# How Factor Markets Work

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Question 1
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Multiple Choice

## For any firm in any market structure,a factor's marginal revenue product is

the average product of the factor multiplied by the price of the output.

the change in revenue caused by the sale of the product contributed by an additional unit of input.

the change in revenue caused by the sale of an additional unit of output.

the increase in output resulting from the use of an additional unit of the factor multiplied by the cost of that factor.

marginal revenue multiplied by total product.

Question 2
Free
Multiple Choice

\$6.

\$36.

\$48.

\$72.

\$96.

Question 3
Free
Multiple Choice

## The marginal revenue product of labour is the change in the value of the firm's output resulting from

a change in the product's price.

an increase in the marginal physical product of labour.

a change in the wage rate paid to labour.

producing one more unit of output.

hiring one more unit of labour input.

Question 4
Free
Multiple Choice

MRP = MP × p

MR =

MC = MR × w

w = MP × p

MRP = MR × MC

Question 5
Free
Multiple Choice

\$1.20.

\$4.44.

\$64.

\$80.

\$144.

Question 6
Multiple Choice

## Consider labour that is hired for \$18 per hour.If the last hour of labour hired produces 8 units of output which sells for \$10 per unit,that labour-hour adds ________ to the firm's profit and so ________ labour should be hired.

\$80; more
-\$80; less
\$62; less
\$62; more
\$0; no
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Question 7
Multiple Choice

## Consider labour that is hired for \$18 per hour.If the last hour hired produces 8 units of output which sells for \$2 per unit, ________ labour should be hired in this situation since the wage is ________ MRP.

more; greater than
more; less than
less; greater than
less; less than
no; equal to
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Question 8
Multiple Choice

## Consider labour that is hired for \$18 per hour.If the last hour hired produces 8 units of output which sells for \$2 per unit,that labour-hour adds ________ to the firm's profit and so ________ labour should be hired.

-\$128; more
-\$2; less
\$16; less
\$16; more
\$0; no
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Question 9
Multiple Choice

## Consider labour hired for \$18 per hour.If the last hour of labour hired produces 8 units of output which sells for \$10 per unit, ________ labour should be hired in this situation since the wage is ________ MRP.

more; greater than
more; less than
less; greater than
less; less than
no; equal to
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Question 10
Multiple Choice

## Consider labour hired for \$1000 per week.If the last week of labour hired produces 0.25 units of output which sells for \$5000 per unit, ________ labour should be hired in this situation since the wage is ________ MRP.

more; greater than
more; less than
less; greater than
less; less than
no; equal to
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Question 11
Multiple Choice

## Consider a small firm that is producing winter jackets.It can lease an additional sewing machine for one month for \$750.With this additional machine,the firm can produce an additional 6 jackets during that time period that it sells for \$125 each.Hiring the marginal machine adds ________ to the firm's profit and so it should ________ the machine.

-\$750; not lease
-\$750; lease
\$0; be indifferent as to whether to lease
\$750; not lease
\$750; lease
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Question 12
Multiple Choice

## Consider a small firm that is producing winter jackets.It can lease an additional sewing machine for one month for \$1200.With this additional machine,the firm can produce an additional 7 jackets during that time period that it sells for \$250 each.Hiring the marginal machine adds ________ to the firm's profit and so it should ________ the machine.

-\$1200; not lease
\$0; be indifferent as to whether to lease
\$1200; lease
\$550; lease
\$1750; lease
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Question 13
Multiple Choice

## Consider a small firm that is producing winter jackets.It can lease an additional sewing machine for one month for \$2400.With this additional machine,the firm can produce an additional 4 jackets during that time period that it sells for \$550 each.Hiring the marginal machine adds ________ to the firm's profit and so it should ________ the machine.

-\$2400; not lease
-\$200; not lease
\$0; be indifferent as to whether to lease
\$200; lease
\$2400; lease
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Question 14
Multiple Choice

## Consider the following production and cost schedule for a firm.The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-1-Refer to Table 13-1.The marginal product of the 15th unit of the factor of production is

-2.
0.
2.
82.
84.
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Question 15
Multiple Choice

## Consider the following production and cost schedule for a firm.The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-1-Refer to Table 13-1.The marginal product of the 12th unit of the factor of production is

4.
14.
20.
44.
64.
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Question 16
Multiple Choice

## Consider the following production and cost schedule for a firm.The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-1-Refer to Table 13-1.The total revenue of the output produced by 12 units of the factor is

\$120.
\$520.
\$640.
\$768.
\$1440.
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Question 17
Multiple Choice

## Consider the following production and cost schedule for a firm.The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-1-Refer to Table 13-1.The total revenue of the output produced by 15 units of the factor is

\$860.
\$150.
\$640.
\$780.
\$1440.
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Question 18
Multiple Choice

## Consider the following production and cost schedule for a firm.The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-1-Refer to Table 13-1.The marginal revenue product of the 14th unit of the factor is

-\$60.
\$60.
\$140.
\$700.
\$840.
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Question 19
Multiple Choice

## Consider the following production and cost schedule for a firm.The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-1-Refer to Table 13-1.The marginal revenue product of the 15th unit of the factor is

-\$20.
\$20.
\$60.
\$150.
\$820.
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Question 20
Multiple Choice