Unit 5 AP Econ review
Which of the following statements about the relationship between the demand for apple pickers and the demand for apples is true?
An increase in the demand for apples increases the demand for apple pickers.
The table above shows how a firm's hourly level of output changes as more of the labor input is employed. The firm sells its output and hires labor in perfectly competitive markets. The wage paid to labor is $10 per hour, and the price of the firm's output is $2 per unit. Based on the data in the table, the marginal revenue product of the fourth hour of labor is equal to
$14
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 cach unit of capital would the firm be minimizing the cost of the current output?
$20
Pickleco, a pickle-producing firm, hires labor and capital in perfectly competitive factor markets. The firm is minimizing its costs at the current production level. The marginal product of labor is 100 units and the marginal product of capital is 60 units. If the rental price of capital is $12, what is the wage Pickleco is paying its workers?
$20.00
If output sells for $20 per unit, what is the marginal revenue product of the fifth worker?
$40
The table above shows the short-run output for a perfectly competitive firm. If the price of the product is $10, what is the marginal revenue product of the third worker hired?
$40
The marginal physical product of the second worker is
19
Assume a perfectly competitive labor market. Which of the following correctly describes the individual firm'sdemand curve for labor and the market demand curve for labor?
Firm's Demand Curve for Labor: downward sloping Market Demand Curve for Labor: downward sloping
Max Company produces electronic gadgets using labor and capital. If Max increases labor and decreases capital to produce the same quantity of gadgets, what will happen to the marginal product (MP) of labor and the MP of capital?
MP of labor decreases and MP of capital increase
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 MP, 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?
MPL /PL = MPk/Pk
In the monopsonistic labor market shown in the diagram above, which of the following indicates the number of workers the firm will hire and the wage rate it will pay?
Number of Workers: L1 Wage Rate: W1
Which of the following is always true for a firm with monopsony power?
The marginal factor cost curve lies above the input supply curve.
If a firm employs only labor and capital in its production process, which of the following best describes the optimal combination of inputs for the firm in the long run?
The marginal product per dollar spent on labor is equal to the marginal product per dollar spent on capital.
Assume that barber shops operate in perfectly competitive product and factor markets. Which of the following will happen to working barbers if the price of haircuts decreases?
The marginal revenue product curve will shift to the left.
Which of the following indicates that a perfectly competitive firm has hired the profit-maximizing amount of labor?
The marginal revenue product of labor equals the wage paid to workers.
Which of the following will happen in the labor market if the price of the good produced by the workers decreases?
The marginal revenue product of labor will decrease.
If binding minimum wage increases in a perfectly competitive labor market, then which of the following will likely occur in the labor market?
The quantity of workers supplied will increase.
Hope Hospital is a monopsonistic employer of nurses. The marginal revenue product of nursing services, the marginal factor (resource) cost of nursing services, and the market supply curve of nursing services are depicted in the figure above by MRP, MC, and S, respectively. What wage quantity combination does Hope Hospital choose in order to maximize its profits?
W1 and Q3
Hope Hospital is a monopsonistic employer of nurses. The marginal revenue product of nursing services, the marginal factor (resource) cost of nursing services, and the market supply curve of nursing services are depicted in the figure above by MRP, MFC, and S, respectively. What wage quantity combination does Hope Hospital choose in order to maximize its profits?
W1 and Q3
In the long run, assume a firm uses both labor and capital to produce 25 units of output. The marginal product of the last unit of labor being employed is 100; the marginal product of the last unit of capital being employed is 500. The wage rate of labor is $10. If the firm is minimizing the cost of producing 25 units of output, what must be the unit price of capital?
$50
Mary manages a manufacturing plant. Two inputs are used to produce the product. To minimize the costs of production, Mary should continue to hire inputs up to the level at which the
(marginal product ÷ price) of each input is equal
Which of the following is most likely to cause the demand curve for nurses to shift to the right?
An increase in the number of hospitals that employ nurses
Which of the following will result in an increase in labor demand?
An increase in the productivity of labor
Which of the following will cause an increase in the supply of labor?
An increase in the retirement age
Max employs both labor and capital to produce toy trains. Currently the last unit of labor employed has a marginal product of 15 units. The last unit of capital employed has a marginal product of 40 units. The price of labor is $3 per unit, and the price of capital is $10 per unit. Which of the following employment decisions should Max follow to use the least-cost combination of labor and capital to produce the current quantity of toy trains?
Employment of labor increases and employment of capital decreases
Assuming a single, profit-maximizing employer in a labor market with many workers, which of the following statements relating to this monopsony is true?
In increasing employment, the marginal factor cost of an additional unit of labor exceeds the wage rate paid to the laborer.
An increase in the demand for automobiles will cause the demand for skilled automobile workers and the wage rate for the workers to change in what ways?
