Questions:
Question 1
Suppose at the current level of labor used, the MRP = $100 and the MFC = $50. To maximize profits, the firm should
a. hire more labor.
b. maintain the current level of labor.
c. reduce the level of labor.
d. shut down.
Question 2
Outsourcing is being practiced by
a. U.S. firms that want to keep jobs at home in the United States.
b. overseas firm tapping into the U.S. labor market and by U.S. firms looking for overseas labor markets with lower wages.
c. U.S. firms only.
d. governments but private firms are not allowed to outsource work.
Question 3
Revenue marginal product is
a. marginal physical product multiplied by marginal revenue.
b. marginal physical product multiplied by average variable cost of the product.
c. the price of the product.
d. the total revenue from the sale of the product sales.
Question 4
An increase in the supply of labor generates
a. increased unemployment.
b. lower wages.
c. an offsetting increase in the demand for labor.
d. a decrease in the quantity demanded of labor.
Question 5
The marginal revenue product curve shifts when
a. wages fall.
b. there is a change in the product price workers are producing.
c. wages rise.
d. the wages paid exceed the price.
Question 6
In the above figure, the competitive firm will employ the quantity of labor
a. equal to Lc.
b. equal to Lb.
c. less than Lb.
d. greater than Lc.
Question 7
The firm's demand curve for labor is
a. the marginal revenue product curve for labor.
b. the demand curve for the good produced divided by the price of the good.
c. the marginal physical product curve for labor divided by the price of the good.
d. the marginal physical product curve for labor multiplied by the price of labor.
Question 8
A firm will not hire additional workers once
a. it earns accounting profits.
b. the additional cost of a worker equals the additional revenue from the worker.
c. total product is rising.
d. the company reaches its breakeven output level.
Question 9
According to the above table, if the wage rate is $400 a week and the price of the good produced is $5, the perfectly competitive firm should hire
a. 6 workers.
b. 4 workers.
c. 3 workers.
d. 5 workers.
Question 10
The additional revenue earned from hiring one more worker is known as the
a. marginal utility of labor.
b. marginal physical product of labor.
c. marginal factor cost of labor.
d. marginal revenue product of labor.
Question 11
When U.S. computer companies hire workers in India to staff their customer service call centers, they are engaging in
a. predatory pricing.
b. unfair trade practices.
c. outsourcing.
d. labor engagement.
Question 12
The change in total output due to the change in one variable input, while holding all other inputs constant, is the
a. marginal revenue product.
b. derived demand for labor.
c. marginal physical product.
d. market demand curve for labor.