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of labor equals 35 units per week, then the marginal cost of producing an additional unit of output is
a.
$20.
b.
$35.
c.
$700.
d.
We do not have enough information to answer this question.
70. Suppose that a competitive firm hires labor up to the point at which the value of the marginal product equals the wage
and that labor is the only input that varies for the firm. If the firm pays a wage of $700 per week and the marginal product
of labor equals 10 units per week, then the marginal cost of producing an additional unit of output is
a.
$7.
b.
$70.
c.
$700.
d.
We do not have enough information to answer this question.
71. When labor is the only input a firm uses, the marginal cost of a unit of output can be defined as the
a.
marginal revenue multiplied by the wage.
b.
marginal product of labor multiplied by the wage.
c.
marginal product of labor divided by the wage.
d.
None of the above is correct.
72. For maximum profit, a firm hires labor up to the point at which the wage equals
(i)
the value of the marginal product of labor.
(ii)
the marginal cost of an additional unit of output.
(iii)
output price multiplied by the marginal product of labor.
a.
(i) and (ii) only
b.
(i) and (iii) only
c.
(ii) and (iii) only
d.
(i), (ii), and (iii)
73. As a result of increasing its workforce from 9 workers to 10 workers, a firm’s total revenue per day increases from
$60,000 to $60,250 and its total cost per day increases from $58,500 to $58,700. The marginal profit of the 10th worker is
a.
-$50.
b.
$50.
c.
$200.
d.
$250.
74. When a competitive firm produces output up to the point at which the price is equal to marginal cost, it also hires labor
up to the point at which the wage is equal to the
a.
marginal cost of labor.
b.
marginal profit of labor.
c.
marginal product of labor.
d.
value of the marginal product of labor.
75. For a competitive firm, which of the following quantities is equal to marginal cost?
a.
wage marginal product of labor
b.
wage value of marginal product of labor
c.
price marginal product of labor
d.
price value of marginal product of labor
Figure 18-1
On the graph, L represents the quantity of labor and Q represents the quantity of output per week.
76. Refer to Figure 18-1. The figure illustrates the
a.
demand for labor.
b.
supply of labor.
c.
production function.
d.
wage function.
77. Refer to Figure 18-1. The marginal product of the second worker is
a.
90 units of output.
b.
105 units of output.
c.
210 units of output.
d.
330 units of output.
78. Refer to Figure 18-1. The marginal product of the fourth worker is
a.
60 units of output.
b.
75 units of output.
c.
285 units of output.
d.
345 units of output.
79. Refer to Figure 18-1. Suppose the firm hires each unit of labor for $600 per week, and each unit of output sells for
$9. What is the value of the marginal product of the third worker?
a.
$540
b.
$600
c.
$675
d.
$810
80. Refer to Figure 18-1. Suppose the firm sells its output for $12 per unit, and it pays each of its workers $700 per week.
The value of the marginal product of the fifth worker is
a.
$540
b.
$700
c.
$720
d.
$1,080
81. Refer to Figure 18-1. Suppose the firm hires each unit of labor for $700 per week, and each unit of output sells for
$9. How many workers will the firm hire to maximize its profit?
a.
2
b.
3
c.
4
d.
5
82. Refer to Figure 18-1. Suppose the firm sells its output for $12 per unit, and it pays each of its workers $700 per week.
How many workers will the firm hire to maximize its profit?
a.
2
b.
3
c.
4
d.
5
83. Refer to Figure 18-1. Suppose the firm sells its output for $15 per unit, and it pays each of its workers $750 per week.
When output increases from 210 units to 285 units, the
a.
marginal cost is $10 per unit of output.
b.
marginal revenue is $5 per unit of output.
c.
value of the marginal product of labor is $4,275
d.
firm’s profit decreases.
84. Refer to Figure 18-1. Suppose the firm sells its output for $10 per unit, and it pays each of its workers $400 per week.
When the number of workers increases from 4 to 5, the
a.
marginal revenue is $450 per unit of output, and the marginal cost is $400 per unit of output.
b.
value of the marginal product of labor is $3,900, and the marginal cost per unit of output is $400.
c.
value of the marginal product of labor is $450, and the marginal cost per unit of output is about $8.89.
d.
firm’s profit increases.
85. Refer to Figure 18-1. Suppose the firm sells its output for $25 per unit, and it pays each of its workers $1,000 per
week. Also, the firm’s non-labor costs are fixed and they amount to $2,000. The firm maximizes profit by hiring
a.
2 workers.
b.
3 workers.
c.
4 workers.
d.
5 workers.
86. Refer to Figure 18-1. Suppose the firm sells its output for $20 per unit, and it pays each of its workers $1,250 per
week. The firm maximizes profit by hiring
a.
3 workers.
b.
4 workers.
c.
5 workers.
d.
6 workers.
