Holding the price of a firm’s output constant, if the marginal product of labor increases
A) the marginal revenue product of labor decreases.
B) the marginal revenue product of labor also increases.
C) the marginal products of other inputs also increase.
D) the marginal revenue product of labor may increase or decrease.
A firm’s expansion path
A) is the same thing as its long-run average cost curve.
B) is a curve that shows a firm’s cost-minimizing combination of inputs for every level
of output, holding input prices constant.
C) shows the targeted growth rate in sales over the long run.
D) is a curve that shows expected profits at various price levels.
Figure 3-6
Refer to Figure 3-6. The figure above represents the market for canvas tote bags.
Compare the conditions in the market when the price is $50 and when the price is $35.
Which of the following describes how the market differs at these prices?
A) At each price there is a surplus; the surplus is greater at $35 than at $50.
B) The difference between quantity supplied and quantity demanded is greater at $50
than at $35.
C) At each price there is a surplus; firms will lower the equilibrium price in order to
eliminate the surplus.
D) At each price the supply of tote bags exceeds that demand for tote bags.
When firms price their products by adding a percentage markup to their average costs
of production, this is called
A) average cost pricing.
B) rounding up.
C) break-even pricing.
D) cost-plus pricing.
In a diagram showing the average total cost and average variable cost curves, the
minimum point of the average total cost is
A) at the same level of output as the minimum point of the average variable cost.
B) at a larger level of output than the minimum point of the average variable cost.
C) at a lower level of output than the minimum point of the average variable cost.
D) at the same level of output as the maximum of the total product curve.
The parent company of Safelite AutoGlass, the nation’s largest installer of auto glass,
changed the system it used to pay its glass installers in the mid-1990s. How did Safelite
change its compensation system and what was the result?
A) Safelite ended its system of paying workers on the basis of how many windows they
repaired and replaced it with a system that paid workers hourly wages. As a result,
productivity and worker morale improved.
B) Safelite ended its system of paying workers hourly wages and replaced it with a
system that determined wages on the basis of how many windows were repaired. As a
result, productivity and worker morale suffered. Eventually, Safelite returned to its
previous compensation system.
C) The new system has not been in place long enough to determine whether it is an
improvement over the previous compensation system.
D) Safelite ended its system of paying workers hourly wages and replaced it with a
system that determined wages on the basis of how many windows were repaired. As a
result, productivity and worker morale improved.