Multiple Choice
Identify the
choice that best completes the statement or answers the question.
|
|
|
1.
|
Acme Rockets, a manufacturer of consumer strap-on rockets, will continue to add
an additional worker to its factory as long as
a. | the additional cost of hiring that worker is less than the additional revenue
generated by hiring the additional worker | d. | each additional worker can increase
production by at least one rocket per day an hour. | b. | the additional revenue generated by each
additional worker is positive. | e. | the marginal product of the additional worker is equal to the worker’s
wage | c. | the additional revenue generated by each additional worker is less than the price of
a rocket. |
|
|
|
2.
|
The profit maximing rule for firms when deciding to hire/purchase additional
units of a resource, including workers, is to keep hiring/purchasing 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 |
|
|
|
3.
|
An individual firm in a perfectly competitive labor market does not affect the
market wage rate regardless of how many workers it hires. In such a situation, a
profit-maximizing firm would hire labor up to the point where the
a. | wage rate = MRC | b. | wage rate < MRP | c. | wage rate =
MRP | d. | wage rate > MRP | e. | wage rate = MP |
|
|
|
4.
|
The payment made to an owner of a resource in excess of the opportunity cost of
the resource is
a. | economic rent | b. | excess cost | c. | marginal
wage | d. | compound interest | e. | marginal cost |
|
|
|
5.
|
The portion of a worker's total earnings that is more than what is
necessary to keep the worker from switching to another job is called
a. | opportunity cost | b. | consumer surplus | c. | value of marginal
product | d. | economic rent | e. | marginal resource
cost |
|
|
|
6.
|
Woody Forthdown is the head coach for a major college football team. He
earns $937,000 per year as coach. If Woody didn’t have the opportunity to coach college
football, he would be a high school teacher/coach. High school teacher/coaches get paid $57,000
per year. Woody’s economic rent as a college football coach is
a. | All of Woody’s income is economic rent. | b. | $994,000 of
his income is economic rent. | c. | $57,000 of his income is economic
rent. | d. | $880,000 of his income is economic rent. | e. | None of
Eddie’s income is economic rent. |
|
|
|
7.
|
Marginal product is
a. | the revenue produced by one additional unit of a resource | b. | the total output
produced by a resource | c. | the additional output produced by employing one
additional unit of a resource | d. | the total output divided by the number of units
of a resource employed | e. | the total output times the number of units of a
resource employed |
|
|
|
8.
|
If 4 workers produce a total of 24 left-handed knives and 5 workers produce a
total of 25 left-handed knives,
a. | the marginal product of the fifth worker is 25 left-handed knives | b. | the marginal product
of the fifth worker is 24 cleft-handed knives | c. | the marginal product of the fifth worker is 1
left-handed knives | d. | the marginal product of the fifth worker is 5
left-handed knives | e. | the fifth worker is probably
right-handed. |
|
|
|
9.
|
We-Cook-4-U, a catering firm, currently employs 5 cooks. Together, they
can prepare meals for 125 people per day. The average meal sells for $9.00. Hiring
another cook will cost them an additional $150 per day. If they hire another cook, then they
should be able to prepare 144 meals per day. Should they hire the additional cook? [note
some economists use the notation “VMP” for “MRP”]
a. | yes, because MP=23 meals, MRP=$161, MRC=$100 | b. | yes, because MP=19
meals, MRP=$171, MRC=$150 | c. | no, because MP=24 meals, MRP=$216,
MRC=$150 | d. | no, because MP=19 meals, MRP=$100, MRC=$171 |
|
|
|
10.
|
When hiring resources, the objective of firms is to
a. | maximize profit | b. | maximize total revenue | c. | maximize marginal
revenue | d. | maximize utility | e. | minimize cost |
|
|
|
11.
|
All other things being unchanged, an decline in the demand for live classical
music performances in the US will cause the demand for violinists to
a. | also decrease because the demand for violinists is a derived
demand | b. | increase because the demand for violinists is a derived demand | c. | also decrease
because the supply of violinists has increased | d. | increase because the supply of violinists has
increased | e. | increase because the supply of violinists has
decreased |
|
|
|
12.
|
The demand for labor is called ________, because the demand for
labor ___________________.
a. | a complementary demand; is based on the demand for products. | b. | a complementary
demand; provides the income to buy products. | c. | a derived demand; is based on the demand
for products. | d. | a derived demand; is calculated from government employment
targets. | e. | a derived demand; is based on the minimum wage |
|