Name:
Class:
Date:
Chapter 11: Resource Markets
c.
third
d.
fourth
e.
fifth
105. The following table shows the product price of a perfectly competitive firm and the output produced by the firm.
From the table, it can be said that the marginal revenue product of the third machine is _____.
Table 11.1
Machines
Output
Product Price ($)
0
0
3
1
7
3
2
12
3
3
15
3
4
17
3
5
18
3
a.
3 units
b.
15 units
c.
$3
d.
$9
e.
$45
106. The following table shows the product price of a perfectly competitive firm and the output produced by the firm. If
the rental price of each machine is $6, the firm should employ _____machine(s).
Table 11.1
Machines
Output
Product Price ($)
0
0
3
1
7
3
2
12
3
3
15
3
4
17
3
5
18
3
a.
one
b.
two
c.
three
d.
four
e.
five
107. For a firm hiring a resource in a perfectly competitive resource market, its demand curve for the resource is its:
Name:
Class:
Date:
Chapter 11: Resource Markets
a.
marginal product curve.
b.
marginal revenue product curve.
c.
marginal resource cost curve.
d.
marginal revenue curve.
e.
total revenue curve.
108. Marginal revenue product is defined as:
a.
the total revenue generated by resources.
b.
the additional output produced by one additional unit of a resource, other things constant.
c.
the marginal revenue from each unit of output.
d.
the total revenue divided by the number of resources employed.
e.
the additional revenue generated by one additional unit of a resource, other things constant.
109. The marginal revenue product of labor equals:
a.
marginal product of labor/wage rate.
b.
the change in total revenue/the change in units of labor.
c.
the change in total revenue times the change in units of labor.
d.
product price/marginal physical product of labor.
e.
marginal physical product of labor × the wage rate.
110. Which of the following is true of marginal revenue product (MRP) and marginal product (MP)?
a.
MRP = MP × price whether the firm is a price taker or not
b.
MRP = MP × price only if the firm is a price maker
c.
MRP = MP × price only if the firm sells in a perfectly competitive market
d.
MRP = MP × marginal cost only if the firm is a price maker
e.
MRP = MP/price only if the firm is a price taker
111. The marginal revenue product of land indicates:
a.
the additional fixed cost generated by an additional square yard of land, other things constant.
b.
the additional cost to the firm when it employs an additional square yard of land, other things constant.
c.
the additional profit the firm earns when it employs an additional square yard of land, other things constant.
d.
the additional revenue the firm earns when it employs an additional square yard of land, other things constant.
e.
the amount of land required to produce an additional unit of output, other things constant.
112. If ZipCo’s marginal revenue product curves slope downward, _____.
a.
ZipCo is likely to be a price taker
b.
the price of the product equals marginal revenue
c.
the price of each resource used by ZipCo is constant
Name:
Class:
Date:
Chapter 11: Resource Markets
d.
the price of the product is less than marginal revenue
e.
ZipCo has some power in the product market
113. If the marginal product of the second worker hired by a firm is 14 units and the price of the tenth unit of output is $7,
then the marginal revenue product:
a.
of the second worker is $98 regardless of the structure of the product market.
b.
of the second worker is $98 if the firm is a price maker in the product market.
c.
of the second worker is $98 if the product market is perfectly competitive.
d.
of the tenth worker is $98 if the product market is perfectly competitive.
e.
of the tenth worker is $98 if the firm is a price taker in the product market.
114. If the marginal product of the second worker hired by a firm is 10 units and the price of a unit of output is $7
regardless of the quantity of output sold, then the marginal revenue product of the second worker is _____.
a.
$70
b.
$14
c.
$7
d.
$2
e.
$21
115. If the marginal revenue product of the fifth worker hired by a firm is $15 and the price of a unit of output is $5
regardless of how much is sold, then the marginal product of the fifth worker is _____.
a.
15 units of output
b.
5 units of output
c.
3 units of output
d.
45 units of output
e.
75 units of output
116. Suppose the marginal revenue product of the fifth worker hired by a firm is $18 and the price of the last unit of
output produced is $6. The marginal product of the fifth worker is _____.
a.
15 units of output if the product market is perfectly competitive
b.
3 units of output if the product market is perfectly competitive
c.
45 units of output if the product market is perfectly competitive
d.
5 units of output if the producer is a price taker
e.
15 units of output if the producer is a price taker
117. For a firm which has some power in the product market, the marginal revenue product of the fifth worker is $15 and
the price of the last unit of output produced is $5. The firm will hire the fifth worker if the marginal product of the fifth
worker is _____.
a.
