Question 1

For a competitive firm the marginal revenue product of labor is usually downward sloping.

Accepted Answer

A) True 
 B)False

Question 2

Monopolization of both the labor market and the output market results in

Accepted Answer

A)  higher wages than when both are competitive.
B)  a higher output price than when both are competitive.
C)  a lower level of output than when both are competitive.
D)  All of the above.E) A) and D)
F) B) and D)

Question 3

The demand for a monopoly's output is p = 200 - Q. The monopoly's production function is Q = 2L, and the market wage is $4. How many units of labor will the monopolist employ at its profit maximization level of output?

Accepted Answer

A)  L = 49.5
B)  L = 4623
C)  L = 198
D)  L = 10E) B) and C)
F) A) and D)

Question 4

For a monopoly, the value of the next worker equals

Accepted Answer

A)  MR ∗ MPL.
B)  (price + the effect of increased output on price) ∗ MPL.
C)  P(1 + 1/e) ∗ MPL
D)  All of the above.E) C) and D)
F) B) and D)

Question 5

If a firm has market power in the output market but buys labor in a competitive market, it will hire the same quantity of labor that a competitive firm will.

Accepted Answer

A) True 
 B)False

Question 6

In comparison to a competitive market, a monopsony generates

Accepted Answer

A)  deadweight loss.
B)  larger low-wage employment.
C)  more high-wages jobs.
D)  more output.E) A) and B)
F) A) and C)

Question 7

A firm faces competitive markets for its inputs and its output. At the profit-maximizing level of output, its marginal cost is $10 and the wage paid is $2. If the MPL = L-0.5, how many workers will be hired by the firm?

Accepted Answer

A)  35
B)  40
C)  25
D)  5E) C) and D)
F) B) and D)

Question 8

In the short run, a competitive firm has a marginal product of labor, MPL = 2L-0.25. The output price is $4 per unit and the wage is $5 per hour. The short-run labor demand curve for the firm is

Accepted Answer

A)  10L-0.25.
B)  8L-0.5.
C)  4L0.25.
D)  8L-0.25.E) A) and B)
F) None of the above

Question 9

In the short run, a competitive firm has a marginal product of labor, MPL = 8L-0.5. The output price is $16 per unit and the wage is $2 per hour. At the profit-maximizing level, how many units of labor are hired by the firm?

Accepted Answer

A)  L = 4
B)  L = 6
C)  L = 12
D)  L = 8E) A) and B)
F) B) and C)

Question 10

If the price of a competitive firm's output increases, the firm responds in the short run by demanding more labor.

Accepted Answer

A) True 
 B)False

Question 11

Monopolization of either the labor market or the output market results in

Accepted Answer

A)  higher wages than when both are competitive.
B)  a higher output price than when both are competitive.
C)  a higher level of output than when both are competitive.
D)  All of the above.E) B) and C)
F) B) and D)

Question 12

The marginal expenditure of a monopsonist is $4. The wage it currently pays is $3. The labor supply curve has a constant elasticity. What is the elasticity of the labor supply?

Accepted Answer

A)  0.33
B)  0.66
C)  1
D)  3E) B) and C)
F) C) and D)

Question 13

In the first years of a professional athlete's career, the athlete is "under reserve," which means that he or she cannot negotiate with other teams. This creates a de facto

Accepted Answer

A)  monopolist.
B)  monopsony.
C)  duopoly.
D)  bilateral monopoly.E) All of the above
F) None of the above

Question 14

The labor market demand curve

Accepted Answer

A)  is the summation of the labor demand curve for each output market.
B)  is identical to the average firm labor demand curve.
C)  is the sum of the wages paid for each unit of labor of the individual firms labor demands.
D)  is always upward sloping for competitive labor markets.E) C) and D)
F) None of the above

Question 15

If a monopolist in the output market purchases its monopoly supplier of labor, consumers benefit.

Accepted Answer

A) True 
 B)False

Question 16

Monopolies tend to

Accepted Answer

A)  hire more labor than duopolists or competitive firms, hence they are inefficient.
B)  hire more labor than competitive firms but less than duopolists.
C)  hire less labor than competitive firms because they produce at an inefficient level.
D)  hire more labor because they produce at an inefficient level.E) B) and D)
F) B) and C)

Question 17

How does a competitive firm's demand for labor react to a specific tax on each unit of output it sells?

Accepted Answer

The price the firm receives for each uni...

