This quiz works best with JavaScript enabled. Home > Finance > Economics > Microeconomics > Factor Markets > Factor Markets – Quiz 1 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Factor Markets Quiz 1 (30 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 = wage rate. C) Marginal revenue cost = marginal revenue. D) Marginal product of labor = marginal revenue. Show Answer Correct Answer: B) 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. 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. 9. 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. 10. 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. 11. What is the payment for land in factor markets called? A) Interest. B) Wages. C) Dividends. D) Rent. Show Answer Correct Answer: D) Rent. 12. 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. 13. The marginal factor cost curve is above the ..... firm's supply curve for labor because A) Monopsonistic, workers have more market power. B) Perfectly competitive, to hire additional units of labor the firm must raise the wage. C) Monopsonistic, to hire additional units of labor the firm must raise the wage. D) Perfectly competitive, to hire additional units of labor the firm must lower the wage. E) Monopsonistic, to hire additional units of labor the firm must lower the wage. Show Answer Correct Answer: C) Monopsonistic, to hire additional units of labor the firm must raise the wage. 14. 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 profit. B) Diminishing marginal cost. C) Diminishing marginal utility. D) Diminishing marginal productivity. E) Specialization. Show Answer Correct Answer: D) Diminishing marginal productivity. 15. 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. 16. 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 left. B) Increase as the MRP curve shifts right. C) Decrease as the MRP curve shifts right. D) Decrease as the MRP curve shifts lef. Show Answer Correct Answer: B) Increase as the MRP curve shifts right. 17. What is the least amount employers can legally pay their employees? A) Minimum wage. B) Law of decreasing wages. C) Wage law. D) Minimum pay. Show Answer Correct Answer: A) Minimum wage. 18. 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) Low wages . D) Wage discrimination. Show Answer Correct Answer: C) Low wages . 19. 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. 20. A firm employs 4 workers and produces 360 units of output. Its selling price is $ 4. When it hires a 5th worker, its total output rises to 400. The MRP of the 5th worker is A) $ 160. B) $ 4. C) $ 0. D) $ 400. E) $ 60. Show Answer Correct Answer: A) $ 160. 21. A toy company has just built an assembly line which includes robots and machinery to make dolls. They begin to hire humans to maintain the machines. As more workers get hired, an economist will expect A) Marginal product will increase sharply and then rise at a reduced rate as more people are hired. B) Marginal product will be negative as more people are hired. C) Marginal product will decrease at first and then rebound to equilibrium as more people are hired. D) Marginal product will increase at first and then decrease as more people are hired. . Show Answer Correct Answer: D) Marginal product will increase at first and then decrease as more people are hired. . 22. A monopsony pays ..... & hires ..... than a P.C. Firm A) The same & fewer. B) Much more & tons of workers. C) More & more. D) Less & less. Show Answer Correct Answer: D) Less & less. 23. The demand for labor will decrease due to:i:a decrease in the demand for the good being produced decreasesii:level of human capital decreasesiii:physical capital stock decreasesiv:a technology that increased worker productivity is banned. A) I only. B) Ii only. C) Ii and iii only. D) I, iii, and iv only. E) All of the above. Show Answer Correct Answer: E) All of the above. 24. What is the impact of a minimum wage on a competitive labor market? A) No impact on unemployment. B) Increases wages without affecting employment. C) Decreases unemployment. D) Increases unemployment. Show Answer Correct Answer: D) Increases unemployment. 25. There is ..... relationship between wage and the quantity of labor demanded. A) Not a. B) An inverse. C) A contentious. D) A direct. Show Answer Correct Answer: B) An inverse. 26. The two types of factor markets are A) Monopolistic Competition. B) Oligopoly. C) Perfect Competition & Monopsony. D) Monopoly. Show Answer Correct Answer: C) Perfect Competition & Monopsony. 27. A business's demand for labor is known as derived demand because A) A worker's pay depends on how much human capital has been invested by the business. B) Workers want to work and try to keep their wages low to attract businesses. C) The business gains more total revenue through hiring more workers. D) The number of workers needed depends on the products demanded by consumers in the product market. . Show Answer Correct Answer: D) The number of workers needed depends on the products demanded by consumers in the product market. . 28. What is the term for the demand for a resource that comes from the demand for the product itself? A) Derived demand. B) Supply and demand. C) Market demand. D) Consumer demand. Show Answer Correct Answer: A) Derived demand. 29. Dunder Mifflin is a monopsonistic employer of sales reps. What wage quantity combination does Dunder Mifflin choose in order to maximize its profits? A) W1 and Q1. B) W1 and Q3. C) W2 and Q2. D) W2 and Q4. E) W3 and Q3. Show Answer Correct Answer: B) W1 and Q3. 30. MFC in a perfectly competitive labor market is A) Equal to the price of the good. B) Greater than the market wage rate. C) Less than the market wage rate. D) Equal to the market wage rate. E) Less than the price of the good. Show Answer Correct Answer: D) Equal to the market wage rate. Next →Related QuizzesMicroeconomics QuizzesEconomics QuizzesFactor Markets Quiz 2Factor Markets Quiz 3 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books