This quiz works best with JavaScript enabled. Home > Finance > Economics > Microeconomics > Factor Markets > Factor Markets – Quiz 2 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Factor Markets Quiz 2 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which of the following will shift the demand curve for a factor of production to the right? A) A decrease in the price of the product produced by the factor. B) A decline in technology used by the factor of production. C) A decrease in the marginal product of the factor. D) An increase in the price of a substitute factor of production. E) An increase in the price of the factor of production. Show Answer Correct Answer: D) An increase in the price of a substitute factor of production. 2. Which of the following is a firm's demand for labor? A) The firm's marginal revenue (MR) curve. B) The firm's long-run average total cost (LRATC) curve. C) The firm's marginal factor cost (MFC) curve. D) The firm's marginal revenue product of capital (MRPK) curve. E) The firm's marginal revenue product of labor curve. Show Answer Correct Answer: E) The firm's marginal revenue product of labor curve. 3. If the government sets a minimum wage above equilibrium wage in a perfectly competitive factor market, which of the following is most likely to happen: A) The quantity of labor demanded will far exceed the supply of labor. B) Unemployment will rise because companies will reduce hiring low wage workers. C) There will be a shortage of workers in the factor market. D) Wages will fall for company CEOs. . Show Answer Correct Answer: B) Unemployment will rise because companies will reduce hiring low wage workers. 4. Dunder Mifflin employs paper sales reps in a perfectly competitive market. Which of the following will happen in the market for paper sales reps in the short run if the demand for paper increases? A) The supply curve of paper sales reps will shift to the right. B) The supply curve of paper sales reps will shift to the left. C) The demand curve for paper sales reps will shift to the right. D) The demand curve for paper sales reps will shift to the left. E) Neither the demand curve nor the supply curve of paper sales reps will shift. Show Answer Correct Answer: C) The demand curve for paper sales reps will shift to the right. 5. The profit a firm receives from an additional unit of labor is: A) The workers's contributions to revenue minus the worker's wages. B) The workers's wage plus the workers' contributions to revenues. C) The workers' contributions to revenue minus the workers' benefits. D) The workers' wages minus the workers' contributions to costs. Show Answer Correct Answer: A) The workers's contributions to revenue minus the worker's wages. 6. The least cost rule is ..... A) MPx-MPy/Mpy. B) MPx/Px = MPy/Py. C) MPx + MPy =1. D) MPx/MPy. Show Answer Correct Answer: B) MPx/Px = MPy/Py. 7. All of the following are shifters for the demand for labor EXCEPT: A) Price of an inferior good. B) Productivity of the worker. C) Change in price of substitute goods or complementary goods. . D) Price of the product. Show Answer Correct Answer: A) Price of an inferior good. 8. Factor Markets designate A) Output. B) Price. C) Input. D) Productivity. Show Answer Correct Answer: C) Input. 9. If hot dogs are an inferior good, an increase in income will result in A) An increase in the quantity demanded for hot dogs. B) An increase in the demand for hot dogs. C) A decrease in the quantity demanded for hot dogs. D) A decrease in the demand for hot dogs. Show Answer Correct Answer: D) A decrease in the demand for hot dogs. 10. In a perfectly competitive labor market. If all other factors remain constant, an increase in the demand for the firms' product will result in which of the following changes in the labor market? A) The demand curve for labor will shift to the right. B) The supply curve for labor will shift to the right. C) The supply curve for labor will shift to the left. D) The demand curve for labor will shift to the left. Show Answer Correct Answer: A) The demand curve for labor will shift to the right. 11. Dunder Mifflin is a perfectly competitive firm. The table shows their short-run output. What is the marginal revenue product of the third worker hired if the price of the product is $ 20? A) $ 240. B) $ 300. C) $ 48. D) $ 160. E) $ 40. Show Answer Correct Answer: D) $ 160. 12. Dunder Mifflin's demand for labor is known as derived demand because: A) Dunder Mifflin will benefit from hiring additional labor. B) Dunder Mifflin gains utility from hiring more labor. C) The amount of labor demanded depends on demand for Dunder Mifflin's product. D) The wage rate paid to workers depends on the demand for labor. E) The amount of labor demanded depends on the amount of capital invested. Show Answer Correct Answer: C) The amount of labor demanded depends on demand for Dunder Mifflin's product. 13. The marginal revenue product of labor is the: A) Marginal revenue plus product price. B) Increase in the average product of labor when the firm employs an additional unit of labor. C) Additional revenue a firm earns when it employs an additional unit of labor. D) Increase in the price of labor when the firm employs an additional unit of labor. E) Produce price times the wage rate. Show Answer Correct Answer: C) Additional revenue a firm earns when it employs an additional unit of labor. 14. What is the term for any amount above the minimum needed to bring a resource into use? A) Consumer surplus. B) Economic rent. C) Economic profit. D) Producer surplus. Show Answer Correct Answer: B) Economic rent. 15. Choose the correct factor payments for land, labor, capital, and entrepreneurship. A) Rent, wage, interest, and profit. B) Rent, pay, revenue, and money. C) Real estate, workers, interest, and cash. D) Rent, pay, interest, and capital . Show Answer Correct Answer: A) Rent, wage, interest, and profit. 