Increase demand for workers and increase wage rate
Which of the following is true of a monopsony in a labor market?
Its marginal factor (resource) cost curve lies above the labor supply curve because hiring an extra worker means paying more to existing workers.
The graph above shows the conditions that a monopsonist faces in a labor market. How many workers would this monopsonist hire and what wage rate would it pay?
Number of worker is 10 and wage rate is $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?
Number of workers 20 and wage rate $20
The graph above shows the marginal revenue product curve and supply curve of labor for a firm. The introduction of new management techniques dramatically increases workers productivity. Which of the following changes is most likely to occur?
The marginal revenue product curve will shift to the right, increasing wage rate.
Based on the graph above, which of the following statements is true? (Couldn't find the picture)
The market wage rate is $10 per unit of labor.
Which of the following explains why the marginal factor (resource cost curve lies above the supply curve for labor in a monopsonistic labor market?
The monopsonist must increase the wage for all workers to hire more workers.
The demand curve for labor shows which of the following?
The number of workers a firm is willing and able to hire at various wage rates
Which of the following statements about the monopsonistic labor market shown in the accompanying graph is true?
The profit-maximizing monopsonist will hire Lo labor and pay each laborer W1.
If a binding minimum wage increases in a perfectly competitive labor market, then which of the following will likely occur in the labor market?
The quantity of workers supplied will increase.
Which of the following will occur when wage rates decrease in a given labor market?
The quantity supplied of labor will decrease.
According to the information in the table above, the twelfth worker would increase the hourly profit by
$1.30
If the firm can sell as many potatoes as it wants for $2 per pound and has to pay each worker $5 per hour, how many workers should the firm employ to maximize profits?
3
Based on the table for a perfectly competitive firm above, if the wage rate for labor is $15, how many units of labor should the firm hire?
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?
4
The marginal product of labor is constant at 1 unit for every additional unit of labor. The monopolist hires labor in a perfectly competitive market at the wage rate of $5 per hour. How many units of labor should the firm employ to maximize profits?
4
Which of the following will shift the demand curve for a factor of production to the left?
A decrease in the price of a substitute factor of production
Which of the following would cause the wage for computer programmers to increase
An improvement in the education of computer programmers
Which of the following statements about a monopsonistic labor market is true?
Compared to the wage paid in a competitive labor market, the wage paid by a monopsonist is lower and the quantity of labor hired is lower.
When the demand for new homes decreases, the demand for construction workers who build homes decreases. This relationship illustrates the concept of
Derived demand
A monopsonistic labor market has a
Single employer of labor
A change in which of the following will NOT cause a shift in the demand curve for a factor of production?
Supple of the factor
Assume that capital and labor are the only two inputs used by a clinic. The table shows the hourly marginal product and the hourly price of capital and labor at the current output level. To minimize costs at the current output level. the clinic should change the hiring of capital and labor in which of the following ways?
The amount of capital hired should increase, and the amount of labor hired should decrease.
Assume that firms sell their output in a perfectly competitive product market and hire labor in a perfectly competitive labor market. If all other factors remain constant, an increase in the demand for the firms' product will result in which of the following changes in the labor market?
The demand curve for labor will shift to the right.
-The marginal product of labor equals 250 units of output. -The marginal product of capital equals 750 units of output. -The price of labor is $50 per person. -The price of capital is $100 per unit. Given the information above, which of the following is true for a firm buying its labor and capital inputs in a perfectly competitive market?
The firm can reduce the cost of its current level of output by laying off workers and employing more capital.
When labor supply in a competitive labor market increases, the equilibrium wage rate and employment will change in which of the following ways?
Wage rate decreases and employment increases
The monopsonist's marginal factor (resource) cost curve for labor is
above the labor supply curve because to hire more workers the firm must raise the wage for all workers
If labor is the only variable input of a firm and the marginal product of labor is falling, the firn will always produce
at a level of output where marginal costs are rising
In a monopsonistic labor market, a firm will continue to hire workers until the marginal revenue product of labor
equals marginal factor (resource) cost, resulting in fewer workers being hired at a lower wage compared with a perfectly competitive labor market
A profit-maximizing firm will continue to hire workers until the
marginal factor cost of labor is equal to the marginal revenue product of labor
A profit-maximizing firm should hire an input up to the point at which
marginal revenue product equals marginal factor cost
A firm's demand for labor is known as a derived demand because
the amount of labor demanded depends on the demand for the firm's product
If the price of a good produced by a competitive firm increases, then
the marginal revenue product of labor will increase
A firm's demand curve for labor is equal to a segment of its
Marginal revenue product curve
Which of the following is most likely to shift the demand for aircraft mechanics to the right?
An increase in the demand for air travel