1. The marginal physical product of a resource is

a. the additional output that is associated with the use of one more unit of a resource, ceteris paribus.
b. the loss of output that is associated with the use of one fewer unit of a resource, ceteris paribus.
c. expressed in physical units, such as tons of coal, bushels of apples, gallons of milk.
d. calculated as Q/R, where Q represents physical output units and R stands for physical resource units.
e. all of the above.

2. All types of firms demand resources as long as people demand the goods they produce. The additional revenue generated by employing an additional resource unit is called

a. marginal revenue.
b. marginal physical product.
c. marginal revenue product.
d. marginal opportunity cost.
e. none of the above.

3. The marginal revenue product of a resource can be computed as

a. TR/ quantity of resource.
b. TR/ quantity of output.
c. ( TR/ quantity of output) x ( quantity of output/ quantity of resource).
d. MR x MPP.
e. all of the above, except (b).

Table 15.1

Quantity of Resource X (1)	Quantity of Output (2)	Marginal Physical Product (3)	Total Revenue (4)	Marginal Revenue (5)	Marginal Revenue Product (6)
0	100	--		--	--
5	400
10	600
15	700
20	750

4. Consider Table 15.1. It provides selected data for a perfectly competitive firm that is using resource X, along with fixed amounts of other resources, to produce a good that sells for $2 per unit. Which of the following statements about this firm is correct?

a. The missing entries in column (3) are 300, 200, 100, 50.
b. The missing entries in column (4) are $200, $800, $1,200, $1,400, $1,500.
c. The missing entries in column (5) are $600, $400, $200, $100.
d. The missing entries in column (6) are $180,000 and $80,000 and $20,000 and $5,000.
e. All of the above.

5. Consider Table 15.1. It provides selected data for a perfectly competitive firm that is using resource X, along with fixed amounts of other resources, to produce a good that sells for $2 per unit. Which of the following statements about this firm is correct?

a. The missing entries in column (3) are 60, 40, 20, 10.
b. The missing entries in column (4) are $200, $800, $1,200, $1,400, $1,500.
c. The missing entries in column (5) are $2, $2, $2, $2.
d. The missing entries in column (6) are $120, $80, $40, $20.
e. All of the above statements are correct.

6. Consider Table 15.1. It provides selected data for a perfectly competitive firm that is using resource X, along with fixed amounts of other resources, to produce a good that sells for $2 per unit. Which of the following statements about this firm is correct?

a. The data of column (1) might be expressed as number of workers.
b. The data of column (2) might be expressed as dollars per week.
c. The data of column (3) might be expressed as dollars per worker.
d. The data in column (4) might be expressed as dollars per worker.
e. All of these statements are correct.

7. Consider Table 15.1. It provides selected data for a perfectly competitive firm that is using resource X, along with fixed amounts of other resources, to produce a good that sells for $2 per unit. Which of the following statements about this firm is correct?

a. The data of column (5) might be expressed as bushels per worker.
b. The data of column (5) might be expressed as dollars per worker.
c. The data of column (5) might be expressed as dollars per bushel.
d. The data of column (6) might be expressed as bushels per worker.
e. The data of column (6) might be expressed as bushels per week.

8. Consider Table 15.1. It provides selected data for a perfectly competitive firm that is using resource X, along with fixed amounts of other resources, to produce a good that sells for $2 per unit. Which of the following statements about this firm is correct?

a. The law of diminishing returns can be observed, somewhat indirectly, by viewing the data of columns (1) and (2).
b. The law of diminishing returns can be observed, most clearly, by viewing the data of columns (1) and (3).
c. The law of diminishing returns can be observed, most clearly, by viewing the data of columns (1) and (5).
d. The law of diminishing returns can be observed, most clearly, by viewing the data of columns (1) and (6).
e. Both (a) and (b) are correct.

9. For a perfectly competitive firm, the marginal labor cost

a. is nothing else but the market-determined wage rate.
b. is the quantity if labor employed multiplied by the wage rate.
c. is the total labor cost divided by the wage rate.
d. is the marginal revenue product divided by the wage rate.
e. is the change in the total labor cost divided by the change in the wage rate.

10. A perfectly competitive firm employs a profit-maximizing quantity of labor such that

a. MRP = w.
b. MPP x w = P.
c. MPP x MLC = P.
d. (TR/L) x w = P.
e. any of the above hold.

11. In order to maximize its profit, a perfectly competitive firm is well advised to hire additional units of labor whenever

a. MPP = (w/P).
b. MPP > (w/P).
c. (TR/L) < (TC/L).
d. (MPP x P) < MLC.
e. (TC/L) > w.

12. In order to maximize its profit, a perfectly competitive firm is well advised to hire fewer units of labor whenever

a. MPP = (w/P).
b. MPP > (w/P).
c. (TR/L) < (TC/L).
d. (MPP x P) > MLC.
e. (TC/L) = w.

