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| Which of the following employment situations would most closely approximate a monopsony? |
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a steel mill in Yokahama, Japan. |
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a fast food restaurant in a big city. |
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a farmer hiring seasonal workers. |
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a large factory in a small town. |
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| If a monopsonist hires labor, it will choose to hire that quantity at which ___________ and pay a wage rate that is _______________. |
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MR = MC; equal to the MRP curve. |
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the supply curve intersect the MRP; less than MFC |
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MRP = MFC; less than MRP |
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the supply curve intersect the MRP; equal to MRP |
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| Suppose a firm employs both labor and capital. If the ratio of marginal product to price of labor is 50/$10 and the ratio of marginal product of capital to price of capital is 60/$12, the firm should |
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maintain the current combination capital and labor. |
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buy more labor and less capital because labor is cheaper. |
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buy more capital and less labor because capital is cheaper. |
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buy more capital because it is more productive than labor. |
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Derived demand for labor means that when a firm hires labor, it has to derive its demand |
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mathematically. |
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based on the labor supply. |
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from the demand for the product that the labor produces. |
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based on the minimum wage. |
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| For a firm in perfect competition, the value of the marginal product is |
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the value of an additional unit of output measured in terms of additional cost. |
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the total value of the total output output divided by the total output. |
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additional revenue minus additional cost as a result of an increase in output. |
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the price of the product multiplied by the additional output resulting from an additional unit employed. |
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| A firm that is perfectly competitive will hire labor as long as which of the following is true? |
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VMP < W. |
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VMP > W. |
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MC > MR. |
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VMP < MRP. |
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| The VMP curve slopes downward at some point because |
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congestion in the work place lowers marginal product. |
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teamwork in the work place increases marginal product. |
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the firm hires less labor as the wage rate rises. |
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labor supplies less amounts of labor as the wage rate falls. |
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| Which of the following would not be considered capital in a business? |
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The employees |
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The factory |
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A machine |
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Tools |
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| The increase in the value of a firmâs capital as it increases in age and use is depreciation. |
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| On a labor market graph, a firmâs demand for labor is |
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the wage rate. |
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the marginal revenue product curve. |
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the marginal product curve. |
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indeterminant. |
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| Why may a householdâs labor supply curve bend backwards at some wage rate? |
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The household substitutes labor for leisure. |
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The household substitutes leisure for labor. |
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Employers demand fewer employees at higher wage rates. |
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Households want to supply more labor as the wage rate decreases to maintain incomes. |
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| The substitution effect is usually stronger than the income effect, thus creating an upward sloping labor supply curve. |
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| An inelastic demand for labor means that an increase in the wage rate causes a less than proportionate decrease in the quantity of labor demanded. |
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| Marginal revenue product is |
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marginal revenue divided by marginal product. |
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marginal revenue times marginal product. |
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marginal product minus marginal revenue. |
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marginal product plus marginal revenue. |
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| A firm obeys the least-cost rule by equating the ratios of ___________________ to the ________________ price. |
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marginal product; product |
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marginal product; factor |
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marginal cost; product |
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marginal revenue; product |
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| Suppose the MP of the last unit of capital hired equals 12 and the MP of the last unit of labor hired equals 16.If the price of capital is $8 per unit and the price of labor is $8 per unit, then the firm |
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is maximizing its costs with this combination of factors. |
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is maximizing its profits with this combination of factors. |
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should hire more labor and less capital in order to minimize its costs. |
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should hire more capital and less labor in order to minimize its costs. |
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| For a firm to minimize its costs with more than one factor of production, for every factor, the ratio of the |
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marginal product to factor price must be equal. |
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marginal revenue product to factor price must be equal. |
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marginal revenue product to output must be equal. |
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marginal cost to factor price must be equal. |
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| A monopsony is a firm that, in a specific market, is the only |
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seller of a product. |
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buyer of a product. |
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seller of a factor of production. |
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buyer of a factor of production. |
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| Which of the following businesses would most closely approximate a monopsonist? |
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A steel mill in Pittsburgh |
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A fast food franchise in a large city |
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A large manufacturer in a rural county |
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A rancher who hires ranch help |
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| A firm has the opportunity to buy a machine that costs $2500. It has found the present value of the income generated by the machine to be $2487. It should purchase the machine. |
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| An increase in the market rate of interest causes |
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a leftward shift in the demand for capital curve. |
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a rightward shift in the demand for capital curve. |
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a movement up the demand for capital curve. |
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a movement down the demand for capital curve. |
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| The characteristic of capital that makes it different from labor is its |
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high cost. |
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durability. |
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rotunda. |
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relatively low cost compared to labor. |
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| The present value of $1000 one year in the future at a 10 percent interest rate is approximately |
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$870. |
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$909. |
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$1000. |
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$1909. |
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