This quiz works best with JavaScript enabled. Home > Economics > Microeconomics > Factor Markets > Factor Markets – Quiz 1 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Factor Markets Quiz 1 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. A firm in a perfectly competitive labor market will maximize profit in the hiring of labor when: A) MR=MC. B) Marginal product of labor = marginal revenue. C) Marginal product of labor = wage rate. D) Marginal revenue cost = marginal revenue. Show Answer Correct Answer: C) Marginal product of labor = wage rate. 2. When a perfectly competitive labor market becomes monopsonistic A) The equilibrium wage increases and the equilibrium quantity of workers hired increases. B) The equilibrium wage decreases and the equilibrium quantity of workers hired increases. C) The equilibrium wage decreases and the equilibrium quantity of workers hired decreases. D) The equilibrium wage increases and the equilibrium quantity of workers hired decreases. E) The equilibrium wage and the equilibrium quantity of workers hired remains the same. Show Answer Correct Answer: C) The equilibrium wage decreases and the equilibrium quantity of workers hired decreases. 3. What would cause the demand for workers to decrease in the labor market? A) Decrease in the demand for workers. B) Increase in the value of leisure. C) Decrease in the working age population. D) Increase in the price of the product. Show Answer Correct Answer: D) Increase in the price of the product. 4. A firm's marginal product per dollar of labor is 20 and its marginal product per dollar of capital is 30. The firm should A) Increase labor and decrease capital. B) Increase capital and decrease labor. C) Maintain its present amount of labor and capital. D) Increase both labor and capital. Show Answer Correct Answer: B) Increase capital and decrease labor. 5. At Dunder Mifflin, if the marginal product of capital equals the marginal product of labor, and the wage rate equals the rental rate of capital, then: A) The firm should use less of both inputs to increase quantity. B) The firm should use less capital and more labor to minimize cost. C) The firm should use more of both inputs to increase quantity. D) The firm should use more capital and less labor to minimize cost. E) The firm is producing that quantity at the lowest cost. Show Answer Correct Answer: E) The firm is producing that quantity at the lowest cost. 6. What happens to the equilibrium wage and quantity of workers hired if the demand for workers increases? A) Wage and quantity both decrease. B) Wage and quantity both increase. C) Wage decreases, quantity increases. D) Wage increases, quantity decreases. Show Answer Correct Answer: B) Wage and quantity both increase. 7. A effective minimum wage imposed on a perfectly competitive labor market will A) Reduce the quantity of worker hired and result in unemployment. B) Reduce the quantity of worker hired but not result in unemployment. C) Increase the quantity of worker hired and increase unemployment. D) Increase the quantity of worker hired but not result in unemployment. E) Not change the quantity of workers hired and not cause any unemployment. Show Answer Correct Answer: A) Reduce the quantity of worker hired and result in unemployment. 8. In a monopsonistic labor market A) W>MFC. B) MFC>W. C) MFC=W. D) MRP=W. E) MFC is downward sloping. Show Answer Correct Answer: B) MFC>W. 9. Which term is this the definition for: "demand for an input used to produce a product" A) Rental rate. B) Derived demand. C) Wage rate. D) Marginal factor cost. E) Implied demand. Show Answer Correct Answer: B) Derived demand. 10. What is the demand curve in factor markets comprised of? A) Businesses demanding resources. B) Households demanding resources. C) Consumers demanding resources. D) Government demanding resources. Show Answer Correct Answer: A) Businesses demanding resources. 11. Dunder Mifflin, as a monopsonistic labor market, has a: A) Demand curve for labor that is perfectly elastic. B) Backward bending labor supply curve. C) Labor force of identically skilled workers. D) Horizontal labor supply curve. E) Single employer of labor. Show Answer Correct Answer: E) Single employer of labor. 12. What is the payment for land in factor markets called? A) Dividends. B) Interest. C) Wages. D) Rent. Show Answer Correct Answer: D) Rent. 13. A profit-maximizing firm will continue to hire workers until the marginal revenue product of labor is equal to the: A) Marginal product of labor. B) Demand for labor. C) Marginal factor cost. D) Price of the good that labor is producing. Show Answer Correct Answer: C) Marginal factor cost. 14. The marginal factor cost curve is above the ..... firm's supply curve for labor because A) Perfectly competitive, to hire additional units of labor the firm must raise the wage. B) Monopsonistic, to hire additional units of labor the firm must raise the wage. C) Perfectly competitive, to hire additional units of labor the firm must lower the wage. D) Monopsonistic, to hire additional units of labor the firm must lower the wage. E) Monopsonistic, workers have more market power. Show Answer Correct Answer: B) Monopsonistic, to hire additional units of labor the firm must raise the wage. 15. MRP is downward sloping in perfect competition due to the principle of ..... which explains why firms will eventually experience diminishing marginal returns A) Diminishing marginal utility. B) Diminishing marginal cost. C) Diminishing marginal profit. D) Specialization. E) Diminishing marginal productivity. Show Answer Correct Answer: E) Diminishing marginal productivity. 16. What would cause the supply of labor to shift to the left in the labor market? A) Increase in the value of leisure. B) Increase in the demand for workers. C) Decrease in the working age population. D) Decrease in the price of the product. Show Answer Correct Answer: A) Increase in the value of leisure. 17. If the labor supply curve shifts to the left, the quantity of workers employed by a single firm will A) Increase as the MRP curve shifts right. B) Decrease as the MRP curve shifts right. C) Increase as the MRP curve shifts left. D) Decrease as the MRP curve shifts lef. Show Answer Correct Answer: A) Increase as the MRP curve shifts right. 18. What is the least amount employers can legally pay their employees? A) Law of decreasing wages. B) Wage law. C) Minimum wage. D) Minimum pay. Show Answer Correct Answer: C) Minimum wage. 19. All of the following are reasons why wages may be different for workers doing the same job EXCEPT A) Geographic immobility. B) Not enough information about the job posted. C) Wage discrimination. D) Low wages . Show Answer Correct Answer: D) Low wages . 20. What are factor markets primarily used for? A) Renting properties. B) Investing in stocks. C) Exchanging resources. D) Buying and selling goods. Show Answer Correct Answer: C) Exchanging resources. Next →Related QuizzesMicroeconomics QuizzesEconomics QuizzesFactor Markets Quiz 2Factor Markets Quiz 3Factor Markets Quiz 4 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books