Microeconomics Assignment

Microeconomics Assignment Words: 2326

When economists say that the demand for labor is a derived demand, they mean that it is: A) dependent on government expenditures for public goods and services. B) related to the demand for the product or service labor is producing. C) based on the desire of businesses to exploit labor by paying below equilibrium wage rates. D) based on the assumption that workers are trying to maximize their money incomes. Answer: B 4. The demand for airline pilots results from the demand for air travel. This fact is an example of: A) resource substitutability. C) elasticity of resource demand. B) rising marginal resource cost.

D) the derived demand for labor. Answer: D 5. We say that the demand for labor is a derived demand because: A) labor is a necessary input in the production of every good or service. B) we demand the product that labor helps produce rather than labor service per SE. C) the forces of supply and demand do not apply directly to labor markets. D) labor is hired using the MR. = MR. rule. Answer: B 6. 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. Of that input. D) the elasticity of supply of substitute inputs. 7.

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The demand for labor is derived from: A) the demands for other variable inputs. C) the price B) consumer demand for the product or service it is helping to produce. The cost-minimization rule. D) the supply of related inputs. C) Type: A Topic: 1 8. In the United States professional football players earn much higher incomes than professional soccer players. This occurs because: A) most football players are good soccer players while the reverse is not true. B) consumers have a greater demand for football games than for soccer games. C) football and soccer games are highly substitutable products for most consumers.

D) the marginal productivity of soccer players exceeds that of football players. Answer: B Resource demand curve; optimal hiring Type: D Topic: 2 E: 505 MI: 261 9. Marginal revenue product measures the: A) amount by which the extra production of one more worker increases a firm’s total revenue. B) decline in product price that a firm must accept to sell the extra output of one more worker. C) increase in total resource cost resulting from the hire of one extra unit of a resource. D) increase in total revenue resulting from the production of one more unit off product. Answer: A Type: A -robot:2 E: 506-507 MI: 262-263 0.

The marginal revenue product schedule is: A) the same whether the firm is selling in a purely competitive or imperfectly competitive market. B) the firm’s resource demand schedule. C) the firm’s resource supply schedule. D) upswing. Type: A -robot:2 E: 507 MI: 263 1 1 . The purely competitive employer of resource A will maximize the profits from A by equating the: A) price of A with the MR. of A. C) marginal productivity of A with the price of A. B) marginal productivity of A with the MR. of A. D) price of A with the MR. of A. Answer: A Type: A Topic: 2 E: 506-507 MI: 262-263 12. The MR. curve for labor:

A) intersects the firm’s labor demand curve from above. B) is the firm’s labor demand curve. C) lies below the firm’s labor demand curve. D) lies above the firm’s labor demand curve. Type: D 13. Topic: 2 Marginal product is: A) the output of the least skilled worker. B) the amount an additional worker adds to the firm’s total output. C) a worker’s output multiplied by the price at which each unit can be sold. D) the amount any given worker contributes to the firm’s total revenue. Answer: B 14. The labor demand curve of a purely competitive seller: A) slopes downward because the elasticity of demand is always less than unity.

B) slopes onward because of diminishing marginal productivity. C) is perfectly elastic at the going wage rate. D) slopes downward because of diminishing marginal utility. Answer: B Type: A -robot:2 E: 506 MI: 262 15. 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 MR. of this additional worker is: A) $6. B) $12. C) $36. D) $72. Answer: C 16. 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. 17. A competitive employer should hire additional labor as long as: A) the MR. exceeds the wage rate. C) average product exceeds PM. B) the wage rate is less than PM. D) MS exceeds MR.. Answer: A 18. A firm will find it profitable to hire workers up to the point at which their: A) marginal resource cost equals their wage rate. C) PM is equal to their MR.. B) wage rate equals product price. D) marginal resource cost is equal to their MR.. 9. A profit-maximizing firm employs resources to the point where: A) MR. = PM. B) Resource price equals product price. C) MR. = MR.. D) PM = product price. Answer: C Use the following to answer questions 20-22: Answer the next question(s) on the basis of the following information: Jones owns a barber shop and charges $6 per haircut. By hiring one barber at $10 per hour the shop can provide 24 haircuts per 8-hour day. By hiring a second barber at the same wage rate the shop can now provide a total of 42 haircuts per day. Topic: 2 E: 506 MI: 262 Refer to the above information. The PM of the second barber is: 20.

B) $108. C) 18. D) 42. -robot:2 E: 506 MI: 262 Refer to the above information. The MR. of the second barber: 21. B) $108. C) Isis. D) $24. 22. Refer to the above information. Jones should: A) $240. A) 18. A) hire the second barber because he will add $28 to profits. B) hire the second barber because he will add $108 to profits. C) not hire the second barber because he is less productive than the first barber. D) not hire the second barber because he will diminish profits. Answer: A 23. The labor demand schedule is identical with the: A) marginal product schedule. C) marginal revenue product schedule. Original resource cost schedule. D) product demand schedule. Answer: C 24. Assume the Apex Manufacturing company is purely competitive in both the hire of labor and in the sale of its product. Apex’s labor demand curve would be: A) vertical at the current level to employment. Upward sloping. The “going” wage rate. D) downward sloping. Answer: D B) horizontal a 25. The general rule for hiring any input (say, labor) in the profit-maximizing amount is MR. = MR.. This rule takes the special form W = MR. (where W is the wage rate) when the: A) labor supply curve is upswing. B) supply of labor is inelastic.