Question 18

If a firm buys some labor in a competitive market and some labor as a monopsonist, the firm is most likely to

Accepted Answer

A)  pay the same wage to both types of labor.
B)  pay a lower wage to the labor purchased in the competitive market.
C)  pay a higher wage to the labor purchased in the competitive market.
D)  not exercise any of its monopsony power.E) A) and D)
F) B) and D)

Question 19

The increase in total revenue due to increasing the amount of labor employed by one unit is called the

Accepted Answer

A)  Marginal Product.
B)  Marginal Revenue Product.
C)  Average Revenue Product.
D)  Total Revenue Product.E) C) and D)
F) All of the above

Question 20

The demand for an input used in a fixed proportions technology

Accepted Answer

A)  is identical to the demand for the other inputs.
B)  is greater than the demand for the end product itself.
C)  lies below the demand for the end product itself.
D)  is the same as the demand for the end product itself.E) None of the above
F) A) and C)

Exam 15: Factor Markets

In the short run, a competitive firm has a marginal product of labor, MPL = 2L-0.25. The output price is $4 per unit and the wage is $5 per hour. The short-run labor demand curve for the firm is

Correct AnswerverifiedShow Answer

If the price of a competitive firm's output increases, the firm responds in the short run by demanding more labor.

Correct AnswerverifiedShow Answer

The demand for a monopoly's output is p = 200 - Q. The monopoly's production function is Q = 2L, and the market wage is $4. How many units of labor will the monopolist employ at its profit maximization level of output?

Correct AnswerverifiedShow Answer

The labor market demand curve

Correct AnswerverifiedShow Answer

The increase in total revenue due to increasing the amount of labor employed by one unit is called the

Correct AnswerverifiedShow Answer

A firm faces competitive markets for its inputs and its output. At the profit-maximizing level of output, its marginal cost is $10 and the wage paid is $2. If the MPL = L-0.5, how many workers will be hired by the firm?

Correct AnswerverifiedShow Answer

In comparison to a competitive market, a monopsony generates

Correct AnswerverifiedShow Answer

Monopolization of either the labor market or the output market results in

Correct AnswerverifiedShow Answer

The demand for an input used in a fixed proportions technology

Correct AnswerverifiedShow Answer

Monopolies tend to

Correct AnswerverifiedShow Answer

How does a competitive firm's demand for labor react to a specific tax on each unit of output it sells?

Correct AnswerverifiedThe price the firm receives for each uni...View AnswerShow Answer

If a firm has market power in the output market but buys labor in a competitive market, it will hire the same quantity of labor that a competitive firm will.

Correct AnswerverifiedShow Answer

If a monopolist in the output market purchases its monopoly supplier of labor, consumers benefit.

Correct AnswerverifiedShow Answer

In the short run, a competitive firm has a marginal product of labor, MPL = 8L-0.5. The output price is $16 per unit and the wage is $2 per hour. At the profit-maximizing level, how many units of labor are hired by the firm?

Correct AnswerverifiedShow Answer

In the first years of a professional athlete's career, the athlete is "under reserve," which means that he or she cannot negotiate with other teams. This creates a de facto

Correct AnswerverifiedShow Answer

For a competitive firm the marginal revenue product of labor is usually downward sloping.

Correct AnswerverifiedShow Answer

If a firm buys some labor in a competitive market and some labor as a monopsonist, the firm is most likely to

Correct AnswerverifiedShow Answer

For a monopoly, the value of the next worker equals

Correct AnswerverifiedShow Answer

Monopolization of both the labor market and the output market results in

Correct AnswerverifiedShow Answer

The marginal expenditure of a monopsonist is $4. The wage it currently pays is $3. The labor supply curve has a constant elasticity. What is the elasticity of the labor supply?

Correct AnswerverifiedShow Answer

In the short run, a competitive firm has a marginal product of labor, MPL = 2L^-0.25. The output price is $4 per unit and the wage is $5 per hour. The short-run labor demand curve for the firm is

Correct Answer
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A firm faces competitive markets for its inputs and its output. At the profit-maximizing level of output, its marginal cost is $10 and the wage paid is $2. If the MPL = L^-0.5, how many workers will be hired by the firm?

Correct Answer
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The price the firm receives for each uni...
View Answer

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In the short run, a competitive firm has a marginal product of labor, MPL = 8L^-0.5. The output price is $16 per unit and the wage is $2 per hour. At the profit-maximizing level, how many units of labor are hired by the firm?

Correct Answer
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