87. Refer to Figure 18-1. The shape of the curve suggests the presence of
a.
an inverted production function.
b.
diminishing total product.
c.
increasing marginal product.
d.
diminishing marginal product.
88. Refer to Figure 18-1. Based on the shape of the curve, the
(i)
total product is increasing.
(ii)
total product is decreasing.
(iii)
marginal product is increasing.
(iv)
marginal product is decreasing.
a.
(i) only
b.
(i) and (iii) only
c.
(i) and (iv) only
d.
(ii) and (iv) only
Figure 18-2
The figure below shows the production function for a particular firm.
89. Refer to Figure 18-2. The marginal product of the third worker is
a.
20 units.
b.
30 units.
c.
40 units.
d.
70 units.
90. Refer to Figure 18-2. The marginal product of the fourth worker is
a.
100 units.
b.
25 units.
c.
20 units.
d.
10 units.
91. Refer to Figure 18-2. Suppose the firm pays a wage equal to $160 per unit of labor and sells its output at $10 per unit.
What is the value of the marginal product of labor for the third worker?
a.
20 units
b.
$200
c.
$2,720
d.
$3,200
92. Refer to Figure 18-2. Suppose the firm pays a wage equal to $160 per unit of labor and sells its output at $10 per unit.
What is the value of the marginal product of labor for the fourth worker?
a.
10 units
b.
$100
c.
$1,000
d.
$1,600
93. Refer to Figure 18-2. Suppose the firm pays a wage equal to $160 per unit of labor and sells its output at $10 per unit.
How many units of labor should the firm hire to maximize profit?
a.
2 units
b.
3 units
c.
4 units
d.
5 units
94. Refer to Figure 18-2. Suppose the firm pays a wage equal to $320 per unit of labor and sells its output at $15 per unit.
How many units of labor should the firm hire to maximize profit?
a.
2 units
b.
3 units
c.
4 units
d.
5 units
Figure 18-3
95. Refer to Figure 18-3. What is the marginal product of the second worker?
a.
4 units
b.
6 units
c.
8 units
d.
12 units
96. Refer to Figure 18-3. What is the marginal product of the third worker?
a.
2 units
b.
4 units
c.
4.67 units
d.
14 units
97. Refer to Figure 18-3. What is the marginal product of the fourth worker?
a.
1 unit
b.
2 units
c.
3.75 units
d.
15 units
98. Refer to Figure 18-3. Suppose that the price of the output is $20. What is the value of the marginal product of the
second worker?
a.
$4
b.
$5
c.
$80
d.
$240
99. Refer to Figure 18-3. Suppose that the price of the output is $20. What is the value of the marginal product of the
third worker?
a.
$2
b.
$10
c.
$40
d.
$280
100. Refer to Figure 18-3. Suppose that the price of the output is $20. What is the value of the marginal product of the
fourth worker?
a.
$1
b.
$20
c.
$280
d.
$300
Scenario 18-1
Harry owns a snow-removal business. He hires workers to shovel driveways for him during the winter. The first worker
he hires can shovel twelve driveways in one day. When Harry hires two workers, they can shovel a total of 22 driveways
in one day. When Harry hires a third worker, he shovels an additional eight driveways in one day.
101. Refer to Scenario 18-1. What is the marginal productivity of the second worker?
a.
7
b.
10
c.
12
d.
22
102. Refer to Scenario 18-1. What is the total productivity of three workers?
a.
12
b.
22
c.
30
d.
42
103. Refer to Scenario 18-1. Suppose that Harry pays each worker $80 per day and that he charges each customer $20 to
have his driveway shoveled. What is the value of the marginal product of labor for the second worker?
a.
$200
b.
$240
c.
$800
d.
$960
104. Refer to Scenario 18-1. Suppose that Harry pays each worker $80 per day and that he charges each customer $20 to
have his driveway shoveled. What is the value of the marginal product of labor for the third worker?
a.
$160
b.
$640
c.
$1,600
d.
$2,400
Table 18-1
Days of Labor
Units of Output
0
0
1
10
2
18
3
25
4
30
5
33
6
34
105. Refer to Table 18-1. What is the marginal product of the second worker?
a.
8
b.
9
c.
10
d.
18
106. Refer to Table 18-1. What is the marginal product of the third worker?
a.
7
b.
8
c.
25
d.
75
107. Refer to Table 18-1. What is the marginal product of the fourth worker?
a.
5
b.
7.5
c.
8
d.
30
108. Refer to Table 18-1. Suppose that the firm pays its workers $45 per day. Each unit of output sells for $10. How
many days of labor should the firm hire?
a.
1
b.
2
c.
3
d.
4
109. Refer to Table 18-1. Suppose that the firm pays its workers $80 per day. Each unit of output sells for $15. How
many days of labor should the firm hire?
a.
3
b.
4
c.
5
d.