3 units of output
b.
45 units of output
Name:
Class:
Date:
Chapter 11: Resource Markets
c.
fewer than 3 units of output
d.
greater than 3 units of output
e.
greater than 75 units of output
118. The following table shows data of a firm producing chocolate candies. If the firm sells chocolate candies for $3 per
pound regardless of the quantity sold, the marginal revenue product of the third worker is _____.
Table 11.2
Pounds of
candy
Units of
labor
80
1
120
2
150
3
a.
$0.60
b.
$6
c.
$0.30
d.
$3
e.
$90
e
119. The following table shows data for a perfectly competitive firm. The first column shows the number of resources
employed in production, the second column shows the total product of the firm, and the third column shows its product
price. Which of the following is the marginal revenue product of the fifth unit of the resource?
Table 11.3
Number of Workers
Total
Product
Product
Price ($)
0
0
4.00
1
15
4.00
2
29
4.00
3
42
4.00
4
54
4.00
5
65
4.00
6
75
4.00
7
84
4.00
8
92
4.00
9
99
4.00
10
105
4.00
a.
$260
b.
$130
c.
$22
d.
$44
e.
−$18
Name:
Class:
Date:
Chapter 11: Resource Markets
120. The following table shows data for a perfectly competitive firm. The first column shows the number of resources
employed in production, the second column shows the total product of the firm, and the third column shows its product
price. If the wage rate is $44, then the number of workers hired is _____.
Table 11.3
Number of Workers
Total
Product
Product
Price ($)
0
0
4.00
1
15
4.00
2
29
4.00
3
42
4.00
4
54
4.00
5
65
4.00
6
75
4.00
7
84
4.00
8
92
4.00
9
99
4.00
10
105
4.00
a.
two
b.
three
c.
five
d.
seven
e.
nine
c
121. The following table shows data for a perfectly competitive firm. The first column shows the number of workers
employed in production, the second column shows the total product of the firm, and the third column shows its product
price. If the firm wants to hire nine workers, then the wage rate is _____.
Table 11.3
Number of Workers
Total
Product
Product
Price ($)
0
0
4.00
1
15
4.00
2
29
4.00
3
42
4.00
4
54
4.00
5
65
4.00
6
75
4.00
7
84
4.00
8
92
4.00
9
99
4.00
10
105
4.00
a.
$4
Name:
Class:
Date:
Chapter 11: Resource Markets
b.
$14
c.
$28
d.
$198
e.
$396
122. The following table shows data for a firm. The first column shows the number of variable resources employed in
production, the second column shows firm’s total product, and the third column shows its product price. The firm will hire
the fourth unit of resource when the marginal revenue product of the fourth unit is _____.
Table 11.4
Units of
variable
resource
Total
Product
Product
Price ($)
0
0
22
1
15
20
2
29
18
3
42
16
4
54
14
5
65
12
6
75
10
7
84
8
8
92
6
9
99
4
10
105
2
a.
$14
b.
$24
c.
$168
d.
$84
e.
$756
123. The following table shows data for a firm. The first column shows the number of variable resources employed in
production, the second column shows firm’s total product, and the third column shows its product price. If the firm
decides to hire five units of resource, then the market price paid to the resource is _____.
Table 11.4
Units of
variable
resource
Total
Product
Product
Price ($)
0
0
22
1
15
20
2
29
18
3
42
16
4
54
14
5
65
12
Name:
Class:
Date:
Chapter 11: Resource Markets
6
75
10
7
84
8
8
92
6
9
99
4
10
105
2
a.
$100
b.
$74
c.
$54
d.
$34
e.
$24
124. The following table shows data for a firm. The first column shows the number of variable resource employed in
production, the second column shows the total product of the firm, and the third column shows its product price. If the
price paid to a resource is $84, then _____ of the resource are employed.
Table 11.4
Units of
variable
resource
Total
Product
Product
Price ($)
0
0
22
1
15
20
2
29
18
3
42
16
4
54
14
5
65
12
6
75
10
7
84
8
8
92
6
9
99
4
10
105
2
a.
0 unit
b.
1 unit
c.
2 units
d.
3 units
e.
4 units
125. The following table shows data for a firm. The first column shows the number of variable resource employed in
production, the second column shows the total product of the firm, and the third column shows its product price. If the
firm decides to hire nine units of the resource, the market price paid to a resource is _____.
