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26 Multiple Choice Questions with Answer - Chapter 18 Review Questions | ECON 200, Exams of Microeconomics
Chapter 18 Review Questions w/ Answers Material Type: Exam; Professor: Lin; Class: PRIN MICRO-ECONOMICS; Subject: Economics; University: University of Maryland; Term: Spring 2011;
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Download 26 Multiple Choice Questions with Answer - Chapter 18 Review Questions | ECON 200 and more Exams Microeconomics in PDF only on Docsity!
Chapter 18
Multiple Choice Identify the choice that best completes the statement or answers the question. Scenario 18- Harry owns a snow-removal business. He hires workers to shovel driveways for him during the winter. The first worker he hires can shovel twelve driveways in one day. When Harry hires two workers, they can shovel a total of 22 driveways in one day. When Harry hires a third worker, he shovels an additional eight driveways in one day. ____ 1. Refer to Scenario 18-1. What is the marginal productivity of the second worker? a. 7 b. 10 c. 12 d. 22 ____ 2. Refer to Scenario 18-1. What is the total productivity of three workers? a. 12 b. 22 c. 30 d. 42 ____ 3. Refer to Scenario 18-1. Suppose that Harry pays each worker $80 per day and that he charges each customer $20 to have his driveway shoveled. What is the value of the marginal product of labor for the second worker? a. $ b. $ c. $ d. $ ____ 4. Refer to Scenario 18-1. Suppose that Harry pays each worker $80 per day and that he charges each customer $20 to have his driveway shoveled. What is the value of the marginal product of labor for the third worker? a. $ b. $ c. $1, d. $2, ____ 5. Suppose that a competitive firm hires labor up to the point at which the value of the marginal product equals the wage. If the firm pays a wage of $700 per week and the marginal product of labor equals 20 units per week, then the marginal cost of producing an additional unit of output is a. $ b. $ c. $ d. We do not have enough information to answer this question. Figure 18-1. On the graph, L represents the quantity of labor and Q represents the quantity of output per week.
120 210 285 345 390 420 1 2 3 4 5 6 L
Q
____ 6. Refer to Figure 18-1. The figure illustrates the a. demand for labor. b. supply of labor. c. production function. d. wage function. ____ 7. Refer to Figure 18-1. The marginal product of the second worker is a. 90 units of output. b. 105 units of output. c. 210 units of output. d. 330 units of output. ____ 8. Refer to Figure 18-1. The marginal product of the fourth worker is a. 60 units of output. b. 75 units of output. c. 285 units of output. d. 345 units of output. ____ 9. Refer to Figure 18-1. Suppose the firm hires each unit of labor for $600 per week, and each unit of output sells for $9. What is the value of the marginal product of the third worker? a. $ b. $ c. $ d. $ ____ 10. Refer to Figure 18-1. Suppose the firm sells its output for $12 per unit, and it pays each of its workers $ per week. The value of the marginal product of the fifth worker is a. $ b. $ c. $ d. $1,
____ 11. Refer to Figure 18-1. Suppose the firm hires each unit of labor for $700 per week, and each unit of output sells for $9. How many workers will the firm hire to maximize its profit? a. 2 b. 3 c. 4 d. 5 ____ 12. Refer to Figure 18-1. Suppose the firm sells its output for $12 per unit, and it pays each of its workers $700 per week. How many workers will the firm hire to maximize its profit? a. 2 b. 3 c. 4 d. 5 ____ 13. Refer to Figure 18-1. Suppose the firm sells its output for $15 per unit, and it pays each of its workers $ per week. When output increases from 210 units to 285 units, a. the marginal cost is $10 per unit of output. b. the marginal revenue is $5 per unit of output. c. the value of the marginal product of labor is $4, d. the firm’s profit decreases. ____ 14. Refer to Figure 18-1. Suppose the firm sells its output for $10 per unit, and it pays each of its workers $400 per week. When the number of workers increases from 4 to 5, a. the marginal revenue is $450 per unit of output and the marginal cost is $400 per unit of output. b. the value of the marginal product of labor is $3,900 and the marginal cost per unit of output is $400. c. the value of the marginal product of labor is $450 and the marginal cost per unit of output is about $8.89. d. the firm’s profit increases. ____ 15. Refer to Figure 18-1. Suppose the firm sells its output for $25 per unit, and it pays each of its workers $1,000 per week. Also, the firm’s non-labor costs are fixed and they amount to $2,000. The firm maximizes profit by hiring a. 2 workers. b. 3 workers. c. 4 workers. d. 5 workers. ____ 16. Refer to Figure 18-1. Suppose the firm sells its output for $20 per unit, and it pays each of its workers $1,250 per week. The firm maximizes profit by hiring a. 3 workers. b. 4 workers. c. 5 workers. d. 6 workers. ____ 17. Refer to Figure 18-1. The shape of the curve suggests the presence of a. an inverted production function. b. diminishing total product. c. increasing marginal product. d. diminishing marginal product.