6
110. Refer to Table 18-1. Suppose that the firm pays its workers $50 per day. Each unit of output sells for $20. How
many days of labor should the firm hire?
a.
3
b.
4
c.
5
d.
6
Table 18-2
Quantity of
Number of Bracelets
Labor
Per Week
0
0
1
200
2
360
3
480
4
560
5
600
111. Refer to Table 18-2. The table shows the number of bracelets that can be assembled per week by various numbers of
workers. If the price per bracelet in a perfectly competitive product market is $8, how many workers would the firm
employ if the weekly wage rate is $800?
a.
1
b.
2
c.
3
d.
4
112. Refer to Table 18-2. The table shows the number of bracelets that can be assembled per week by various numbers of
workers. If the price per bracelet in a perfectly competitive product market is $5, how many workers would the firm
employ if the weekly wage rate is $375?
a.
1
b.
2
c.
3
d.
4
113. Refer to Table 18-2. The table shows the number of bracelets that can be assembled per week by various numbers of
workers. If the price per bracelet in a perfectly competitive product market is $10, how many workers would the firm
employ if the weekly wage rate is $375?
a.
2
b.
3
c.
4
d.
5
114. Refer to Table 18-2. The table shows the number of bracelets that can be assembled per week by various numbers of
workers. If the price per bracelet in a perfectly competitive product market is $2.50, how many workers would the firm
employ if the weekly wage rate is $375?
a.
2
b.
3
c.
4
d.
5
Table 18-3
Number of
Workers (L)
Output of
Firm A
Output of
Firm B
Output of
Firm C
Output of
Firm D
1
200
200
200
200
2
160
380
600
400
3
120
540
1,200
600
4
80
680
2,000
800
115. Refer to Table 18-3. Which firm’s production function exhibits constant marginal product?
a.
Firm A
b.
Firm B
c.
Firm C
d.
Firm D
116. Refer to Table 18-3. Which firm’s production function exhibits positive but diminishing marginal product?
a.
Firm A
b.
Firm B
c.
Firm C
d.
Firm D
117. Refer to Table 18-3. Which firm’s production function exhibits negative marginal product?
a.
Firm A
b.
Firm B
c.
Firm C
d.
Firm D
118. Refer to Table 18-3. For Firm A, the marginal product of labor is
a.
increasing.
b.
constant.
c.
decreasing.
d.
negative.
119. Refer to Table 18-3. For Firm B, the marginal product of labor is
a.
increasing.
b.
constant.
c.
decreasing.
d.
negative.
120. Refer to Table 18-3. For Firm C, the marginal product of labor is
a.
increasing.
b.
constant.
c.
decreasing.
d.
negative.
121. Refer to Table 18-3. For Firm D, the marginal product of labor is
a.
increasing.
b.
constant.
c.
decreasing.
d.
negative.
Table 18-A
Labor
Output
Marginal Product
of Labor
Value of Marginal
Product of Labor
Wage
Marginal
Profit
0
0
---
---
---
---
1
1,000
1,000
$5,000
$3,000
$2,000
2
1,800
800
$4,000
$3,000
$1,000
3
2,300
500
$2,500
$3,000
-$500
4
2,600
300
$1,500
$3,000
-$1,500
122. Refer to Table 18-4. The price of output is
a.
$400.
b.
$3.
c.
$2.
d.
$1.
123. Refer to Table 18-4. How many workers should the firm hire?
a.
1
b.
2
c.
3
d.
4
Table 18-5
Labor
Output
Marginal Product
of Labor
Value of Marginal
Product of Labor
Wage
Marginal
Profit
0
0
---
---
---
---
1
400
400
$800
$450
$350
2
700
300
$600
$450
$150
3
950
250
$500
$450
$50
4
1050
100
$200
$450
-$250
124. Refer to Table 18-5. The price of output is
a.
$1.
b.
$2.
c.
$3.
d.
$4.
125. Refer to Table 18-5. How many workers should the firm hire?
a.
1
b.
2
c.
3
d.
4
Table 18-6
Labor
Output
Marginal Product
of Labor
Value of Marginal
Product of Labor
Wage
Marginal
Profit
0
0
---
---
---
---
1
300
300
$600
$300
$300
2
500
200
AA
$300
$100
3
600
100
$200
$300
BB
4
650
CC
DD
$300
-$200
126. Refer to Table 18-6. What is the value for the cell labeled AA?
a.
$600
b.
$500
c.
$400
d.
$300
127. Refer to Table 18-6. What is the value for the cell labeled BB?
a.
$300
b.
$200
c.
$100
d.
−$100
128. Refer to Table 18-6. What is the value for the cell labeled CC?
a.
650
b.
600
c.
100
d.
50
129. Refer to Table 18-6. What is the value for the cell labeled DD?
a.
−$100
b.
$300
c.
$100
d.
$50
