AP Micro Unit 5 Practice

marginal revenue product curve

A firm's demand curve for labor is equal to a segment of its

Supply of the factor

A change in which of the following will NOT cause a shift in the demand curve for a factor of production?

make no changes to the mix of inputs

A contractor is employing labor and capital to build an office complex. At the current mix of inputs, the marginal product of labor is 30 square feet per day, and the marginal product of capital is 90 square feet per day. The price of labor is $1,000 per day, and the price of capital is $3,000 per day. To hire inputs in a cost-minimizing way, the firm should

$5 per hour

A firm is currently employing a cost-minimizing combination of labor and capital for a given level of output. The firm is employing 20 workers, and the marginal product of the last worker is 40 units of output. The firm is employing 100 units of capital, and the marginal product of the last unit of capital is 10 units of output. If the wage rate is $20 per hour, what is the price of capital?

the amount of labor demanded depends on the demand for the firm's product

A firm's demand for labor is known as a derived demand because

value of the marginal product of the input exceeds the price of the input

A perfectly competitive profit-maximizing firm will continue to hire additional units of an input as long as the

marginal revenue product equals marginal factor cost

A profit-maximizing firm should hire an input up to the point at which

MPL /PL = MPK /PK

Assume a firm uses only two inputs, capital (K) and labor (L), to produce its output. Let the marginal product of capital be MPK , the marginal product of labor be MPL , the price of capital be PK , and the price of labor be PL . The least-cost combination of capital and labor needed to produce a given level of output is given by which of the following?

4

Given the production information in the table above, how many workers would be employed if the wage rate were $20.00 per day and if sandwiches sold for $0.50?

Labor Capital Increase Decrease

A firm produces truffles by using labor and capital. The price of labor is $10 per unit, and the price of capital is $20 per unit. At current output level, the marginal product of labor is 40 truffles and the marginal product of capital is 60 truffles. To reduce the total cost of producing the current quantity of truffles, how should the firm change its spending on labor and capital?

Marginal Product of Labor Price of Capital 5 $4

A firm sells its output in a perfectly competitive market and hires two inputs, capital and labor, in perfectly competitive factor markets. The product price is $15 per unit, the wage is $75 per day, and the marginal product of capital is 3. If the firm is choosing the least-cost combination of labor and capital, the firm's marginal product of labor and the price of capital must be equal to which of the following?

$20

A firm uses capital and labor in its production process. The marginal product for the last unit of labor is 5, the marginal product for the last unit of capital is 10, and the wage is $10. At what cost of hiring each unit of capital would the firm be minimizing the cost of the current output?

Demand For Workers Wage Rate Increase Increase

An increase in the demand for automobiles will cause the demand for skilled automobile workers and the wage rate of skilled automobile workers to change in which of the following ways?

a decrease in the prices of medicine

As the population of a country ages, the demand for health care is projected to increase. As a result, the health care industry is likely to experience all of the following EXCEPT

less than the output price

Assume that both the product and labor markets are perfectly competitive. It would be profitable for a firm to hire additional labor if the ratio of the wage to the marginal product of labor is

The demand for health-care workers will increase.

Assume that firms providing health-care services to older people operate in a perfectly competitive market. What must happen in the market for health-care workers if there is an increase in the number of older people in a country?

increase the use of capital and decrease the use of labor

Assume that the last worker a firm hired produces 60 additional units of output per hour and the last machine rented produces 6,000 units of output per hour. A worker's hourly wage rate is $12, and the rental cost of a machine is $1,000 per hour. In order to minimize the cost of its current output, the firm should

Labor Capital Increase Decrease

At its current employment level of labor and capital, a firm observes the following. Marginal product of labor = 30 units Marginal product of capital = 60 units Price of labor = $3 per unit Price of capital = $15 per unit Which of the following actions should the firm take in order to achieve the least-cost combination of labor and capital and produce the same level of output?

Price of Labor Price of Capital $60 $100

For a certain firm, the marginal revenue product for the last unit of labor is $60, and the marginal revenue product for the last unit of capital is $100. Which of the following combinations of factor prices would be necessary for the firm to maximize profits?

Number of Workers Wage Rate 20 $20

The graph above shows a monopsony labor market. In the absence of any regulations, which of the following represents the number of workers the firm will hire and the wage rate it will offer to those workers?