Set 1 Economists say that the demand for labor is a derived demand, they mean that it is: _________________________________________________________ If the demand for airline pilots increases, what can be said about the product market demand? ______________________________________________________ In the United States professional football players earn much higher incomes than professional soccer players. Provide an economic reason to explain the income disparity: _______________________________________________________

Set 2 1. Marginal revenue product measures the: A)amount by which the extra production of one more worker increases a firm's total revenue. B)decline in product price that a firm must accept to sell the extra output of one more worker. C)increase in total resource cost resulting from the hire of one extra unit of a resource. D)increase in total revenue resulting from the production of one more unit of a product. 2. The purely competitive employer of resource A will maximize the profits from A by equating the: A)price of A with the MRP of A. B)marginal productivity of A with the price of A. C)marginal productivity of A with the MRC of A. D)price of A with the MRC of A.

Set 3 1. Assume labor is the only variable input and that an additional input of labor increases total output from 72 to 78 units. If the product sells for $6 per unit in a purely competitive market, the MRP of this additional worker is: A) $6. B) $12. C) $36. D) $72. 2. Assuming a firm is selling its output in a purely competitive market, its resource demand curve can be determined by: A) multiplying total product by product price. B) multiplying marginal product by product price. C) dividing total revenue by marginal product. D) comparing marginal product with various possible input prices.

Set 4 A farmer who has fixed amounts of land and capital finds that total product is 24 for the first worker hired; 32 when two workers are hired; 37 when three are hired; and 40 when four are hired. The farmer's product sells for $3 per unit and the wage rate is $13 per worker. The marginal product of the second worker is: The marginal revenue product of the second worker is: How many workers should the farmer hire?

Set 5 1. Other things equal, an increase in the price of a complementary resource would cause a(n): A) move from a to b on D1. B) shift from D3 to D2. C) shift from D2 to D3. D) move from b to a on D1. 2. Other things equal, an increase in the price of substitute resource would cause a(n): A) shift from D2 to D3 assuming the substitution effect exceeds the output effect. B) move from a to b on D1. C) move from b to a on D1. D) shift from D3 to D2 assuming the substitution effect exceeds the output effect.

Set 6 Suppose the demand for strawberries rises sharply, resulting in an increased price of strawberries. As it relates to strawberry pickers, we could expect the: A) MRP curve to shift to the right. C) MRC curve to shift downward. B) MRP curve to shift to the left. D) MP curve to shift downward.

Set 7 1. Assuming a competitive resource market, a firm is hiring several resources in the profit-maximizing amounts when the: A) firm's total outlay on resources is minimized. B) marginal revenue product of each resource is equal to its price. C) price of each resource employed is the same. D) marginal revenue product of the last unit of each resource hired is the same. 2. Assume that an appliance manufacturer is employing variable resources X and Y in such amounts that the MRPs of the last units of X and Y employed are $100 and $60 respectively. Resource X can be hired at $50 per unit and resource Y at $20 per unit. The firm: A) should hire more of both X and Y. B) should hire more of Y and less of X. C) is producing with the least-costly combination of X and Y, but could increase its profits by employing more of X and less of Y. D) is using the least-cost combination of X and Y, but could increase its profits by employing less of both X and Y.

Set 8 Answer the next question(s) on the basis of the following marginal product data for resources a and b. The output of these independent resources sells in a purely competitive market at $1 per unit. 1. Assuming the prices of resources a and b are $5 and $8 respectively, what is the least costly combination of resources for the firm to employ in producing 192 units of output? 3A, 4B Assuming the prices of resources a and b are $5 and $8 respectively, what is the profit-maximizing combination of resources? 5A, 7B

Set 9 1. This firm is selling its product in: A) an imperfectly competitive market at prices that decline as sales increase. B) a purely competitive market at $3 per unit. C) a purely competitive market at $2 per unit. D) an imperfectly competitive market at $3 per unit. 2. If the prices of labor and capital are $9 and $15 respectively, the firm will hire: A) 5 units of labor and 3 of capital. C) 4 units of labor and 4 of capital. B) 5 units of labor and 2 of capital. D) 3 units of labor and 4 of capital. 3. The firm's total output will be: A) 38 units. B) 60 units. C) 64 units. D) 27 units

Set 10 1. If the nominal wages of carpenters rose by 5 percent in 2000 and the price level increased by 3 percent, then the real wages of carpenters: A) decreased by 2 percent. C) increased by 3 percent. B) increased by 2 percent. D) increased by 8 percent. 2. The real wage will rise if the nominal wage: A) falls more rapidly than the general price level. B) increases at the same rate as labor productivity. C) increases more rapidly than the general price level. D) falls more rapidly than the general price level.

Set 11 1. A firm that is hiring labor in a purely competitive labor market and selling its product in a purely competitive product market will maximize its profit by hiring labor until: A) marginal revenue product is zero. B) marginal revenue product exceeds marginal resource (labor) cost by the greatest amount. C) marginal resource cost is zero. D) marginal revenue product equals marginal resource (labor) cost.

Set 12 1) W < MRP; W < MRC 2) W = MRP; W < MRC 1. The outcome in a purely competitive labor market is shown by: A) 1. B) 2. C) 3. D) 4. 2. The outcome in a monopsony labor market is shown by: 3. A monopsonist's wage cost in hiring an additional worker is the: A) worker's wage rate. B) worker's wage rate plus the wage increases paid to all workers already employed. C) worker's wage rate adjusted for the lower price that must be charged for the extra output. D) marginal wage cost less the wage rate.

Set 13 1. If the above diagram was relevant to an individual firm, we could conclude that the firm is: A) a pure competitor in the hire of labor. B) a monopsonist in the hire of labor. C) selling its product in an imperfectly competitive market. D) selling its product in a purely competitive market. 2. Refer to the above diagram. The MRC curve lies above the labor supply curve because: A) any number of workers can be hired at the going equilibrium wage rate. B) the firm must lower product price to increase its sales. C) the higher wage needed to attract additional workers must also be paid to the workers already employed. D) there is an inverse relationship between wage rate and the amount of labor employed.

Set 14 1. If this labor market is purely competitive, the wage rate and level of employment respectively will be: BG 2. If this labor market is monopsonistic, the wage rate and level of employment respectively will be: AF

Set 15 Q of Labor MP of Labor MRP of Labor Q of Capital MP of Capital MRP of Capital 1 15 $45 8 $24 2 12 36 6 18 3 9 27 5 4 If the prices of labor and capital are $9 and $18 respectively, the firm will hire what inputs to arrive at the profit maximization level of output:

Set 16 More college students are graduating with degrees in communications. Given this trend we would expect the wage of Communications labor, the employment of Communications Labor, and the demand for public speaking text books to change in which of the following ways: Communications Employment of Demand for Public Speaking Wages Communications Text Books Decrease Increase Increase Decrease Decrease Decrease Increase Decrease Decrease Increase Decrease Increase

Set 17 Units of Resource Total Product Marginal Product 1 8 2 14 6 3 18 4 21 5 23 If the firm can sell 8 units at a price of $1.50, 14 units at a price of $1.00, 18 units at a price of $0.90, 21 units at a price of $0.70, the MRP of the 4th unit of resource is: 1.50