Table 11.4
Units of
variable
resource
Total
Product
Product
Price($)
Name:
Class:
Date:
Chapter 11: Resource Markets
0
0
22
1
15
20
2
29
18
3
42
16
4
54
14
5
65
12
6
75
10
7
84
8
8
92
6
9
99
4
10
105
2
a.
$98
b.
$4
c.
$396
d.
$28
e.
$400
126. In a perfectly competitive market, if ten cases of spring water are sold at a price of $6 each and the marginal product
of the last unit of labor is 5 units, then the marginal revenue product of that last unit of labor is ______.
a.
$60
b.
$30
c.
$50
d.
$2
e.
60 cents
127. Ten cases of spring water are sold for $6 each, and the marginal product of the last unit of labor is 5. If the price of a
case increases from $6 to $8, then the marginal revenue product of the last unit of labor would:
a.
decrease by $10.
b.
increase by $40.
c.
decrease by $30.
d.
increase by $10.
e.
increase by $20.
128. An increase in the demand for automobiles will increase the demand for the labor used to produce the automobiles
due to a(n):
a.
increase in the marginal revenue product of labor.
b.
decrease in the marginal revenue product of labor.
c.
increase in the marginal revenue product of automobiles.
d.
decrease in the marginal revenue product of automobiles.
e.
decrease in the average revenue of labor.
Name:
Class:
Date:
Chapter 11: Resource Markets
129. A firm will hire additional units of a resource as long as each unit’s:
a.
marginal revenue product is greater than zero.
b.
marginal revenue product equals the product price.
c.
marginal revenue product is greater than or equal to its marginal resource cost.
d.
marginal revenue product is less than its marginal resource cost.
e.
total revenue product is greater than its marginal resource cost.
130. If a profit-maximizing firm hires an additional unit of labor, which of the following is true of that labor’s wage and
marginal revenue product?
a.
Its wage always equals its marginal revenue product.
b.
Its wage is always greater than its marginal revenue product.
c.
Its wage is always equal to its average revenue.
d.
Its wage is always less than its marginal product.
e.
Its wage is always less than or equal to its marginal revenue product.
131. A firm hires labor in a perfectly competitive labor market. If the wage rate is $44, the firm should hire:
a.
44 workers.
b.
all units of labor whose marginal product is 44.
c.
all units of labor whose marginal revenue product is $44.
d.
all units of labor whose marginal revenue product is greater than or equal to $44.
e.
all units of labor whose marginal revenue product is less than or equal to $44.
132. Suppose the marginal resource cost of the tenth worker hired by a firm is $4 and the wage of the tenth worker is $3.
The firm will hire ten workers if the marginal revenue product of the tenth worker is _____.
a.
$1
b.
less than $3
c.
greater than or equal to $3
d.
greater than or equal to $4
e.
less than $4
133. In a perfectly competitive labor market, a profit-maximizing firm will hire labor up to the point at which the:
a.
wage rate = marginal resource cost.
b.
wage rate < marginal revenue product.
c.
wage rate = marginal revenue product.
d.
wage rate > marginal revenue product.
e.
wage rate = marginal product.
134. Which of the following represents a firm’s demand curve for a resource?
a.
Average total cost curve
Name:
Class:
Date:
Chapter 11: Resource Markets
b.
Average variable cost curve
c.
Marginal revenue product curve
d.
Marginal resource cost curve
e.
Average fixed cost curve
135. If the market wage is below the marginal revenue product of labor, then:
a.
a profit-maximizing firm will employ more workers.
b.
a profit-maximizing firm will employ fewer workers.
c.
there is an increase in the demand for labor.
d.
there is a decrease in the demand for labor.
e.
the opportunity cost of leisure increases.
136. The Pat Summerall School of Diction is employing teachers. If the marginal revenue product of teachers exceeds the
wage rate. The school will:
a.
reduce its demand for teachers.
b.
lay off teachers.
c.
be losing money from those teachers employed.
d.
hire more teachers.
e.
increase the price of diction classes.
137. A firm’s marginal resource cost curve is:
a.
horizontal only if the firm is a price taker in the product market.
b.
horizontal only if the firm is a price taker in the resource market.
c.
vertical only if the firm is a price taker in the product market.
d.
vertical only if the firm is a price taker in the resource market.
e.
always downward sloping whether the firm sells its product in a competitive market or a market with some
market power.
138. A firm sells staples in a perfectly competitive market and hires workers from a perfectly competitive labor market.
Which of the following is true?
a.
The supply curve of staples is horizontal
b.
The supply curve of workers is horizontal.
c.
The firm’s demand curve for labor is horizontal.
d.
