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45 Cards in this Set
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Assume labor is the only variable input and that an additional input of labor increases total output from 72 to 78 units. If the product sells for $6 per unit in a purely competitive market, the MRP of this additional worker is:
$6. $12. $36. $72. |
$36
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If one worker can pick $30 worth of grapes and two workers together can pick $50 worth of grapes, the:
a) marginal revenue product of each worker is $25. b) marginal revenue product of the first worker is $20. c) marginal revenue product of the second worker is $20. data given do not permit the determination of the marginal revenue product of either worker. |
marginal revenue product of the second worker is $20.
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Increases in the productivity of labor result partly from:
A. the law of diminishing returns. B. improvements in technology. C. reductions in wage rates. D. increases in the quantity of labor. |
B. improvements in technology.
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The real wage will rise if the nominal wage:
A. falls more rapidly than the general price level. B. increases at the same rate as labor productivity. C. increases more rapidly than the general price level. D. falls at the same rate as the general price level. |
C. increases more rapidly than the general price level.
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Marginal revenue product (MRP) of labor refers to the:
A. increase in total revenue resulting from the sale of an additional unit of output. B. amount by which a firm's total resource cost increases when it employs one more unit of labor. C. increase in total revenue resulting from the hire of one more unit of labor. D. price at which additional units of labor can be employed in a monopsonized labor market. |
C. increase in total revenue resulting from the hire of one more unit of labor.
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Marginal resource cost refers to the:
A. increase in total revenue resulting from the sale of the extra output of one more worker. B. price at which additional units of a resource can be hired in an imperfectly competitive resource market. C. increase in total cost resulting from the production of one more unit of output. D. amount by which a firm's total resource cost increases as the result of hiring one more unit of the resource. |
D. amount by which a firm's total resource cost increases as the result of hiring one more unit of the resource.
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The market supply curve for labor is upsloping because:
A. of diminishing returns. B. of the opportunity cost of labor in housekeeping, leisure, or alternative employments. C. of declining MRC. D. each employer is a "wage taker." |
B. of the opportunity cost of labor in housekeeping, leisure, or alternative employments.
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A firm operating in a purely competitive resource market faces a resource supply curve that is:
A. perfectly inelastic. B. perfectly elastic. C. highly inelastic. D. highly elastic. |
B. perfectly elastic.
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A firm that is hiring labor in a purely competitive labor market and selling its product in a purely competitive product market will maximize its profit by hiring labor until:
A. marginal revenue product is zero. B. marginal revenue product exceeds marginal resource (labor) cost by the greatest amount. C. marginal resource cost is zero. D. marginal revenue product equals marginal resource (labor) cost. |
D. marginal revenue product equals marginal resource (labor) cost.
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A profit-maximizing firm will:
A. expand employment if marginal revenue product exceeds marginal resource cost. B. reduce employment if marginal revenue product exceeds marginal resource cost. C. expand employment if marginal revenue product equals marginal resource cost. D. reduce employment if marginal revenue product equals marginal resource cost. |
A. expand employment if marginal revenue product exceeds marginal resource cost.
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A firm hiring labor in a perfectly competitive labor market faces a:
A. downsloping labor supply curve and upsloping labor demand curve. B. upsloping labor supply curve and downsloping labor demand curve. C. upsloping labor supply curve and horizontal labor demand curve. D. horizontal labor supply curve and downsloping labor demand curve. |
D. horizontal labor supply curve and downsloping labor demand curve.
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Refer to the above data. If there is neither a union nor a minimum wage, we can conclude that this firm:
A. "purchases" labor in purely competitive labor market. B. is a monopsonist. C. faces a perfectly inelastic labor supply curve. D. has a perfectly elastic labor demand curve. |
A. "purchases" labor in purely competitive labor market.
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Refer to the above data. In maximizing its profit, this firm will employ:
A. 2 units of labor. B. 3 units of labor. C. 4 units of labor. D. 5 units of labor. |
B. 3 units of labor.
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The labor supply curve facing a purely competitive employer is __________ whereas the labor supply curve facing a monopsonist is _________.
