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1. Marginal revenue
product measures the increase in
a. output resulting from one more unit of labor.
b. total revenue resulting from one more unit of output.
c. revenue per unit from one more unit of output.
d. total revenue resulting from one more unit of labor.
2. Troll Corporation
sells dolls for $10.00 each in a market that is perfectly competitive. Increasing
the number of workers from 100 to 101 would cause output to rise from 500 to
510 dolls per day. Troll should hire the 101st worker only when the wage is
a. $100 or less per day.
b. more than $100 per day.
c. $5.10 or less per day.
d. none of the above.
3. Derived demand
for labor depends on the
a. cost of factors of production used in the product.
b. market supply curve of labor.
c. consumer demand for the final goods produced by labor.
d. firm's total revenue less economic profit.
4. If demand for
a product falls, the demand curve for labor used to produce the product will
5. The owner of
a restaurant will hire waiters if the
a. additional labor's pay is close to the minimum wage.
b. marginal product is at the maximum.
c. the additional work of the employees adds more to total revenue than to costs.
d. waiters do not belong to a union.
6. In a perfectly
competitive market, the demand curve for labor
a. slopes upward.
b. slopes downward because of diminishing marginal productivity.
c. is perfectly elastic at the equilibrium wage rate.
d. is described by all of the above.
7. A union can
influence the equilibrium wage rate by
b. requiring longer apprenticeships.
c. favoring trade restrictions on foreign products.
d. all of the above.
e. none of the above.
8. In which of
the following market structures is the firm not a price taker in the factor
d. Perfect competition
9. The extra cost
of obtaining each additional unit of a factor of production is called the marginal
a. physical product.
b. revenue product.
c. factor cost.
d. implicit cost.
10. A monopsonist's
marginal factor cost curve lies above its supply curve because the firm must
a. increase the price of its product to sell more.
b. lower the price of its product to sell more.
c. increase the wage rate to hire more labor.
d. lower the wage rate to hire more labor.
11. In order to
maximize profits, a monopsonist will hire the quantity of labor to the point
where the marginal factor cost is equal to
a. marginal physical product.
b. marginal revenue product.
c. total revenue product.
d. any of the above.
12. BigBiz, a
local monopolist, currently hires 50 workers and pays them $6 per hour. To attract
an additional worker to its labor force, BigBiz would have to raise the wage
rate to $6.25 per hour. What is BigBiz's marginal factor cost?
a. $6.25 per hour.
b. $12.50 per hour.
c. $18.75 per hour.
d. $20 per hour.
13. Suppose a
firm can hire 100 workers at $8.00 per hour, but must pay $8.05 per hour to
hire 101 workers. Marginal factor cost (MFC) for the 101st worker is approximately
14. A monopsonist
in equilibrium has a marginal revenue product of $10 per worker hour. Its equilibrium
wage rate must be
a. less than $10.
b. equal to $10.
c. greater than $10.
d. equal to $5.