16. Assume that capital and labor are the only two inputs used by Dunder Mifflin. To minimize costs at the current output level, Dunder Mifflin should change the hiring of capital and labor in which of the following ways? A) There should be no change to the quantity of capital or labor hired. B) The amount of capital hired should increase, and the amount of labor hired should increase. C) The amount of capital hired should decrease, and the amount of labor hired should decrease. D) The amount of capital hired should increase, and the amount of labor hired should decrease. E) The amount of capital hired should decrease, and the amount of labor hired should increase. Show Answer Correct Answer: D) The amount of capital hired should increase, and the amount of labor hired should decrease. 17. Compared to a competitive labor market a monopsony employs A) More workers at a lower wage. B) More workers at a higher wage. C) Less workers at a higher wage. D) Less workers at a lower wage. Show Answer Correct Answer: D) Less workers at a lower wage. 18. Assume a perfectly competitive labor market. Which of the following correctly describes the individual firm's demand curve for labor and the market demand curve for labor, respectively? A) Downward sloping; horizontal. B) Horizontal; downward sloping. C) Downward sloping; downward sloping. D) Horizontal; horizontal. Show Answer Correct Answer: C) Downward sloping; downward sloping. 19. If a large number of unskilled workers enter the labor market, which of the following is most likely to occur in the labor market for unskilled workers? A) The supply curve will shift to the right, pushing the wage down. B) The supply curve will shift to the left, pushing the wage up. C) The demand curve will shift to the right, pusing wage up. D) The demand curve will shift to the left, pushing the wage down. Show Answer Correct Answer: A) The supply curve will shift to the right, pushing the wage down. 20. Economics argue that most top-selling music artists earn economic rent because they: A) Make additional income through commercial endorsements of products. B) Perform at concerts only about six months during a year. C) Work less than 40 hours per week when they are on tour. D) Earn far more as musicians than they could earn in their next-best occupation. E) Are able to make music for only a limited number of years before changing occupations. Show Answer Correct Answer: D) Earn far more as musicians than they could earn in their next-best occupation. 21. In a perfectly competitive labor market, the individual firm's ..... is perfectly elastic. A) MRP. B) Market supply. C) MP. D) MRC. Show Answer Correct Answer: D) MRC. 22. Profit maximizing firms will hire additional units of an input until A) MRP=MC. B) MR=MC. C) W=MFC. D) MR=MFC. E) MRP=MFC. Show Answer Correct Answer: E) MRP=MFC. 23. The graph shows the marginal revenue product (MRP) and the market wage rate for Dunder Mifflin, a profit-maximizing firm. Which of the following is true of Dunder Mifflin's hiring of labor? A) It should hire 18 workers. B) It should hire between 8 and 18 workers. C) It should hire 8 workers. D) It should hire between 3 and 8 workers. E) It should hire 3 workers. Show Answer Correct Answer: A) It should hire 18 workers. 24. What are the three productive resources focused on in factor markets? A) Land, labor, and capital. B) Technology, labor, and land. C) Goods, services, and capital. D) Labor, capital, and goods. Show Answer Correct Answer: A) Land, labor, and capital. 25. A firm's desire to hire workers and to sell products is driven by: A) The desire of the firm to maximize profit. B) The desire of the firm to maximize sales. C) The desire of the firm to limit costs. D) The desire of the firm to raise revenue. Show Answer Correct Answer: A) The desire of the firm to maximize profit. 26. Dunder Mifflin, in a monopsonistic labor market, will continue to hire workers until the MRP of labor: A) Equals MRC, resulting in more workers being hired @ a lower wage. B) Equals MRC, resulting in fewer workers hired @ a higher wage. C) Equals MRC, resulting in fewer workers being hired @ a lower wage. D) Is less than MRC, resulting in more workers being hired @ a lowe rwage. E) Is less than MRC, resulting in fewer workers being hired @ a lower wage. Show Answer Correct Answer: C) Equals MRC, resulting in fewer workers being hired @ a lower wage. 27. Michael Scott manages Dunder Mifflin. Two inputs are used to produce paper. To minimize costs of production, Michael Scott should continue to hire inputs up to the level at which the: A) Marginal product of each input is equal. B) (Marginal product-price) of each input is equal. C) (Marginal product/price) of each input is equal. D) (Marginal product * price) of each input is equal. E) Price of each input is equal. Show Answer Correct Answer: C) (Marginal product/price) of each input is equal. 28. Which of the following is the correct formula for marginal revenue product (MRP)? A) MRP= Change in total profit/change in revenue. B) MRP= Change in total revenue/change in inputs . C) MRP= Change in total costs/change in input. D) MRP= Change in inputs/ Change in total product. Show Answer Correct Answer: B) MRP= Change in total revenue/change in inputs . 29. All of the following are shifters for the supply of labor EXCEPT: A) Education and Training. B) Cultural expectations. C) Working conditions. D) A change in the price of a substitute good . Show Answer Correct Answer: D) A change in the price of a substitute good . 30. If Dunder Mifflin has monopsony power, which of the following is always true? A) The input demand curve lies above the marginal factor cost curve. B) The marginal factor cost curve lies above the input demand curve. C) The marginal revenue product curve lies above the input demand curve. D) The marginal revenue product curve is upward-sloping. E) The marginal factor cost curve lies above the input supply curve. Show Answer Correct Answer: E) The marginal factor cost curve lies above the input supply curve. ← PreviousNext →Related QuizzesMicroeconomics QuizzesEconomics QuizzesFactor Markets Quiz 1Factor Markets Quiz 3 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books