1)As the wage of a worker increases, the opportunity cost of his/her leisure time increases as well. This is an example of

substitution effect.

income effect.

normative effect.

complimentary effect.

inferior effect.

2)Firm X is in a monopsonistic market and bears a marginal input cost of $40 per hour for each worker. For the firm to maximize profit, what should the marginal revenue product of labor be?

Any amount below $40

Any amount above $40

$40

$80

There is insufficient information to make a determination.

3)

Megasoft is the only software manufacturing company in Tallahassee. When the firm maximizes profit, its software engineers' marginal revenue product will be

more than the wage rate.

less than the wage rate.

equal to one.

equal to the wage rate.

double the wage rate.

4)

A perfect competitive firm will hire workers until

the marginal input cost is greater than the marginal product of labor.

the value of the marginal product of labor equals wages.

the value of the marginal product of labor equals the marginal product of labor.

price of output equals wages.

marginal product of labor equals zero.

5)

Bennie's Radiator Shop has installed a new machine that increases production by 200 units. Each unit sells for $30. What is the marginal revenue product of the new machine?

$6,000

$30

$170

200 units

Insufficient data

6)

Under conditions of imperfect competition, the MRP for the 12th worker is calculated by

subtracting the total revenue with 11 workers from the total revenue with 12 workers.

multiplying the marginal physical product of the 12th worker by the product price.

subtracting total cost from total revenue with 12 workers.

summing the MRPs from worker #1 through #11.

using either A or B since they will both return the same value for MRP.

7)Bob's Blades is in a perfectly competitive market, manufacturing in-line skates. The firm installs a new machine that increases the productivity of labor. Consequently,

the marginal physical product of labor decreases.

the marginal revenue product of labor decreases.

the demand for labor increases.

the output of labor decreases.

the wage rate decreases.

8)Mannie's Masonry wants to minimize his cost of production. He should select a combination of labor and capital for which the marginal product per dollar of labor is

more than the marginal product per dollar of capital.

equal to the wage.

equal to one.

equal to the cost of capital.

equal to the marginal product per dollar of capital.

9)

Lupita grows cantaloupes in central Florida and is in a perfectly competitive market. The marginal physical product of labor is 10 units while the price per unit is $2. What is the marginal revenue product of labor of Lupita's farm?

$2

$20

$5

$10

$12

10)

Households play two separate roles in the Circular Flow Model. What are the roles and where are they played?

Households are the suppliers in the product market and the demanders in the resource market.

Households are the demanders in the product market and the suppliers in the resource market.

Households are the suppliers in the wholesale market and the demanders in the retail market.

Households are the suppliers in the housing market and the demanders in the home improvement market.

Households are both the demanders and the suppliers in the real estate market.

11)

Assume that new technology develops a substitute for DVDs. How will the price elasticity of demand for DVDs be impacted?

There will be no change in the price elasticity of demand for DVDs.

The appearance of a substitute for DVDs with increase the elasticity coefficient for DVDs.

The appearance of a substitute for DVDs with decrease the elasticity coefficient for DVDs.

The impact on price elasticity of demand for DVDs is uncertain but the demand for DVDs will increase.

The impact on price elasticity of demand for DVDs is uncertain but the total revenue for sellers of DVDs will increase.

12)

Price elasticity of demand refers to the ratio of the

percentage change in price of a product in response to the percentage change in quantity demanded of the good.

percentage change in price of a product in response to the percentage change in buyers income.

percentage change in quantity demanded of a product in response to the percentage change in the price of the good.

percentage change in quantity demanded of a product in response to the percentage change in price of another product.

None of the above.