Question : 59) Holding the price of a firm’s output constant, if : 1387971

 

 

59) Holding the price of a firm’s output constant, if the marginal product of labor increases,

A) the marginal revenue product of labor decreases.

B) the marginal revenue product of labor also increases.

C) the marginal products of other inputs also increase.

D) the marginal revenue product of labor may increase or decrease.

 

 

60) Hotspur Incorporated, a manufacturer of microwaves, is a price taker in both the input and output markets. To maximize its profit, Hotspur will hire labor up to the point where

A) the marginal product of labor is no longer positive.

B) all economies of scale have been exhausted.

C) the marginal revenue product of labor equals the wage rate.

D) the marginal revenue product of labor equals the output price.

 

61) Marginal revenue product falls as more labor is hired because

A) the price of the product must fall for a perfectly competitive firm to sell more.

B) the wage rate rises as more workers work more hours.

C) the marginal product of labor is negative as additional units of labor are hired.

D) the marginal product of labor falls as a result of the law of diminishing returns.

 

 

Figure 17-2

 

 

Figure 17-2 shows the marginal revenue product for Becca’s Baubles, a producer of hand-beaded bracelets.

 

62) Refer to Figure 17-2.  If the wage rate is $20, how many workers should Becca hire?

A) 6

B) 5

C) 4

D) 3

 

63) Refer to Figure 17-2.  If Becca can sell her bracelets at $3 each, what is the marginal product of the 4th worker?

A) $36

B) 12 bracelets

C) 36 bracelets

D) $144

 

 

64) Refer to Figure 17-2.  Suppose the market price of bracelets falls to $2. What happens to the curve given in the diagram?

A) Nothing, because labor’s productivity has not changed.

B) There will be a movement along the curve.

C) The curve shifts to the left.

D) We cannot answer the question without knowing if Becca would want to hire more workers.

 

Table 17-3

 

Number of Workers

Output of Microwave Ovens per Week

1

  30

2

  55

3

  75

4

  90

5

100

6

105

 

Hotspur Incorporated, a manufacturer of microwave ovens, is a price taker in its input and output markets. The firm hires labor at a constant wage rate of $800 per week and sells microwave ovens at a constant price of $80. Table 17-3 shows the relationship between the quantity of labor it hires and the quantity of microwave ovens it produces.

 

65) Refer to Table 17-3.  What is the amount of revenue added as a result of hiring the fourth worker?

A) $1,200

B) $7,200

C) 15 microwaves

D) 90 microwaves

 

 

66) Refer to Table 17-3. What is the amount of profit added as a result of hiring the fourth worker?

A) $7,200

B) $1,200

C) $800

D) $400

 

67) Refer to Table 17-3.  What is Hotspur’s profit maximizing quantity of labor?

A) 2 workers

B) 3 workers

C) 5 workers

D) 6 workers

 

 

68) Which of the following is not held constant along a firm’s demand curve for labor?

A) the quantity of other inputs used by the firm

B) the wage rate

C) changes in technology

D) the price of the product produced by the firm