C) firm is hiring labor under purely competitive conditions. Labor under imperfectly competitive conditions. Answer: C Use the following to answer questions 26-30: D) firm is hiring Answer the next question(s) on the basis of the following information for Manfred Shoe Shine Parlor. Assume Manfred hires labor, its only variable input, under purely competitive conditions. Shoe shines are also sold competitively. Type: T -robot:2 E: 506 MI: 262 26. Refer to the above data. How many units of output are produced when 2 workers are employed? A) 4 B) 16 C) 24 D) 10 27. Refer to the above data. What is the marginal product of the sixth worker?

A) 2 units B) 3 units C) 4 units D) 5 units Type: T Topic: 2 E: 506-507 MI: 262-263 28. Refer to the above data. At what price does each shoe shine sell? B) $2 C) $3 D) $2. 50 Type: T -robot:2 E: 506-507 MI: 262-263 29. Refer to the above data. If the wage rate is $1 1, how many workers will Manfred hire to maximize profits? Type: T 30. Refer to the above data. If Manfred only fixed input is capital, the total cost of which is $30, then what will be his economic profit? A) $62 B) $42 C) $28 D) $32 31. Assume that a restaurant is hiring labor in an amount such that the MR. of he last worker is $16 and her MR. is $12.

On the basis of this information we can say that: A) profits will be increased by hiring additional workers. B) profits will be increased by hiring fewer workers. C) marginal revenue product must exceed average revenue product. D) the restaurant is maximizing profits. Use the following to answer questions 32-35: Answer the next question(s) on the basis of the information given in the following table: Type: T Topic: 2 E: 506 MI: 262 32. Refer to the above data. This firm is: A) selling its product in a purely competitive market. B) selling its product in an imperfectly competitive market. Purely competitive market.

D) hiring workers in an imperfectly competitive market. C) hiring workers in 33. Refer to the above data. If the firm is hiring workers under purely competitive conditions at a wage rate of $22, it will employ: A) 1 worker. Workers. C) 3 workers. D) 4 workers. Answer: C Type: T -robot:2 E: 507 MI: 263 34. Refer to the above data. If the firm is hiring workers under purely competitive conditions at a wage rate of $10, it will employ: A) 2 workers. Workers. C) 4 workers. D) 5 workers. Answer: D Refer to the above data. Which of the following best represents the labor 35. Emend schedule for this firm? 6. Assuming a firm is selling its output in a purely competitive market, its resource demand curve can be determined by: A) multiplying total product by product price. B) multiplying marginal product by product price. C) dividing total revenue by marginal product. D) comparing marginal product with various possible input prices. Answer: B Type: D Topic: 2 E: 506 MI: 262 37. 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. Answer: B Use the following to answer questions 38-40: Answer the next question(s) on the basis of the data contained in the following table. Assume that the firm is hiring labor in a purely competitive market. 38. Refer to the above data. If the wage rate is $20, how many workers will the firm choose to employ? A) 5 B) 4 C) 3 D) 2 39. Refer to the above data. If the wage rate is $1 1, how many workers will the 40. The above data reveal that:

A) the firm is selling its product in a purely competitive market. B) the firm is selling its product in an imperfectly competitive market. C) there is no level of output at which this firm can operate at a profit. D) the law of diminishing returns is not applicable to this firm. Answer: B Type: A -robot:2 E: 507-508 MI: 263-264 41. Other things equal, the resource demand curve of an imperfectly competitive seller will: A) lie below its marginal revenue product curve. B) be subject to increasing marginal productivity. C) be less elastic than that of a purely competitive seller. D) be more elastic Han that off purely competitive seller.

Answer: C 42. The MR. curve is the resource demand curve for: A) neither the purely competitive nor the imperfectly competitive seller. The imperfectly competitive seller, but not the purely competitive seller. C) the purely competitive seller, but not the imperfectly competitive seller. D) both the purely competitive and imperfectly competitive seller. Answer: D 43. The labor demand curve of an imperfectly competitive seller is downward sloping: A) solely because of diminishing marginal utility. B) both because of diminishing returns and the necessity to lower price to sell ore output.

C) solely because product price must be reduced to sell more D) solely because of diminishing returns. Output. 44. If a firm is selling in an imperfectly competitive product market, then: A) average product will be less than marginal product for any number of workers hired. B) the marginal products of successive workers must be sold at lower prices. C) the marginal products of successive workers can be sold at higher prices. D) the marginal products of successive workers can be sold at a constant price. Answer: B 45. Other things the same, we would expect the labor demand curve of a purely nominative seller to be: A) of unitary elasticity. Ore elastic than that to an imperfectly competitive seller. That of an imperfectly competitive seller. D) perfectly elastic. Type: A -robot:2 E: 508 MI: 264 less elastic than 46. Other things equal, we would expect the labor demand curve of a monopolistic seller to: A) decline more rapidly than that of a purely competitive seller. B) decline less rapidly than that of a purely competitive seller. C) decline at the same rate as that of a purely competitive seller. D) be more elastic than that off purely competitive seller. Answer: A 47.

The change in a firm’s total revenue that results from the hire of an additional worker is measured by: A) marginal product. C) marginal revenue product. B) marginal revenue. D) average revenue product. 48. The labor demand curve of a purely competitive seller: downward because the firm must lower price to sell more output. B) slopes downward because labor productivity increases as successive workers are hired. C) is perfectly elastic because the firm is hiring an insignificant portion of the total labor supply. D) slopes downward because the marginal product of successive workers declines. Answer: D 49. The MR. curve for labor

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