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The table below shows a competitive firm's short-run production function. Labor is the firm's only variable input, and the market price for the firm's product is $2 per unit.

Units of Labor Units of Output
3 370
4 490
5 570
6 600
7 620

1. How much does the fifth unit of labor add to the firm's total revenue?

A. $160.
B. $80.
C. $60.
D. $40.
E. $10.

2. If the wage rate is $200, how many units of labor will the firm employ?
A. 3.
B. 4.
C. 5.
D. 6.
E. 0, the firm shuts down.

3. If the wage rate is $200, the firm should
A. Shut down because the average revenue product is $200, which is less than the marginal revenue product.
B. Shut down because the average revenue product is $228, which is greater than the wage rate.
C. Produce because the average revenue product is $200, which is less than the marginal revenue product.
D. Produce because the average revenue product is $245, which is greater than the wage rate.

4. If the market price for the firm's production increases to $5, how many units of labor will the firm employ at a wage rate of $200?
A. 0, the firm shuts down.
B. 4.
C. 5.
D. 6.
E. 7.

 

 

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Romarie Khazandra Marijuan
Romarie Khazandra MarijuanLv10
28 Sep 2019

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Related questions

1) Which of the following inputs can be changed in the short run?

Land owned
Labor employed
Machinery
Office Space

2) In a perfectly competitive market:

price is always equal to marginal revenue.
price is always greater than marginal revenue.
price is always greater than marginal cost.
price is always equal to marginal cost.

3) The following table shows the total output, number of workers employed, variable costs, and fixed costs of a firm.

Number of Workers Total Output (units) Variable Costs ($) Fixed Costs ($)
0 0 0 150
1 25 10 150
2 55 20 150
3 86 30 150
4 110 40 150
5 130 50 150
6 145 60 150
7 155 70 150
8 160 80 150



Refer to the table above. Suppose that the only variable input that the firm uses is labor. What is the wage paid to a worker in the firm?

4) A firm produces 200 units of a good when it employs 7 workers. The marginal product of the eighth worker is 46 units. If the eighth worker is hired, the firm's total product will increase to:

246 units.
208 units.
322 units.
228 units.

Suppose a firm in a competitive industry faces an equilibrium product price of $2 per unit of output. Table A provides information on the output produced by various amounts of labor. Use this information to complete the remaining columns of Table A, and to fill in the labor demand schedule in Table B.

Table A: Production Schedule Units of Labor Total Product

Units of Labor Total Product AP MP MRP
0 0      
1 13      
2 25      
3 34      
4 42      
5 46      
6 48      

(a) Complete Table A, where AP is the average product of labor, MP is the marginal product of labor, MRP is the marginal revenue product of labor.

(b) Briefly explain why the marginal revenue product of labor (MRP) will be equal to the value of the marginal product of labor (V MP) in this market

Wage Rate Quantity Demanded
24  
16  
8  

(c) Complete Table B, with the labor demand schedule for this firm at different wage rates.

(d) If the equilibrium market wage rate is $8, what is the equilibrium quantity of labor hired by the firm?

A change in demand for a given factor of production will not occurif:
Answer
A. the productivity of that factor increases.
B. there is a decrease in the price of a substitute factor.
C. the price of that factor falls.
D. the productivity of that factor decreases.

Question 2

In terms of contribution to total income, the single most importantfactor of production is:
Answer
A. labor.
B. entrepreneurship.
C. natural resources.
D. capital.

Question 3

The trade off between work and leisure underlying the supply oflabor involves the substitution effect and the:
Answer
A. complementary effect.
B. elasticity effect.
C. production effect.
D. income effect.

Question 4

(Exhibit: Marginal Revenue Product and Demand) If the product priceis $4 per unit and the price of the factor of production is $80 perunit, the profit-maximizing quantity of the factor is _______unit(s).
Answer
A. 1
B. 5
C. 7
D. 3

Question 5

In perfect competition:
Answer
A. MFCL is greater than the price of labor.
B. the supply curve of labor to the firm is a horizontalline.
C. MRPL equals the price of the good.
D. MFCL is less than the price of labor.

