Question 1

A firm's demand for labour curve is also called its
A) marginal revenue product of labour curve.
B) marginal factor cost of labour curve.
C) marginal valuation curve.
D) marginal benefit of labour curve.

Accepted Answer

The demand for labour curve shows the firm's marginal revenue product of labour, which is the additional revenue generated by hiring one more unit of labour. Therefore, choice A is the correct answer. Choice B is incorrect because marginal factor cost refers to the additional cost of hiring one more unit of labour, which is represented by the firm's supply of labour curve. Choices C and D are incorrect because they do not accurately describe the firm's demand for labour curve.

Question 2

Figure 10-1  Figure 10-1 shows the marginal revenue product for Dale's Hand-Sewn Doilies, a producer of linen doilies.
-Refer to Figure 10-1.If Dale can sell her doilies at $2 each,what is the marginal product of the 5th worker?
A) $28
B) 28 doilies
C) 14 doilies
D) $56

Accepted Answer

According to the graph, the marginal revenue product for the 5th worker is $14. Since the price of each doily is $2, the marginal product of the 5th worker is 14/2 = 7 doilies. Therefore, the best choice is to hire the 5th worker as they will contribute an additional 7 doilies of revenue for the company.

Question 3

Figure 10-1  Figure 10-1 shows the marginal revenue product for Dale's Hand-Sewn Doilies, a producer of linen doilies.
-Refer to Figure 10-1.Suppose the market price of doilies rises to $3.What happens to the curve given in the diagram?
A) Nothing, because labour's productivity has not changed.
B) There will be a movement along the curve.
C) The curve shifts to the right.
D) We cannot answer the question without knowing if Dale would want to hire more workers.

Accepted Answer

C

Question 4

A firm's primary interest when it hires an additional worker is
A) the cost of hiring the additional worker.
B) how the average output of the firm will be affected by this new worker.
C) the extra revenue the firm realises from hiring that worker.
D) whether or not the new worker gets along with the firm's existing workers.

Accepted Answer

The primary interest of a firm when hiring an additional worker is the extra revenue that the firm can realize from hiring that worker. This is because the firm hires workers with the aim of increasing output and ultimately generating more revenue. Therefore, the firm will want to ensure that the revenue generated by the new worker will exceed the cost of hiring and compensating that worker. Choices A, B, and D could also be factors considered by the firm, but they are not the primary interest.

Question 5

The firm's gain in profit from hiring another worker is
A) the marginal revenue product of the extra worker.
B) the difference between marginal revenue product and the wage of the worker.
C) the extra output of the extra worker.
D) the reduction in costs from hiring another worker.

Accepted Answer

The answer of The firm's gain in profit from hiring...

Question 6

Table 10-1
 
-Refer to Table 10-1.Suppose the output price is $3.If the wage rate is $90,what is the profit-maximising quantity of labour that the firm should hire?
A) 7 units
B) 5 units
C) 4 units
D) 3 units

Accepted Answer

The profit-maximising quantity of labour is 7 units because at this point, the marginal revenue product of labour (MRPL) is equal to the wage rate.

Question 7

Firms use information on labour's marginal revenue product to determine
A) how much to produce at each output price.
B) how many workers to hire at each wage rate.
C) how much marginal product to produce at each wage rate.
D) how much labour service to supply at each wage rate.

Accepted Answer

Labour's marginal revenue product shows the additional revenue that an additional unit of labour will generate. Firms use this information to determine how many workers to hire at each wage rate, in order to have an optimal combination of labour and capital that maximizes profits.

Question 8

The labour market is considered to be one of the more important markets in an economy because
A) most people typically earn the bulk of their income from wages and salaries.
B) most people are concerned that wages determined in the labour market are unfair.
C) the usual market forces do not hold in the labour market.
D) the labour market does not reach an equilibrium.

Accepted Answer

Most people earn the bulk of their income from wages and salaries, making the labour market crucial to individual well-being and overall economic performance.

Question 9

Suppose you have worked at a local sandwich shop for six months and now you plan to ask your manager for a raise.How can you convince your manager that you are worth more money than you are currently being paid?
A) By threatening to quit if he refuses to give you a raise.
B) By demonstrating to your manager the marginal revenue product your employment contributes to the sandwich shop.
C) By explaining to him how difficult it is for you to save enough money to go to university.
D) By convincing him that you are a dedicated worker and ready to take on more responsibilities at the shop.

