRC), which is $4 in this case. This ensures that the revenue generated by the worker is at least equal to the cost of hiring them, making it a profitable decision for the firm.

Question 6

The following table shows data for a firm. The first column shows the number of variable resources employed in production, the second column shows firm's total product, and the third column shows its product price. The firm will hire the fourth unit of resource when the marginal revenue product of the fourth unit is _____. ​
Table 11.4
​

A)$14
B)$24
C)$168
D)$84
E)$756

Accepted Answer

The answer of The following table shows data for a...

Question 7

The following table shows data for a firm. The first column shows the number of variable resource employed in production, the second column shows the total product of the firm, and the third column shows its product price. If the firm decides to hire nine units of the resource, the market price paid to a resource is _____. ​
Table 11.4
​

A)$98
B)$4
C)$396
D)$28
E)$400

Accepted Answer

The answer of The following table shows data for a...

Question 8

​In a perfectly competitive labor market, a profit-maximizing firm will hire labor up to the point at which the:
A)wage rate = marginal resource cost.
B)wage rate < marginal revenue product.
C)wage rate = marginal revenue product.
D)wage rate > marginal revenue product.
E)wage rate = marginal product.

Accepted Answer

In a perfectly competitive labor market, a firm will hire labor up to the point where the wage rate is equal to the marginal revenue product (MRP) of labor, because at this point, the value of the last unit of labor is just equal to the cost of hiring it. This ensures that the firm is maximizing their profits, as they are not hiring any additional workers that would result in diminishing returns or cost more than the value they produce.

Question 9

The following table shows data for a firm. The first column shows the number of variable resources employed in production, the second column shows firm's total product, and the third column shows its product price. If the firm decides to hire five units of resource, then the market price paid to the resource is _____. ​
Table 11.4
​

A)$100
B)$74
C)$54
D)$34
E)$24

Accepted Answer

The answer of The following table shows data for a...

Question 10

A firm's marginal resource cost curve is:​
A)horizontal only if the firm is a price taker in the product market.
B)horizontal only if the firm is a price taker in the resource market.
C)vertical only if the firm is a price taker in the product market.
D)vertical only if the firm is a price taker in the resource market.
E)always downward sloping whether the firm sells its product in a competitive market or a market with some market power.

Accepted Answer

Marginal resource cost is the change in total cost when an additional unit of a resource is added. The marginal resource cost curve is vertical if the firm is a price taker in the resource market (meaning it has no market power in buying resources). This is because the price of the resource will not be affected by the quantity purchased. If the firm has some market power in buying resources, the marginal resource cost curve will be upward sloping. Therefore, option A, C, D, and E are incorrect.

Question 11

A firm hires labor in a perfectly competitive labor market. If the wage rate is $44, the firm should hire:​
A)44 workers.
B)all units of labor whose marginal product is 44.
C)all units of labor whose marginal revenue product is $44.
D)all units of labor whose marginal revenue product is greater than or equal to $44.
E)all units of labor whose marginal revenue product is less than or equal to $44.

Accepted Answer

In a perfectly competitive labor market, the firm should hire all units of labor whose marginal revenue product (MRP) is greater than or equal to the wage rate ($44 in this case) in order to maximize profits. MRP is the additional revenue generated by hiring one more unit of labor. If MRP is greater than the wage rate, then hiring that unit of labor will increase the firm's revenue by more than the cost of hiring that worker, leading to an increase in profits. Therefore, the best choice is to hire all units of labor whose MRP is greater than or equal to $44.

Question 12

A firm will hire additional units of a resource as long as each unit's:​
A)marginal revenue product is greater than zero.
B)marginal revenue product equals the product price.
C)marginal revenue product is greater than or equal to its marginal resource cost.
D)marginal revenue product is less than its marginal resource cost.
E)total revenue product is greater than its marginal resource cost.

Accepted Answer

Hiring additional units of a resource is profitable for a firm only if the marginal revenue product (MRP) that each unit adds to the total revenue of the firm is at least equal to the marginal resource cost (MRC) of hiring that unit. MRP represents the price times the marginal product of the resource, which is the additional revenue generated by adding one more unit of the resource. MRC is the cost of hiring one more unit of the resource. Therefore, the best choice is C because it ensures that the firm maximizes its profits and does not incur losses by hiring additional resources.

Question 13

If a firm hires a resource in a perfectly competitive resource market, then:​
A)the firm is a price taker in the product market.
B)the firm has some power in the product market.
C)the firm faces a horizontal marginal resource cost curve.
D)the firm faces an upward-sloping marginal resource cost curve.
E)the firm faces a downward-sloping marginal resource cost curve.