Question 6

An increase in the participation rate of women in the U.S. laborforce:
Answer
A. has shifted the supply curve of labor to the right.
B. has increased the demand for labor.
C. resulted in a faster increase in wages.
D. has shifted the supply of labor to the left.

Question 7

A firm's demand curve for labor is:
Answer
A. the downward-sloping portion of its marginal revenue productcurve.
B. the upward-sloping portion of its marginal revenue productcurve.
C. horizontal for the firm in perfect competition.
D. the downward-sloping portion of its marginal productcurve.

Question 8

Since the 1970s, wage rates in the United States have _______ more_______ than they did in the previous two decades.
Answer
A. decreased; slowly
B. decreased; rapidly
C. increased; rapidly
D. increased; slowly

Question 9

Which of the following statements is true?
Answer
A. If the MFCL = MRPL the firm should hire more labor.
B. If MFCL < MRPL the firm should hire more labor.
C. If MFCL > 0, the firm should shut down.
D. If the MFCL > MRPL the firm should hire more labor.

Question 10

A leftward shift in the labor supply curve would result if:
Answer
A. people have less nonlabor income.
B. transit costs to and from work decline.
C. the population increases.
D. people value leisure more highly.

Question 11

A firm is in equilibrium when the marginal factor cost is:
Answer
A. equal to the marginal revenue product.
B. less than the price of the factor.
C. equal to the average product.
D. greater than the average product.

Question 12

A leftward shift in the labor supply curve would result if:
Answer
A. transit costs to and from work increase.
B. people value leisure less highly.
C. the population increases.
D. people have less nonlabor income.

Question 13

(Exhibit: Wage Determination in Perfect Competition) Which of thefollowing statements is true?
Answer
A. The firm will hire L1 units of labor, as shown in Panel(a).
B. The individual firm is a wage setter.
C. The firm's MFC of labor is equal to the price of the firm'soutput.
D. Total employment is equal to L1, as shown in Panel (a).

Question 14

(Exhibit: Marginal Revenue Product and Demand) If the product priceis $2 per unit and the price of the factor of production is $20 perunit, the profit-maximizing quantity of the factor is _______units.
Answer
A. 6
B. 4
C. 8
D. 2

Question 15

(Exhibit: Marginal Revenue Product and Demand) Assume that theproduct price is $2 per unit, the price of the factor of productionis $40 per unit, and 8 units are being hired. Profit can bemaximized by hiring _______ unit(s).
Answer
A. 2 more
B. 1 more
C. 3 fewer
D. 1 fewer

Question 16

(Exhibit: Demand and Supply of Bricklayers in a PerfectlyCompetitive Labor Market) If the price for "bricks laid in thewall" by a bricklayer is $.10 a brick, the marginal product of thesecond bricklayer is _______ bricks.
Answer
A. 1,200
B. 1,400
C. 1,300
D. 1,500

Question 17

In a perfectly competitive labor market, each firm can hire:
Answer
A. larger quantities of labor at going market wages perworker.
B. all the labor it wants, but only by outbidding itscompetitors.
C. larger quantities of labor at rising wages per worker.
D. only a fixed amount of labor at the going wage.

Question 18

(Exhibit: Demand and Supply of Bricklayers in a PerfectlyCompetitive Labor Market) If the equilibrium wage in the market forbricklayers is $100 a day, but a minimum wage for bricklayers of$130 a day is set by the government:
Answer
A. 3 workers who otherwise would have been employed are nowunemployed.
B. the firm will shut down.
C. 6 workers will now be hired by the firm.
D. all bricklayers are better off.

Question 19

A factor demand curve will shift because of:
Answer
A. the proportion of the factor's cost relative to totalcost.
B. changes in technology.
C. the slope of the MP curve.
D. the elasticity of demand for the final product.

Question 20

Which of the following statements is true?
Answer
A. MFC = change in total cost/ change in the quantity of afactor.
B. MFC = the change in the quantity of a factor times the change inthe price of the factor.
C. MRPL = MC of the output.
D. MRPL = MPL x (P), where P is the price of labor.

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