Accepted Answer

The answer of Suppose you have worked at a local...

Question 10

Table 10-1
 
-Refer to Table 10-1.If the output price is $3,what is the marginal revenue product of the fifth unit of labour?
A) $1050
B) $360
C) $210
D) $150

Accepted Answer

The answer of Table 10-1
 
-Refer to Table 10-1.If the...

Question 11

Marginal revenue product for a perfectly competitive seller is equal to
A) the output price multiplied by the total product of labour.
B) the output price multiplied by the number workers hired.
C) the change in total revenue that results from hiring another worker.
D) the marginal cost of production.

Accepted Answer

Marginal revenue product (MRP) is the change in total revenue that results from hiring one additional unit of labor (worker). In a perfectly competitive market, the output price is fixed, so the MRP will be equal to the output price multiplied by the marginal physical product of labor (MPP). Mathematically, MRP = output price x MPP. Therefore, the best choice is C.

Question 12

What is the difference between labour's marginal product and marginal revenue product?
A) The marginal product of labour is the increase in output as a result of hiring an additional worker, while the marginal revenue product of labour is the increase in profit as a result of hiring an additional worker.
B) The marginal revenue product of labour is the dollar value of hiring an additional worker, while the marginal product of labour is the increase in the firm's physical output as a result of hiring an additional worker.
C) The marginal product of labour is the additional labour's contribution to the firm's total output, while the marginal revenue product is the additional labour's contribution to the firm's total sales revenue.
D) Labour's marginal product is a measure of labour's productivity, while labour's marginal revenue product is a measure of labour's ability to sell the firm's products.

Accepted Answer

The marginal product of labour is the additional labour input's contribution to the firm's total output, while the marginal revenue product is the additional labour input's contribution to the firm's total sales revenue. Marginal product of labour is a measure of productivity, while marginal revenue product of labour is a measure of revenue or sales generated by an additional unit of labour input.

Question 13

The demand for labour is described as a derived demand because
A) it is derived by workers seeking to earn income to fund the consumption of goods and services.
B) it is derived by producers seeking to make profits by starting new businesses.
C) it is derived from the demand for products that use labour in the production process.
D) it is derived from government institutions which rely on labour markets for the purpose of raising tax revenue.

Accepted Answer

The demand for labor is derived from the demand for products that use labor in the production process. In other words, if a producer wants to produce more products, they will need to hire more labor to help with production. Therefore the demand for labor is derived from the demand for goods and services.

Question 14

Table 10-1
 
-Refer to Table 10-1.Suppose the output price is $3.If the firm represented in the table is maximising its profit by hiring six workers,what is the wage rate?
A) $120
B) $65
C) $40
D) There is insufficient information to answer the question.

Accepted Answer

The marginal revenue product of the sixth worker is $3, which is equal to the wage rate of $120.

Question 15

Demand in factor markets differs from demand in product markets in that
A) the demand for a factor of production is difficult to determine.
B) the demand for a factor of production is influenced by workers' productivity and by the producers' expected sales revenues, not by tastes and preferences of consumers.
C) demand for a factor of production is based on the tastes and preferences of firms.
D) demand for a factor of production is based on the tastes and preferences of resource owners.

Accepted Answer

In product markets, demand is determined by the tastes and preferences of consumers, whereas in factor markets, the demand for a factor of production is influenced by the productivity of workers and the expected sales revenues for producers. The demand for factors of production, such as labor or capital, is based on their ability to contribute to the production process and increase profits for the firm. Therefore, option B is the correct answer.

Question 16

Table 10-1
 
-Refer to Table 10-1.The marginal product of the fourth unit of labour is
A) 300.
B) 75.
C) 60.
D) 15.

Accepted Answer

The answer of Table 10-1
 
-Refer to Table 10-1.The marginal...

Question 17

Marginal revenue product of labour for a competitive seller is
A) the change in total product from hiring one more worker.
B) equal to the marginal product of labour multiplied by the output price.
C) the output price multiplied by the quantity sold.
D) the marginal revenue of the product multiplied by the output price.

