Factor Market
Quiz 1
The Demand for Resources
Factor Market and Firm Graphs
Which of the following statements best
illustrates the concept of derived demand?
1.
2.
3.
4.
A decline in the price of
margarine will reduce the
demand for butter.
A decline in the demand for
shoes will cause the demand
for leather to decline.
As income goes up the demand
for farm products will increase
by a smaller relative amount.
When the price of gasoline
goes up, the demand for motor
oil will decline.
25%
1
25%
25%
2
3
25%
4
T he demand for labor is derived from:
1.
3.
the demands for other variable
inputs.
consumer demand for the
product or service it is helping to
produce.
the cost-minimization rule.
4.
the supply of related inputs.
2.
25%
1
25%
25%
2
3
25%
4
Fastest Responders
Seconds
Participant
Seconds
Participant
Marginal revenue product measures the:
1.
2.
3.
4.
amount by which the extra production
of one more worker increases a
firm's total revenue.
decline in product price that a firm
must accept to sell the extra output of
one more worker.
increase in total resource cost
resulting from the hire of one extra
unit of a resource.
increase in total revenue resulting
from the production of one more unit
of a product
25%
1
25%
25%
2
3
25%
4
The purely competitive employer of resource A
will maximize the profits from A by equating
the:
1.
2.
3.
4.
price of A with the MRC of A.
marginal productivity of A with
the MRC of A.
marginal productivity of A with
the price of A.
price of A with the MRP of A.
25%
1
25%
25%
2
3
25%
4
The MRP curve for labor:
1.
intersects the firm's labor
25%
25%
25%
2
3
25%
demand curve from above.
2.
is the firm's labor demand curve.
3.
lies below the firm's labor
demand curve.
lies above the firm's labor
demand curve.
4.
1
4
Fastest Responders
Seconds
Participant
Seconds
Participant
Marginal product is:
1.
2.
3.
the output of the least skilled
worker.
a worker's output multiplied by
the price at which each unit can
be sold.
the amount any given worker
contributes to the firm's total
25%
25%
25%
2
3
25%
revenue.
4.
the amount an additional worker
adds to the firm's total output.
1
4
If one worker can pick $30 worth of grapes and
two workers together can pick $50 worth of
grapes, the:
1.
2.
3.
marginal revenue product of
each worker is $25.
marginal revenue product of the
first worker is $20.
marginal revenue product of the
25%
25%
25%
2
3
25%
second worker is $20.
4.
data given do not permit the
determination of the marginal
revenue product of either worker.
1
4
Fastest Responders
Seconds
Participant
Seconds
Participant
A competitive employer should hire additional
labor as long as:
25%
1.
2.
3.
the MRP exceeds the wage rate.
the wage rate is less than MP.
average product exceeds MP.
4.
average product exceeds MP.
1
25%
25%
2
3
25%
4
A firm will find it profitable to hire workers up
to the point at which their:
1.
2.
3.
4.
marginal resource cost equals
their wage rate.
wage rate equals product price.
MP is equal to their MRP.
marginal resource cost is equal
to their MRP.
25%
1
25%
25%
2
3
25%
4
The MRP curve is the resource demand curve
for:
1.
2.
3.
4.
neither the purely competitive nor
the imperfectly competitive seller.
the imperfectly competitive seller,
but not the purely competitive
seller.
the purely competitive seller, but
not the imperfectly competitive
seller.
both the purely competitive and
imperfectly competitive seller.
25%
1
25%
25%
2
3
25%
4
Fastest Responders
Seconds
Participant
Seconds
Participant
Employers will hire more units of a resource if:
1.
2.
3.
4.
the price of the resource
increases.
the productivity of the resource
increases.
the price of the good being
produced declines.
the price of a complementary
resource rises.
25%
1
25%
25%
2
3
25%
4
If a firm is hiring a certain type of labor under
purely competitive conditions:
1.
2.
3.
4.
its labor demand curve will be
perfectly elastic at the marketdetermined wage rate.
the labor supply curve will lie
above the marginal labor cost
curve.
the labor supply and marginal
labor (resource) cost curves will
coincide and be upsloping.
the labor supply and marginal
labor (resource) cost curves will
coincide and be perfectly elastic.
25%
1
25%
25%
2
3
25%
4
Fastest Responders
Seconds
Participant
Seconds
Participant
Which of the following describes a purely
competitive labor market?
1.
2.
3.
4.
MRP = Wage Rate.
MRP > Wage Rate.
Wage Rate > MRC.
Wage Rate < MRC.
25%
1
25%
25%
2
3
25%
4
The labor supply curve facing a purely
competitive employer is __________ whereas the
labor supply curve facing a monopsonist is
___________.
25%
1.
2.
3.
4.
25%
25%
2
3
25%
upward sloping; horizontal
downward sloping; vertical
vertical; upward sloping
horizontal; upward sloping
1
4
The economic term for a sole employer in
a nonunion community is:
25%
1.
2.
3.
4.
25%
25%
2
3
25%
monopsonist.
monopolist.
bilateral competitor.
bilateral monopolist.
1
4
Fastest Responders
Seconds
Participant
Seconds
Participant
Which of the following is most likely to be
an example of monopsony?
25%
1.
2.
3.
4.
the market for fast-food workers
in a large summer resort town
the market for card dealers in
Las Vegas.
the market for major league
baseball umpires.
the market for retail sales clerks
in a major city.
1
25%
25%
2
3
25%
4
A monopsonist:
1.
2.
3.
4.
boosts the wage rate above the
competitive level to attract more
workers.
reduces the number of workers it
employs so that it can pay each
worker a lower wage rate.
is a "wage taker."
pays a wage rate equal to MR
25%
1
25%
25%
2
3
25%
4
"Player drafts" of professional athletes:
1.
2.
3.
4.
increase the competitiveness of
the labor market for professional
athletes.
reduce the profitability of
professional sports franchises.
promote monopsony in the hire
of professional athletes.
increase salaries of professional
athletes.
25%
1
25%
25%
2
3
25%
4
Fastest Responders
Seconds
Participant
Seconds
Participant
If the diagram to the left was
relevant to an
individual firm, we
could conclude that
the firm is:
25%
1.
2.
3.
4.
a pure competitor in the hire of
labor.
a monopsonist in the hire of
labor.
selling its product in an
imperfectly competitive market.
selling its product in a purely
competitive market.
1
25%
25%
2
3
25%
4
25%
25%
25%
2
3
25%
Refer to the above diagrams.
The firm:
1.
2.
3.
4.
is a monopsonist in the hire of
labor.
must be selling its product in an
imperfectly competitive market.
is a "wage taker."
must pay a higher marginal
resource cost for each
successive worker.
1
4
Participant Leaders
Points
Participant
Points
Participant