ECON212 Ch 11 Study Guide

If a product's price increases, then its: a. MP will increase. b. MFC will increase. c. MRP will increase. d. MP will decrease.

c

If the security guards can be hired for $45 per day, how many guards should the shop hire? a. 2. b. 3. c. 4. d. 5.

c

In Exhibit 11-10, the marginal factor cost of the 8th employee is: a. $14. b. $13. c. $21. d. $112.

c

One reason the supply of carpenters is greater than the supply of physicians is because: a. carpenters demand less income. b. physicians do not belong to a union. c. of differences in human capital. d. carpenters belong to unions.

c

Refer to Exhibit 11-1. If the market wage rate is $25 per day, how many workers should the firm hire if it wants to maximize profits? a. 4. b. 5. c. 6. d. 7.

c

Suppose a monopsonist hires its second worker and this hiring has a marginal factor cost of $75 per day. If the market wage is now $62.50 per day, what was the first employee earning when she worked alone? a. $40. b. $45. c. $50. d. $55.

c

The labor supply curve facing an individual employer in a perfectly competitive labor market is: a. upward sloping. b. downward sloping. c. horizontal. d. the MRP curve.

c

The marginal revenue product of a resource: a. is defined as the marginal product of the resource multiplied by the resource price. b. simply means that a firm should add to its capital stock as long as competition requires it. c. equals the extra output produced by an additional unit of the resource multiplied by the price of that output. d. equals the average product of the resource multiplied by the cost of hiring an additional (marginal) unit of the resource.

c

Tucker Corporation sells its product for $5.00. Tucker's industrial engineers have informed management that hiring one additional worker will increase output by five units per hour. Tucker should hire the additional worker only if the wage rate is: a. $5.00 or less per hour. b. $1.00 or more per hour. c. $25.00 or less per hour. d. more than $25.00 per hour.

c

Use Exhibit 11-13. What wage rate will the monopsonist pay the workers? a. $11. b. $13. c. $12. d. $16.

c

What happens to the marginal product of labor when the market price of the good produced increases? a. Increases proportional to price. b. Decreases proportional to price. c. Stays the same. d. Falls because quantity demanded falls.

c

Which of the following can shift the labor demand curve to the right? a. decrease in product price b. increase in wages c. increase in productivity d. decrease in the marginal product

c

A firm's demand curve for labor coincides with the: a. marginal cost curve. b. average cost curve. c. marginal revenue curve. d. marginal revenue product curve.

d

If a monopsonist offers a wage of $6, he finds that 1,200 people are willing to work for him. This means that the: a. marginal factor cost is $6. b. marginal factor cost is $200. c. total wage cost is $1,200. d. total wage cost is $7,200.

d

A competitive car wash currently hires 4 workers, who together can wash 80 cars per day. The market price of car washes is $5 per wash, and the price of workers is $60 per day. The car wash should hire a fifth worker if it would increase total production to at least: a. 92 cars per day. b. 100 cars per day. c. 104 cars per day. d. 110 cars per day.

a

A monopoly is a sole ____, and a monopsonist is a sole ____. a. buyer in a product market; seller in a product market b. seller in a product market; seller in a labor market c. buyer in a product market; seller in a labor market d. seller in a product market; buyer in a labor market

a

A union may negotiate limits on workload in order to increase the demand for labor and raise workers' salaries. This practice is known as: a. featherbedding. b. human capital formation. c. monopsonistic bargaining. d. artificial demand stimulus.

a

According to the economic theory of labor markets, if unions are successful in raising wages, with no accompanying increase in labor productivity, then which of the following is true? a. The quantity of labor demanded by profit-maximizing firms will decline. b. The quantity of labor demanded by profit-maximizing firms will increase. c. The quantity of labor supplied by workers will decline. d. There will be a shortage of labor in the unionized labor market.

a

An increase in demand for French fries will cause equilibrium wage rates: a. and quantities of potato workers hired to rise. b. and quantities of potato workers hired to fall. c. to rise and quantities of potato workers hired to fall. d. to fall and quantities of potato workers hired to rise.

a

Currently, union membership in the United States is about what percentage of civilian employees? a. 10 percent. b. 15 percent. c. 20 percent. d. 25 percent.

a

If a town has a monopsony, this means: a. there is only one employer. b. price discrimination takes place. c. goods are priced too high. d. no unions can exist.

a

In a labor market with one employer, the marginal factor cost is: a. above the labor supply curve. b. above the labor demand curve. c. what determines the wage. d. downward sloping.

a

The best number of workers for any employer to hire is that quantity in which: a. the marginal revenue product equals the marginal factor cost. b. the marginal revenue product exceeds the marginal factor cost. c. total costs are minimized. d. total revenue is maximized.

a

The demand curve for labor of Coca-Cola manufacturers will not shift to the right if: a. Coca-Cola workers become unionized. b. the price of Coca-Cola increases. c. the firms innovate with new technology that raises labor productivity. d. the price of Pepsi increases.

a

A decrease in the marginal product of labor would be represented by a(n): a. increase in labor demand. b. decrease in labor demand. c. increase in the quantity demanded of labor. d. decrease in the quantity demanded of labor.

b

Dividing the change in total revenue by the change in labor gives: a. marginal product of labor. b. marginal revenue product of labor. c. the price of the output. d. demand for the output.

b

If the labor market shown in Exhibit 11-8 is a monopsony, the wage rate and number of workers employed will be determined at point: ​ a. F. b. B. c. C. d. D.