A. upsloping; horizontal B. downsloping; vertical C. vertical; upsloping D. horizontal; upsloping |
D. horizontal; upsloping
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The economic term for a firm that is the sole buyer in a market is:
A. monopsonist. B. monopolist. C. bilateral competitor. D. bilateral monopolist. |
A. monopsonist.
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In a monopsonistic labor market the employer will maximize profits by employing workers up to that point at which:
A. the difference between the wage rate and marginal resource (labor) cost is at a maximum. B. marginal revenue product equals marginal resource (labor) cost. C. the wage rate equals marginal revenue product. |
B. marginal revenue product equals marginal resource (labor) cost.
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Which of the following is most likely to be an example of monopsony?
A. The market for fast-food workers in a large summer resort town. B. The market for card dealers in Las Vegas. C. The market for major league baseball umpires. D. The market for retail sales clerks in a major city. |
C. The market for major league baseball umpires.
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Country A limits other nation's exports to Country A to 1,000 tons of coal annually. This is an example of a(n):
A. protective tariff. B. export subsidy. C. import quota. D. voluntary export restriction. |
C. import quota.
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A protective tariff will:
A. increase the sales of foreign exporters. B. increase the price and sales of domestic producers. C. increase the welfare of domestic consumers. D. create an efficiency gain in the domestic economy. |
B. increase the price and sales of domestic producers.
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If one worker can pick $30 worth of grapes and two workers together can pick $50 worth of grapes, the:
A. marginal revenue product of each worker is $25. B. marginal revenue product of the first worker is $20. C. marginal revenue product of the second worker is $20. D. data given do not permit the determination of the marginal revenue product of either worker. |
C. marginal revenue product of the second worker is $20.
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A competitive employer should hire additional labor as long as:
A. the MRP exceeds the wage rate. B. the wage rate is less than MP. C. average product exceeds MP. D. MC exceeds MR. |
A. the MRP exceeds the wage rate.
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A firm will find it profitable to hire workers up to the point at which their:
A. marginal resource cost equals their wage rate. B. wage rate equals product price. C. MP is equal to their MRP. D. marginal resource cost is equal to their MRP. |
D. marginal resource cost is equal to their MRP.
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Marginal resource cost is:
A. the increase in total resource cost associated with the production of one more unit of output. B. the increase in total resource cost associated with the hire of one more unit of the resource. C. total resource cost divided by the number of inputs employed. D. the change in total revenue associated with the employment of one more unit of the resource. |
B. the increase in total resource cost associated with the hire of one more unit of the resource.
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If MPa/Pa = MPb/Pb and MRPa/Pa = MRPb/Pb>1, this firm is:
A. producing its output with the least costly combination of resources, but is not producing the profit-maximizing output. B. maximizing profits, but failing to minimize costs. C. neither maximizing profits nor minimizing costs. D. combining resources a and b so as to minimize costs and maximize profits. |
A. producing its output with the least costly combination of resources, but is not producing the profit-maximizing output.
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Monopolistic competition means:
A) a market situation where competition is based entirely on product differentiation and advertising. B) a large number of firms producing a standardized or homogeneous product. C) many firms producing differentiated products. D) a few firms producing a standardized or homogeneous product. |
C) many firms producing differentiated products.
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Nonprice competition refers to:
A)competition between products of different industries, for example, competition between aluminum and steel in the manufacture of automobile parts. B) price increases by a firm that are ignored by its rivals. C) advertising, product promotion, and changes in the real or perceived characteristics of a product. D)reductionsin production costs that are not reflected in price reductions. |
C) advertising, product promotion, and changes in the real or perceived characteristics of a product
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The restaurant, legal assistance, and clothing industries are each illustrations of:
A) countervailing power. B) homogeneous oligopoly. C) monopolistic competition. D) pure monopoly. |
C) monopolistic competition.
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A monopolistically competitive industry combines elements of both competition and monopoly. The monopoly element results from:
A) the likelihood of collusion. B) high entry barriers. C) product differentiation. D) mutual interdependence in decision making. |
C) product differentiation.
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A monopolistically competitive firm's marginal revenue curve:
A) is downsloping and coincides with the demand curve. B) coincides with the demand curve and is parallel to the horizontal axis. C) is downsloping and lies below the demand curve. D) does not exist because the firm is a "price maker." |
C) is downsloping and lies below the demand curve.
