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NARRBEGIN: Exhibit 11-8-1 Exhibit 11-8 NARRBEGIN: Exhibit 11-8-1 Exhibit 11-8 -In Exhibit 11-8, if the wage rate is $44 and does not vary, how many workers will be hired? A) two B) three C) five D) seven E) nine -In Exhibit 11-8, if the wage rate is $44 and does not vary, how many workers will be hired?


A) two
B) three
C) five
D) seven
E) nine

F) A) and E)
G) C) and E)

Correct Answer

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Which of the following is true of marginal revenue product (MRP) and marginal product (MP) ?


A) MRP = MP ×\times price, whether the firm is a price searcher or not.
B) MRP = MP ×\times price only if the firm is a price searcher.
C) MRP = MP ×\times price only if the firm sells in a perfectly competitive market.
D) MRP = MP ×\times marginal cost only if the firm is a price searcher.
E) MRP = MP/price only if the firm is a price taker.

F) C) and D)
G) None of the above

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The marginal revenue product curve slopes downward only if the firm is a price searcher in the product market.

A) True
B) False

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Which of the following represents a perfectly competitive farmer's demand curve for hired hands?


A) her ATC curve
B) her AVC curve
C) her MRP curve
D) her MRC curve
E) her AFC curve

F) B) and E)
G) All of the above

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Economic rent represents


A) a loss to society since resource owners do not earn it
B) the difference between marginal revenue product and marginal resource cost
C) a loss to resource owners who earn less than the market value of the resource
D) any resource earnings less than that resource's opportunity cost
E) any resource earnings greater than that resource's opportunity cost

F) A) and C)
G) D) and E)

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A game show host who gave up his job as a teacher brags about his salary, saying "the rest is pure gravy." Here, "the rest" refers to


A) opportunity cost
B) implicit cost
C) explicit cost
D) the height of his labor supply curve
E) economic rent

F) A) and E)
G) B) and C)

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Suppose that with two fro-yo machines, 12 workers produce eight quarts of fro-yo. If the marginal product of the thirteenth worker is two quarts, then


A) thirteen workers produce ten quarts
B) thirteen workers produce two quarts
C) the thirteenth worker alone produces ten quarts
D) the law of diminishing returns cannot be operating in this example
E) diminishing returns must begin with the thirteenth worker

F) A) and C)
G) A) and D)

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The marginal resource cost of a resource is the additional cost of employing one additional unit of the resource.

A) True
B) False

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A temporary price differential in resource markets is


A) eliminated by resource movements
B) caused by a failure of firms to maximize profits
C) eliminated by resources moving from highly-valued uses to lower-valued uses
D) caused by Congress increasing the federal minimum wage
E) a result of firms using the MRP = MRC rule in hiring resources

F) A) and B)
G) A) and C)

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A profit-maximizing firm will hire an additional unit of a resource as long as the


A) marginal product of the resource is greater than the marginal resource cost
B) marginal product of the resource is less than the marginal resource cost
C) marginal revenue product of the resource is greater than the marginal resource cost
D) marginal revenue product of the resource is less than the marginal resource cost
E) price of the resource is less than the marginal resource cost

F) A) and B)
G) A) and C)

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NARRBEGIN: Exhibit 11-9-1 Exhibit 11-9 NARRBEGIN: Exhibit 11-9-1 Exhibit 11-9 -In Exhibit 11-9, if the wage were $84, how many workers would the firm hire? A) 0 B) 1 C) 2 D) 3 E) 4 -In Exhibit 11-9, if the wage were $84, how many workers would the firm hire?


A) 0
B) 1
C) 2
D) 3
E) 4

F) B) and C)
G) A) and E)

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Marginal revenue product is defined as


A) the total revenue generated by inputs
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

F) A) and E)
G) B) and E)

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The portion of a worker's total earnings that is not necessary to keep the worker in her present job is called


A) opportunity cost
B) consumer surplus
C) economic profit
D) economic rent
E) normal profit

F) A) and D)
G) A) and C)

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Which of the following best illustrates the concept of derived demand?


A) As income rises, the demand for TVs rises.
B) A fall in the price of cameras will increase the demand for film.
C) A fall in the demand for tires will reduce the demand for rubber.
D) When the price of gasoline rises, the demand for automobile repair falls.
E) If consumers expect the price of coffee to rise, demand for coffee rises.

F) B) and E)
G) C) and E)

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Fred Ramirez is a farmer who charts the relationship between number of acres planted in corn and number of bushels of corn harvested. Which marginal concept can Fred measure with this data?


A) marginal utility
B) marginal product
C) marginal cost
D) marginal revenue product
E) marginal factor cost

F) A) and C)
G) A) and D)

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As the price of land decreases along its demand curve, the relative price of land


A) increases because the prices of other resources have also decreased
B) decreases because the prices of other resources have also decreased
C) increases because the prices of other resources have increased
D) decreases because the prices of other resources are held constant
E) remains constant because the prices of other resources also increase

F) A) and B)
G) B) and C)

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The more elastic the supply of a resource,


A) the greater is economic rent as a proportion of total earnings
B) the greater is opportunity cost as a proportion of total earnings
C) the fewer alternative uses the resource has
D) the greater the derived demand for the resource
E) the lower the derived demand for the resource

F) A) and B)
G) A) and C)

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NARRBEGIN: Exhibit 11-6-1 Exhibit 11-6 NARRBEGIN: Exhibit 11-6-1 Exhibit 11-6 -In Exhibit 11-6, the marginal product of the third machine is A) $3 B) 5 C) 15 D) 3 E) 2 -In Exhibit 11-6, the marginal product of the third machine is


A) $3
B) 5
C) 15
D) 3
E) 2

F) B) and D)
G) B) and C)

Correct Answer

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We see permanent price differentials in land because


A) the demand for land is high
B) land has few uses
C) location is the inherent quality that often determines its value
D) real estate brokers are inefficient
E) land is not traded in free markets

F) C) and E)
G) B) and E)

Correct Answer

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Suppose a firm is a price searcher in the product market and hires labor in a perfectly competitive labor market. If the 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 from the last unit of output must be


A) $1
B) $1.50
C) $4
D) $5
E) $20

F) B) and D)
G) A) and B)

Correct Answer

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