Question 1
1.
Suppose at the current level of labor used, the MRP = $100 and the MFC = $50. To maximize profits, the firm should
Answer
a. hire more labor.
b. maintain the current level of labor.
c. reduce the level of labor.
d. shut down.
8 points
Question 2
1.
Outsourcing is being practiced by
Answer
a. U.S. firms that want to keep jobs at home in the United States.
b. overseas firm tapping into the U.S. labor market and by U.S. firms looking for overseas labor markets with lower wages.
c. U.S. firms only.
d. governments but private firms are not allowed to outsource work.
8 points
Question 3
1.
Revenue marginal product is
Answer
a. marginal physical product multiplied by marginal revenue.
b. marginal physical product multiplied by average variable cost of the product.
c. the price of the product.
d. the total revenue from the sale of the product sales.
9 points
Question 4
1.
An increase in the supply of labor generates
Answer
a. increased unemployment.
b. lower wages.
c. an offsetting increase in the demand for labor.
d. a decrease in the quantity demanded of labor.
8 points
Question 5
1.
The marginal revenue product curve shifts when
Answer
a. wages fall.
b. there is a change in the product price workers are producing.
c. wages rise.
d. the wages paid exceed the price.
8 points
Question 6
1.
In the above figure, the competitive firm will employ the quantity of labor
Answer
a. equal to Lc. b. equal to Lb. c. less than Lb. d. greater than Lc.
9 points
Question 7
1.
The firm's demand curve for labor is
Answer
a. the marginal revenue product curve for labor. b. the demand curve for the good produced divided by the price of the good. c. the marginal physical product curve for labor divided by the price of the good. d. the marginal physical product curve for labor multiplied by the price of labor.
9 points
Question 8
1.
A firm will not hire additional workers once
Answer
a. it earns accounting profits. b. the additional cost of a worker equals the additional revenue from the worker. c. total product is rising. d. the company reaches its breakeven output level.
8 points
Question 9
1.
According to the above table, if the wage rate is $400 a week and the price of the good produced is $5, the perfectly competitive firm should hire
Answer
a. 6 workers. b. 4 workers. c. 3 workers. d. 5 workers.
9 points
Question 10
1.
The additional revenue earned from hiring one more worker is known as the
Answer
a. marginal utility of labor. b. marginal physical product of labor. c. marginal factor cost of labor. d. marginal revenue product of labor.
8 points
Question 11
1.
When U.S. computer companies hire workers in India to staff their customer service call centers, they are engaging in
Answer
a. predatory pricing. b. unfair trade practices. c. outsourcing. d. labor engagement.
8 points
Question 12
1.
The change in total output due to the change in one variable input, while holding all other inputs constant, is the
Answer
a. marginal revenue product. b. derived demand for labor. c. marginal physical product. d. market demand curve for labor.