1. The additional revenue earned from hiring one more worker is known as the
A. marginal factor cost of labor.
B. marginal utility of labor.
C. marginal revenue product of labor.
D. marginal physical product of labor.
2. Derived demand means
A. the labor demand curve will be upward sloping.
B. labor demand will shift about in a random fashion.
C. labor demand is derived from demand for the product it produces.
D. labor demand is determined by the supply of labor.
3. As new substitutes for office productivity software are developed, the demand for workers in office productivity software production should
A. become less elastic.
B. become more elastic.
C. change in an undetermined way.
D. be unchanged.
4. Whenever an input makes up a large percentage of a good's final cost, an increase in that input's price will
A. cause the firm to shutdown.
B. not affect total revenues.
C. affect only accounting profits.
D. affect total cost relatively more.
5. Suppose at the current level of labor used, MRP = $100 and MFC = $50. To maximize profits, the firm should
A. reduce the level of labor.
B. hire more labor.
C. maintain the current level of labor.
D. shut down.
6. The additional cost associated with the hiring of one more unit of labor is known as the
A. marginal physical product of labor.
B. marginal revenue product of labor.
C. marginal factor cost of labor.
D. marginal utility of labor.
7. Suppose a new technology allows firms to substitute mechanical tomato pickers for farm laborers. As a result, the demand curve for farm laborers will
A. become less elastic.
B. not be affected.
C. become more elastic.
D. shift to the right.
8. The market demand for labor will be
A. perfectly inelastic.
B. insensitive to the wage rate in the short run.
C. the inverse of the market demand for output.
D. downward sloping.
9. The more inelastic the consumer demand for the final product, the
A. greater will be the economic profit in a competitive market.
B. more responsive the output demand to a change in the price of labor.
C. greater the impact on employment from a change in the wage rate.
D. more inelastic the demand for labor producing the product.