b

In Exhibit 11-13, how many workers will the monopsonist hire? a. 4. b. 5. c. 3. d. 6.

b

Which of the following statements is true? a. Marginal revenue product is the extra revenue generated to the firm from the production of one more unit of output. b. Marginal factor cost is the extra cost to a firm of employing one more unit of a factor of production. c. The demand curve for a perfectly competitive employer is horizontal at the market wage rate. d. The supply curve of labor is upward sloping because of the law of diminishing marginal productivity.

b

The process of negotiating labor contracts between the union and management concerning wages and working conditions is called a. collective bargaining. b. featherbedding. c. lobbying. d. an apprenticeship.

a

Which of the following is not true about a monopsonist? a. It can set the wage rate and hire any desired number of workers at that wage. b. It is the only buyer of labor in a market. c. It usually extracts rents from its monopsony power. d. It determines the optimal employment-wage rate combination by equating the marginal revenue product of labor to the marginal cost of labor.

a

Which of the following would cause the demand for labor to change? a. a change in the price of the good produced b. a change in the cost of living c. changes in the wage rate d. movements along the labor demand curve

a

Lorna's Lumberyard is a monopsony. Lorna estimates that at a wage of $10, 100 workers would be willing to work for her. Similarly, at a wage of $12, 200 workers would be willing to work. Her marginal factor cost is: a. $10. b. $14. c. $120. d. $140.

b

Refer to Exhibit 11-1. What is the marginal revenue product of the fifth unit of labor? a. $6. b. $36. c. $54. d. $324.

b

The marginal cost of labor for a perfectly competitive firm is given by: a. the marginal product of labor. b. the market wage rate. c. its marginal revenue product curve. d. the demand curve for labor.

b

Which of the following is the most accurate definition of a worker's marginal revenue product? a. The change in the firm's profits as the result of hiring an additional worker. b. The change in the firm's total revenue as the result of hiring an additional worker. c. The change in the firm's output as the result of hiring an additional worker. d. The change in the firm's cost as the result of hiring an additional worker.

b

A monopsonist hires the amount of labor where the marginal revenue product of labor equals the: a. price of the monopsonist's product. b. wage rate. c. marginal factor cost of labor. d. marginal product of labor.

c

A monopsonist's marginal factor cost (MFC) curve lies above its supply curve because the firm must: a. lower the factor price to hire more. b. increase the price of its product to sell more. c. increase the factor price to hire more. d. lower the product price to sell more.

c

A monopsony owner believes that hiring an additional worker would increase the company's revenue by $150 per day. We can conclude that the monopsony pays its workers: a. more than $150 per day. b. exactly $150 per day. c. less than $150 per day. d. exactly $75 per day.

c

A monopsony will: a. hire more workers than a competitive employer. b. pay a higher wage than a competitive employer. c. employ a quantity of labor where the marginal revenue product equals the marginal factor cost. d. have a marginal factor cost curve equal to the labor supply curve.

c

A union can influence the demand for labor by: a. requiring union fees. b. raising union fees. c. effective advertising that convinces customers to buy the "union label." d. lobbying for legislation to reduce immigration.

c

For a monopsonist, the supply of labor facing the firm is: a. an insignificant portion of the market supply. b. perfectly horizontal. c. identical to the supply curve facing the market. d. the summation of each firm's demand for labor.

c

If the marginal product of labor is always positive, the total revenue will grow with each additional worker. Firms do not continuously hire new workers because: a. there isn't enough room in the factory. b. there isn't an infinite number of workers. c. wages would have to increase. d. they stop when MRP = wage

d

In Exhibit 11-3, the total wage cost of hiring 6 employees is: a. $18 per hour. b. $36 per hour. c. $3 per hour. d. $108 per hour.

d

In Exhibit 11-4, assume that both input and output markets are perfectly competitive. If one additional server increases the number of meals sold by four per day and each meal sells for $10, each additional food server will be paid: a. $16 per day. b. $32 per day. c. $36 per day. d. $40 per day.

d

Suppose a monopsonist wants to hire more workers. If it has to pay the same wage to all of its workers, the: a. marginal factor cost will fall while the wage will rise. b. wage will fall while the marginal factor cost will rise. c. difference between the wage and marginal factor cost will become smaller. d. wage and the marginal factor cost will increase.

d

Suppose the price of HD televisions decreases. As a result, the a. MP of the workers making HD televisions will increase. b. MFC of the workers making HD televisions will increase. c. MRP of the workers making HD televisions will increase. d. MRP of the workers making HD televisions will decrease.

d

The optimal hiring rule is to employ labor up to the point where: a. wage = MFC. b. wage = MP. c. wage = MR d. wage = MRP

d

Wage and MFC differ for a monopsonist because: a. the monopsonist is forced to pay a wage greater than the worker's MFC. b. the monopsonist must accept the market wage rate. c. workers are not as efficient when employed by a monopsonist. d. any wage increase applies to all workers, not just to the next hired.

d

Which of the following statements concerning the supply of labor is true? a. The wage rate has no effect on the supply of labor. b. The labor supply curve is downward sloping. c. The supply of labor is determined by the prevailing wage rate. d. The typical labor supply curve is upward sloping.

d

Which part of the United States has the largest union membership measured as the percentage of civilian employees in unions? a. south-western states b. western states that do not border the Pacific Ocean c. south-eastern states d. mid-western states

d