The firm’s marginal cost is decreasing.
e.
The marginal product of labor curve is horizontal.
139. If a firm hires a resource in a perfectly competitive resource market, then:
a.
the firm is a price taker in the product market.
b.
the firm has some power in the product market.
Name:
Class:
Date:
Chapter 11: Resource Markets
c.
the firm faces a horizontal marginal resource cost curve.
d.
the firm faces an upward-sloping marginal resource cost curve.
e.
the firm faces a downward-sloping marginal resource cost curve.
140. The following table shows data of a firm that produces watches. If the firm’s marginal resource cost of labor is
constant at $18 per unit of labor, at the profit-maximizing level of output, the firm will hire _____ of labor.
Table 11.5
Units of labor
Total Product
Marginal Product
Price of watch
($)
1
10
10
6
2
19
9
6
3
22
3
6
4
24
2
6
5
25
1
6
a.
one unit
b.
two units
c.
three units
d.
four units
e.
five units
141. Which of the following represents the resource supply curve for a firm that hires resources in a perfectly competitive
resource market?
a.
Average total cost curve
b.
Average variable cost curve
c.
Marginal revenue product curve
d.
Marginal resource cost curve
e.
Average fixed cost curve
142. A firm produces in a perfectly competitive market and hires labor in a perfectly competitive labor market. The firm
hires four workers, the marginal product of the fourth worker is 4, and the wage rate is $40. The firm produces 100 units
of the product, which sell for a price of $10. This firm is:
a.
maximizing profit when it hires four workers.
b.
not maximizing profit and should hire more workers to increase profit.
c.
not maximizing profit and should hire fewer workers to increase profit.
d.
not maximizing profit when it produces 100 units of the product and should increase production to increase
profit.
e.
not maximizing profit when it produces 100 units of the product and should decrease production to increase
profit.
Name:
Class:
Date:
Chapter 11: Resource Markets
143. Suppose a firm has some power in the product market and hires labor in a perfectly competitive labor market. If the
market wage rate is $20, the marginal product of the last worker hired is 5, and the firm is hiring the profit-maximizing
amount of labor, then the marginal revenue product of the last worker hired is _____.
a.
$1
b.
$1.50
c.
$4
d.
$5
e.
$20
e
144. The demand for labor is likely to increase when:
a.
the marginal product of labor decreases.
b.
the demand for the final good it produces rises.
c.
the opportunity cost of leisure decreases.
d.
the marginal revenue product of labor decreases.
e.
the wage rate rises.
145. If the marginal product of labor increases because of a shift of the marginal product curve, it will likely cause:
a.
an increase in the price of output produced by labor.
b.
an increase in labor demand.
c.
an increase in labor supply.
d.
a fall in the wage paid to labor.
e.
a fall in the number of workers employed.
146. If a publishing company purchases faster computers to speed up word processing, _____.
a.
the marginal product of its editors will increase, which will shift the demand for editors to the right
b.
the marginal product of its editors will increase, which will shift the demand for editors to the left
c.
the wages of its editors will increase, which will cause an upward movement along the demand for editors
d.
the wages of its editors will decrease, which will cause a downward movement along the demand for editors
e.
the price of the journals printed by the company will increase
a
147. An improvement in technology that allows workers to process twice as many insurance forms in an hour than before
will result in:
a.
an increase in the employment of labor because the marginal product of labor has decreased.
b.
an increase in insurance premiums.
c.
a decrease in the employment of labor because the marginal product of labor has decreased.
d.
an increase in the employment of labor because the marginal revenue product of labor has increased.
e.
a decrease in the employment of labor because its marginal revenue product has increased.
148. A change in the market demand of a final good affects:
Name:
Class:
Date:
Chapter 11: Resource Markets
a.
the supply of the resources used to produce it.
b.
the demand for the resources used to produce it.
c.
the marginal product of the resources used to produce it.
d.
the marginal resource cost of the resources used to produce it.
e.
the total cost of the resources used to produce it.
149. If two resources, such as labor and farm machinery, are complements:
a.
one can be used in place of the other.
b.
an increase in the price of one will increase the demand for the other.
c.
an increase in the price of one will increase the supply of the other.
d.
a decrease in the price of one will decrease the demand for the other.
e.
a decrease in the price of one will increase the demand for the other.
150. Which of the following are complementary resources?
a.
Margarine and butter, used in baking
b.
Sugar and honey, used in cereals
c.
A teacher and a chalkboard
d.
Rye and wheat bread, used in a sandwich shop
e.
A typewriter and a personal computer, used in an office