Accepted Answer

In a perfectly competitive resource market, firms are price takers and face a horizontal supply curve of resources. Therefore, the marginal resource cost curve is also horizontal for the firm. This means that the firm can hire additional units of the resource at a constant cost, and there is no need to pay a higher price to attract more resources.

Question 14

​If a profit-maximizing firm hires an additional unit of labor, which of the following is true of that labor's wage and marginal revenue product?
A)Its wage always equals its marginal revenue product.
B)Its wage is always greater than its marginal revenue product.
C)Its wage is always equal to its average revenue.
D)Its wage is always less than its marginal product.
E)Its wage is always less than or equal to its marginal revenue product.

Accepted Answer

The profit-maximizing firm will continue to hire additional units of labor as long as the marginal revenue product (MRP) of each additional worker is greater than or equal to the wage rate. Therefore, the wage rate will always be less than or equal to the marginal revenue product (MRP) of labor.

Question 15

The following table shows data of a firm that produces watches. If the firm's marginal resource cost of labor is constant at $18 per unit of labor, at the profit-maximizing level of output, the firm will hire _____ of labor. ​
Table 11.5
​

A)one unit
B)two units
C)three units
D)four units
E)five units

Accepted Answer

To determine the profit-maximizing level of output, we need to compare the marginal revenue (MR) and marginal cost (MC) of producing an additional unit of output.

From the table, we can see that the MR of producing the first three units is greater than the MC of producing those units. However, the MR of producing the fourth and fifth units is less than the MC of producing those units.

Therefore, the profit-maximizing level of output is three units. To produce these three units, the firm will need to hire three units of labor, since the marginal resource cost of labor is constant at $18 per unit of labor.

Question 16

If the market wage is below the marginal revenue product of labor, then:
A)a profit-maximizing firm will employ more workers.
B)a profit-maximizing firm will employ fewer workers.
C)there is an increase in the demand for labor.
D)there is a decrease in the demand for labor.
E)the opportunity cost of leisure increases.

Accepted Answer

When the market wage is below the marginal revenue product of labor, it means that each additional worker is adding more to the firm's revenue than it costs to employ them. Therefore, a profit-maximizing firm will employ more workers to take advantage of the additional profit that each worker brings.

Question 17

Ten cases of spring water are sold for $6 each, and the marginal product of the last unit of labor is 5. If the price of a case increases from $6 to $8, then the marginal revenue product of the last unit of labor would:​
A)decrease by $10.
B)increase by $40.
C)decrease by $30.
D)increase by $10.
E)increase by $20.

Accepted Answer

Since the marginal product of the last unit of labor is 5, it means that the revenue generated by the sale of 5 additional cases is $30 (5*6=30). 
If the price of a case increases from $6 to $8, then the revenue generated by the sale of 5 additional cases is $40 (5*8=40). This means that the marginal revenue product of the last unit of labor would increase by $10. Therefore, the correct answer is D.

Question 18

An increase in the demand for automobiles will increase the demand for the labor used to produce the automobiles due to a(n):​
A)increase in the marginal revenue product of labor.
B)decrease in the marginal revenue product of labor.
C)increase in the marginal revenue product of automobiles.
D)decrease in the marginal revenue product of automobiles.
E)decrease in the average revenue of labor.

Accepted Answer

An increase in the demand for automobiles will increase the production and sales of automobiles which leads to an increase in the marginal revenue product of labor. This increase in the marginal revenue product of labor will result in a higher demand for labor used to produce automobiles.

Question 19

The following table shows data for a firm. The first column shows the number of variable resource employed in production, the second column shows the total product of the firm, and the third column shows its product price. If the price paid to a resource is $84, then _____ of the resource are employed. ​
Table 11.4
​

A)0 unit
B)1 unit
C)2 units
D)3 units
E)4 units

Accepted Answer

The answer of The following table shows data for a...

Question 20

The following table shows data for a perfectly competitive firm. The first column shows the number of workers employed in production, the second column shows the total product of the firm, and the third column shows its product price. If the firm wants to hire nine workers, then the wage rate is _____. ​
Table 11.3
​

A)$4
B)$14
C)$28
D)$198
E)$396

Accepted Answer

The answer of The following table shows data for a...

Quiz 11: Resource Markets

In a perfectly competitive market, if ten cases of spring water are sold at a price of $6 each and the marginal product of the last unit of labor is 5 units, then the marginal revenue product of that last unit of labor is ______.

A firm sells staples in a perfectly competitive market and hires workers from a perfectly competitive labor market. Which of the following is true?

Which of the following represents a firm's demand curve for a resource?