____ 18. Your best friend receives a pay raise at her part-time job from $8 to $10 per hour. She used to work 16 hours per week, but now she decides to work 20 hours per week. For this price range, her labor supply curve is a. vertical. b. horizontal. c. upward sloping. d. backward sloping. ____ 19. What happens to labor supply in the pear-picking market when the wage paid to apple pickers increases? a. The labor supply will stay unchanged until the wages paid to pear pickers change. b. The labor supply will decrease. c. The labor supply will increase. d. The labor supply may fall or rise, depending on the price of pears. ____ 20. Suppose that the market for labor is initially in equilibrium. An increase in the price of output will cause a. the equilibrium wage and the quantity of labor to both rise. b. the equilibrium wage and the quantity of labor to both fall. c. the equilibrium wage to rise and the quantity of labor to fall. d. the equilibrium wage to fall and the quantity of labor to rise. Figure 18- This figure below shows the labor market for automobile workers. The curve labeled S is the labor supply curve, and the curves labeled D 1 and D 2 are the labor demand curves. On the horizontal axis, L represents the quantity of labor in the market. D
D
S
0
1 2 L ____ 21. Refer to Figure 18-4. What is measured along the vertical axis on the graph? a. The quantity of automobiles produced b. The price of automobiles c. The wage paid to automobile workers d. Time spent by workers producing automobiles ____ 22. Refer to Figure 18-4. Which of the following is a possible explanation of the shift of the labor-demand curve from D 1 to D 2? a. The wage earned by automobile workers increased. b. The price of automobiles increased. c. The opportunity cost of leisure, as perceived by automobile workers, decreased.
d. Large segments of the population changed their tastes regarding leisure versus work. ____ 23. Refer to Figure 18-4. Which of the following events would most likely explain the shift of the labor-demand curve from D 1 to D 2? a. The price of automobiles decreased. b. A large number of immigrants entered the automobile-worker market. c. A technological advance increased the marginal product of automobile workers. d. All of the above events are equally-likely explanations. ____ 24. Refer to Figure 18-4. Which of the following events would most likely explain a shift of the labor-demand curve from D 2 back to D 1? a. The price of automobiles decreased. b. A large number of immigrants entered the automobile-worker market. c. A technological advance increased the marginal product of automobile workers. d. An increase in the demand for automobiles. ____ 25. Consider the labor market for heath care workers. Because of the aging population in the United States, the output price for health care services has increased. Holding all else equal, what effect does this have on the equilibrium wage of health care employees? a. The equilibrium wage increases. b. The equilibrium wage decreases. c. The equilibrium wage does not change. d. It is not possible to determine what happens to the equilibrium wage. ____ 26. When firms are able to increase the amount of physical capital available to workers, the a. marginal product of labor will decrease. b. value of the marginal product of labor will decrease. c. value of the marginal product of labor will increase. d. final product price will increase.