13. Consider Table 15.1. It provides selected data for a perfectly competitive firm that is using factor X, along with fixed amounts of other factors of production, to produce a good that sells for $2 per unit. In order to view the firm's labor demand curve, one would

a. plot the data of column (1) on the vertical axis against those of column (2) on the horizontal axis.
b. plot the data of column (1) on the vertical axis against those of column (3) on the horizontal axis.
c. plot the data of column (1) on the vertical axis against those of column (4) on the horizontal axis.
d. plot the data of column (1) on the vertical axis against those of column (5) on the horizontal axis.
e. do none of the above.

14. Consider Table 15.1. It provides selected data for a perfectly competitive firm that is using factor X, along with fixed amounts of other factors of production, to produce a good that sells for $2 per unit. In order to view the firm's labor demand curve, one would

a. plot the data of column (2) on the vertical axis against those of column (1) on the horizontal axis.
b. plot the data of column (3) on the vertical axis against those of column (1) on the horizontal axis.
c. plot the data of column (4) on the vertical axis against those of column (1) on the horizontal axis.
d. plot the data of column (5) on the vertical axis against those of column (1) on the horizontal axis.
e. plot the data of column (6) on the vertical axis against those of column (1) on the horizontal axis.

15. A perfectly competitive firm is buying labor at $8 per hour and uses it to produce apples that sell for $5 per bushel. In order to maximize profit, this firm is well advised

a. to hire additional units of labor if labor's marginal physical product equals 1 bushel.
b. to hire fewer units of labor if labor's marginal physical product equals 10 bushels.
c. to hire additional units of labor as long as MPP < wage / price.
d. to hire additional units of labor as long as MPP > wage / price.
e. to hire additional units of labor as long as MPP x wage > price.

16. Consider Figure 15.1. It depicts data relevant to a perfectly competitive firm's behavior in the labor market. Which of the following statements about this firm is correct?

a. This firm faces a market-determined wage rate of 0B that it cannot influence.
b. This firm's demand curve for labor is the red line, labeled MRP.
c. To maximize profit, this firm hires labor quantity 0G.
d. All of the above statements are correct.
e. None of the above statements is correct.

17. Consider Figure 15.1. It depicts data relevant to a perfectly competitive firm's behavior in the labor market. Which of the following statements about this firm is correct?

a. The profit associated with hiring 0F labor hours is smaller than that associated with hiring 0G labor hours.
b. The profit associated with hiring 0H labor hours is larger than that associated with hiring 0G labor hours.
c. If the price of the firm's product is $3 per bushel, labor's marginal physical product at the profit-maximizing hiring level equals 0B times $3 per bushel.
d. If the price of the firm's product is $3 per bushel, the marginal labor cost at the profit-maximizing hiring level equals $3 per bushel.
e. If the price of the firm's product is $3 per bushel, the marginal labor cost at the profit-maximizing hiring level equals $3 per hour.

18. Consider Figure 15.1. It depicts data relevant to a perfectly competitive firm's behavior in the labor market. Which of the following statements about this firm is correct?

a. The firm would hire labor quantity 0H if the wage rate dropped to IH, ceteris paribus.
b. The firm would hire labor quantity 0H if the marginal physical product of labor rose sufficiently to shift MRP vertically up by IH, ceteris paribus.
c. The firm would hire labor quantity 0H if its product price rose sufficiently to shift MRP vertically up by IH, ceteris paribus.
d. All of the above statements are correct.
e. None of the above.

19. Which of the following statements about a labor market is false?

a. The market supply of labor shifts vertically down and to the right when workers' alternative employment opportunities worsen.
b. The market supply of labor shifts vertically down and to the right when additional population groups migrate into the area.
c. Given (a) and (b), the equilibrium wage falls, ceteris paribus.
d. The market supply of labor shifts vertically down and to the right when workers' wealth increases.
e. Beyond some fairly high wage, increases in the wage rate reduce the labor quantity supplied.

20. Which of the following statements about labor markets is false?

a. If wage differentials exist in two different labor markets, the mobility of labor from low-wage markets to higher-wage markets and the mobility of firms from high-wage markets to lower-wage markets tend to reduce the differentials.
b. In the presence of noncompeting labor markets, the differentials noted in (a) will, over time, be eliminated completely.
c. Minimum wage laws set a price floor above the market-determined wage rates in markets that generate low equilibrium wages.
d. Wages higher than the market equilibrium rate, known as efficiency wages, are offered by firms in the expectation of luring better qualified workers to them, enhancing labor productivity, and reducing labor turnover.
e. Market wage rates express the underlying ethic that people are paid for the value of what they produce.