The Pat Summerall School of Diction is employing teachers. If the marginal revenue product of teachers exceeds the wage rate. The school will:

Suppose the marginal resource cost of the tenth worker hired by a firm is $4 and the wage of the tenth worker is $3. The firm will hire ten workers if the marginal revenue product of the tenth worker is _____.

In a perfectly competitive labor market, a profit-maximizing firm will hire labor up to the point at which the:

A firm's marginal resource cost curve is:

A firm hires labor in a perfectly competitive labor market. If the wage rate is $44, the firm should hire:

A firm will hire additional units of a resource as long as each unit's:

If a firm hires a resource in a perfectly competitive resource market, then:

If a profit-maximizing firm hires an additional unit of labor, which of the following is true of that labor's wage and marginal revenue product?

The following table shows data of a firm that produces watches. If the firm's marginal resource cost of labor is constant at $18 per unit of labor, at the profit-maximizing level of output, the firm will hire _____ of labor. Table 11.5

If the market wage is below the marginal revenue product of labor, then:

Ten cases of spring water are sold for $6 each, and the marginal product of the last unit of labor is 5. If the price of a case increases from $6 to $8, then the marginal revenue product of the last unit of labor would:

An increase in the demand for automobiles will increase the demand for the labor used to produce the automobiles due to a(n) :

Quiz 11: Resource Markets

​In a perfectly competitive market, if ten cases of spring water are sold at a price of $6 each and the marginal product of the last unit of labor is 5 units, then the marginal revenue product of that last unit of labor is ______.

A firm sells staples in a perfectly competitive market and hires workers from a perfectly competitive labor market. Which of the following is true?​

Which of the following represents a firm's demand curve for a resource?​

​The Pat Summerall School of Diction is employing teachers. If the marginal revenue product of teachers exceeds the wage rate. The school will:

Suppose the marginal resource cost of the tenth worker hired by a firm is $4 and the wage of the tenth worker is $3. The firm will hire ten workers if the marginal revenue product of the tenth worker is _____.​

​In a perfectly competitive labor market, a profit-maximizing firm will hire labor up to the point at which the:

A firm's marginal resource cost curve is:​

A firm hires labor in a perfectly competitive labor market. If the wage rate is $44, the firm should hire:​

A firm will hire additional units of a resource as long as each unit's:​

If a firm hires a resource in a perfectly competitive resource market, then:​

​If a profit-maximizing firm hires an additional unit of labor, which of the following is true of that labor's wage and marginal revenue product?

The following table shows data of a firm that produces watches. If the firm's marginal resource cost of labor is constant at $18 per unit of labor, at the profit-maximizing level of output, the firm will hire _____ of labor. ​ Table 11.5 ​

If the market wage is below the marginal revenue product of labor, then:

Ten cases of spring water are sold for $6 each, and the marginal product of the last unit of labor is 5. If the price of a case increases from $6 to $8, then the marginal revenue product of the last unit of labor would:​

An increase in the demand for automobiles will increase the demand for the labor used to produce the automobiles due to a(n) :​

In a perfectly competitive market, if ten cases of spring water are sold at a price of $6 each and the marginal product of the last unit of labor is 5 units, then the marginal revenue product of that last unit of labor is ______.

A firm sells staples in a perfectly competitive market and hires workers from a perfectly competitive labor market. Which of the following is true?

Which of the following represents a firm's demand curve for a resource?

The Pat Summerall School of Diction is employing teachers. If the marginal revenue product of teachers exceeds the wage rate. The school will:

Suppose the marginal resource cost of the tenth worker hired by a firm is $4 and the wage of the tenth worker is $3. The firm will hire ten workers if the marginal revenue product of the tenth worker is _____.

In a perfectly competitive labor market, a profit-maximizing firm will hire labor up to the point at which the:

A firm's marginal resource cost curve is:

A firm hires labor in a perfectly competitive labor market. If the wage rate is $44, the firm should hire:

A firm will hire additional units of a resource as long as each unit's:

If a firm hires a resource in a perfectly competitive resource market, then:

If a profit-maximizing firm hires an additional unit of labor, which of the following is true of that labor's wage and marginal revenue product?

The following table shows data of a firm that produces watches. If the firm's marginal resource cost of labor is constant at $18 per unit of labor, at the profit-maximizing level of output, the firm will hire _____ of labor. Table 11.5

Ten cases of spring water are sold for $6 each, and the marginal product of the last unit of labor is 5. If the price of a case increases from $6 to $8, then the marginal revenue product of the last unit of labor would:

An increase in the demand for automobiles will increase the demand for the labor used to produce the automobiles due to a(n) :