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Monopolistically competitive and purely competitive industries are similar in that:
A) both are assured of short-run economic profits. B) both produce differentiated products. C) the demand curves facing individual firms are perfectly elastic in both industries. D) there are few, if any, barriers to entry. |
D) There are few, if any, barriers to entry.
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The monopolistically competitive seller's demand curve will become more elastic the:
A) more significant the barriers to entering the industry. B) greater the degree of product differentiation. C) larger the number of competitors. D) smaller the number of competitors. |
D) larger the number of competitors.
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In the short run, a profit-maximizing monopolistically competitive firm sets it price:
A) equal to marginal revenue. B) equal to marginal cost. C) above marginal cost. D) below marginal cost. |
C) above marginal cost.
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In the short run, the price charged by a monopolistically competitive firm attempting to maximize profits:
a) must be less than ATC. b) must be more than ATC. c) maybe either equal to ATC, less than ATC, or more than ATC. d) must be equal to ATC. |
C) may be either equal to ATC, less than ATC, or more than ATC.
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Monopolistically competitive firms:
A) realize normal profits in the short run but losses in the long run. B) incur persistent losses in both the short run and long run. C) may realize either profits or losses in the short run but realize normal profits in the long run. D) persistently realize economic profits in both the short run and long run. |
C) may realize either profits or losses in the short run but realize normal profits in the long run.
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The monopolistically competitive seller maximizes profit by producing at the point where:
A) total revenue is at a maximum. B) average costs are at a minimum. C) marginal revenue equals marginal cost. D) price equals marginal revenue. |
C) marginal revenue equals marginal cost.
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Long-run equilibrium for a monopolistically competitive firm where economic profits are zero results from:
A) rising marginal costs. B) a perfectly elastic product demand curve. C) relatively easy entry. D) product differentiation and development. |
C) relatively easy entry.
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The demand for a resource depends primarily on:
A) the supply of that resource. B) the demand for the product or service that it helps produce. C) the price of that input. D) the elasticity of supply of substitute inputs. |
B) the demand for the product or service that it helps produce.
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In the United States, professional football players earn much higher incomes than professional soccer players. This occurs because:
-most football players are good soccer players while the reverse is not true. -consumers have a greater demand for football games than for soccer games. -football and soccer games are highly substitutable products for most consumers. -the marginal productivity of soccer players exceeds that of football players. |
consumers have a greater demand for football games than for soccer games
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Marginal revenue product measures the:
- amount by which the extra production of one more worker increases a firm's total revenue. - decline in product price that a firm must accept to sell the extra output of one more worker. - increase in total resource cost resulting from the hire of one extra unit of a resource. - increase in total revenue resulting from the production of one more unit of a product. |
amount by which the extra production of one more worker increases a firm's total revenue.
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The marginal revenue product schedule is:
- the same whether the firm is selling in a purely competitive or imperfectly competitive market. - the firm's resource demand schedule. - the firm's resource supply schedule. - upsloping. |
the firm's resource demand schedule.
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Marginal product is:
- the output of the least skilled worker. - a worker's output multiplied by the price at which each unit can be sold. - the amount an additional worker adds to the firm's total output. - the amount any given worker contributes to the firm's total revenue. |
the amount an additional worker adds to the firm's total output.
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The labor demand curve of a purely competitive seller:
- slopes downward because the elasticity of demand is always less than unity. - slopes downward because of diminishing marginal productivity. - is perfectly elastic at the going wage rate. - slopes downward because of diminishing marginal utility. |
slopes downward because of diminishing marginal productivity.
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If the nominal wages of carpenters rose by 5 percent in 2013 and the price level increased by 3 percent, then the real wages of carpenters:
- decreased by 2 percent. - increased by 2 percent. - increased by 3 percent. - increased by 8 percent. |
increased by 2 percent.
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Countries engaged in international trade specialize in production based on:
- relative levels of GDP. - comparative advantage. - relative exchange rates. - relative inflation rates. |
comparative advantage.
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Tariffs:
- maybe imposed either to raise revenue (revenue tariffs) or to shield domestic producers from foreign competition (protective tariffs). - are also called import quotas. - are excise taxes on goods exported abroad. - are per-unit subsidies designed to promote exports. |
maybe imposed either to raise revenue (revenue tariffs) or to shield domestic producers from foreign competition (protective tariffs).
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