Principles of Microeconomics, 8e (Case/Fair) Chapter 10: Input Demand: The Labor and Land Markets



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Principles of Microeconomics, 8e (Case/Fair)

Chapter 10: Input Demand: The Labor and Land Markets



Input Markets: Basic Concepts
Multiple Choice

1)



The idea that the demand for autoworkers stems from the demand for automobiles is

A)



the value of the marginal product of autoworkers.

B)



derived demand.

C)



indirect demand.

D)



output demand.

Answer:



B

Diff: 3

Type: C




2)



A decrease in the wage rate will change

A)



only the amount of labor hired.

B)



the amount of labor employed, and it may also change the amount of other inputs employed.

C)



the price the firm charges for the product, but it will not affect the demand for any of the inputs.

D)



the firm's profit-maximizing level output, but not its usage of inputs.

Answer:



B

Diff: 1

Type: F




3)



When a large amount of output is produced per unit of the input, the input is said to exhibit

A)



high productivity.

B)



low productivity.

C)



marginal productivity.

D)



derived productivity.

Answer:



A

Diff: 1

Type: F




4)



The demand for _________ is a "derived demand."

A)



ice cream cones on a hot day

B)



tax-free municipal bonds

C)



a hair stylist by a salon owner

D)



a birthday cake for your brother

Answer:



C

Diff: 3

Type: C



5)




The demand for inputs is a derived demand because

A)



it does not come from competitive markets.

B)



it depends on the demand for outputs.

C)



it is derived from nature.

D)



it is derived from production.

Answer:



B

Diff: 3

Type: C




6)



A car manufacturing company adopts a new technology that, ceteris paribus, increases the productivity of capital. At the same time, workers unionize and demand higher wages. Assume that for this firm capital and labor are substitutable. Which of the following is most likely to occur?

A)



Capital will be substituted for labor.

B)



Labor will be substituted for capital.

C)



Output increases as do the prices of capital and labor.

D)



Output decreases as does the price of cars.

Answer:



A

Diff: 3

Type: C




7)



Factors of production that can be used together to enhance the other's productivity are

A)



substitutable inputs.

B)



complementary inputs.

C)



duplicate inputs.

D)



proportionate inputs.

Answer:



B

Diff: 2

Type: D




8)



The marginal revenue product of labor is

A)



the additional revenue a firm earns by employing one additional unit of labor.

B)



the additional profit a firm earns by employing one additional unit of labor.

C)



the marginal product of capital times the price of labor.

D)



the additional revenue the firm makes by selling one unit of labor.

Answer:



A

Diff: 2

Type: D




9)



If the marginal product of a calculator manufacturer is 10 calculators, and the price of a calculator is $10, the firm's marginal revenue product is

A)



$1.00.

B)



$10.00.

C)



$100.00.

D)



$1,000.00.

Answer:



C

Diff: 2

Type: A



10)




The Package Store hires workers to wrap packages. The store sells this service for $5. The marginal revenue product of this store's fifth worker is $50. The marginal product of the fifth worker is

A)



0.01 package.

B)



1 package.

C)



10 packages.

D)



indeterminate from this information.

Answer:



C

Diff: 2

Type: A




11)



The Ernie Egg Store hires workers to paint eggs. The store sells the eggs for $3. The marginal revenue product of this store's fifth worker is $21. The marginal product of the fifth worker is

A)



0.14 eggs.

B)



7 eggs.

C)



36 eggs.

D)



indeterminate from this information.

Answer:



B

Diff: 2

Type: A




Refer to the data provided in Table 10.1 below to answer the following questions.
Table 10.1





12)



Refer to Table 10.1. The marginal revenue product of the fourth worker is

A)



$5.

B)



$20.

C)



$100.

D)



$475.

Answer:



C

Diff: 3

Type: C



13)




Refer to Table 10.1. The marginal revenue product of the __________ worker is $150.

A)



second

B)



third

C)



fourth

D)



fifth

Answer:



A

Diff: 3

Type: C




14)



Refer to Table 10.1. If the payment to labor per day is $100, this T-shirt manufacturer is maximizing profits if he will hire __________ employees.

A)



one

B)



two

C)



four

D)



five

Answer:



C

Diff: 3

Type: C




15)



Refer to Table 10.1. The maximum payment to labor per day that this profit-maximizing T-shirt manufacturer would be willing to pay to hire three workers per day is

A)



$15.

B)



$75.

C)



$125.

D)



$200.

Answer:



C

Diff: 3

Type: C




16)



If the price of the product produced by labor decreases, the marginal revenue product of labor curve will

A)



be unaffected because productivity of labor has not changed.

B)



shift to the left.

C)



shift to the right.

D)



become more inelastic.

Answer:



B

Diff: 1

Type: F




17)



The formula for the marginal revenue product of labor (L is for labor, X is the output) is

A)



MPL/PX.

B)



PX/MPL.

C)



(MPL)(MRX).

D)



MPL + PX.

Answer:



C

Diff: 2

Type: D





Refer to the information provided in Figure 10.1 below to answer the questions that follow.


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