Accepted Answer

Marginal revenue product of labour for a competitive seller is the additional revenue generated by employing one more unit of labour. It is equal to the marginal product of labour multiplied by the output price. Therefore, option B is the correct choice. Option A is incorrect because it refers to marginal product, not marginal revenue product. Option C is incorrect because it refers to the total quantity sold, which is not relevant to the marginal revenue product of labour. Option D is incorrect because it refers to the marginal revenue of the product, which is also not relevant to the marginal revenue product of labour.

Question 18

Figure 10-1  Figure 10-1 shows the marginal revenue product for Dale's Hand-Sewn Doilies, a producer of linen doilies.
-Refer to Figure 10-1.If the wage rate is $40,how many workers should Dale hire?
A) 6 labour units
B) 5 labour units
C) 4 labour units
D) 3 labour units

Accepted Answer

The answer of Figure 10-1  Figure 10-1 shows the...

Question 19

A reason why a perfectly competitive firm's demand for labour curve slopes downward is that
A) each additional unit of labour hired is less efficient than previously hired units.
B) in the short run, as more labour is hired, labour's marginal product falls because of the law of diminishing returns.
C) the extra cost of hiring additional units of labour increases as a firm hires more units of labour.
D) the firm's demand curve for the product that uses labour is downward sloping.

Accepted Answer

In the short run, a firm's demand for labor curve slopes downward due to the law of diminishing returns, which states that as additional units of variable input (in this case labor) are added to a fixed quantity of input (capital), the marginal product of the variable input eventually decreases. As a result, the additional output produced by each additional unit of labor falls, leading to a decrease in the value of the marginal product of labor and hence a downward sloping demand for labor curve.

Question 20

What is the difference between a firm's marginal revenue and its marginal revenue product?
A) Marginal revenue is the change in sales revenue from selling one more unit of output, while marginal revenue product is the profit earned from hiring one more worker.
B) Marginal revenue is the change in sales revenue from selling one more unit of output, while marginal revenue product is the change in total revenue from hiring one more worker.
C) Marginal revenue is the increase in revenue when a firm raises its output price, while marginal revenue product is the increase in marginal product when a firm hires an additional worker.
D) There is no difference between the two terms.

Accepted Answer

Marginal revenue is the change in sales revenue from selling one more unit of output, while marginal revenue product is the change in total revenue from hiring one more worker. Marginal revenue product takes into account the contribution of each additional worker to the total output of the firm and therefore the total revenue earned from the additional output.

Quiz 10: Monopoly and Antitrust

A firm's demand for labour curve is also called its

Figure 10-1 Figure 10-1 shows the marginal revenue product for Dale's Hand-Sewn Doilies, a producer of linen doilies. -Refer to Figure 10-1.If Dale can sell her doilies at $2 each,what is the marginal product of the 5th worker?

Figure 10-1 Figure 10-1 shows the marginal revenue product for Dale's Hand-Sewn Doilies, a producer of linen doilies. -Refer to Figure 10-1.Suppose the market price of doilies rises to $3.What happens to the curve given in the diagram?

A firm's primary interest when it hires an additional worker is

The firm's gain in profit from hiring another worker is

Table 10-1 -Refer to Table 10-1.Suppose the output price is $3.If the wage rate is $90,what is the profit-maximising quantity of labour that the firm should hire?

Firms use information on labour's marginal revenue product to determine

The labour market is considered to be one of the more important markets in an economy because

Suppose you have worked at a local sandwich shop for six months and now you plan to ask your manager for a raise.How can you convince your manager that you are worth more money than you are currently being paid?

Table 10-1 -Refer to Table 10-1.If the output price is $3,what is the marginal revenue product of the fifth unit of labour?

Marginal revenue product for a perfectly competitive seller is equal to

What is the difference between labour's marginal product and marginal revenue product?

The demand for labour is described as a derived demand because

Table 10-1 -Refer to Table 10-1.Suppose the output price is $3.If the firm represented in the table is maximising its profit by hiring six workers,what is the wage rate?

Demand in factor markets differs from demand in product markets in that

Table 10-1 -Refer to Table 10-1.The marginal product of the fourth unit of labour is

Marginal revenue product of labour for a competitive seller is

Figure 10-1 Figure 10-1 shows the marginal revenue product for Dale's Hand-Sewn Doilies, a producer of linen doilies. -Refer to Figure 10-1.If the wage rate is $40,how many workers should Dale hire?

A reason why a perfectly competitive firm's demand for labour curve slopes downward is that

What is the difference between a firm's marginal revenue and its marginal revenue product?