Consider two situations: In situation A the production of widgets is monopolized by a single firm. In situation B the production of widgets is perfectly competitive. In both situations the supply of labor to widget makers is infinitely elastic at a wage of w. Which of the following statements is true?

A) The marginal value product of labor will be the same in the two cases.
B) The marginal value product of labor is higher in case B than in case A.
C) The marginal value product of labor is higher in case A than in case B.
D) From the information given it is not possible to make a definite statement about the marginal value product of labor.

2. A monopolist who owned the entire supply of a scarce resource would set a price

A) at about the competitive level.
B) lower than the competitive level.
C) higher than the competitive level but lower than what a monopoly producer of a nonscarce good would.
D) above that which would be chosen by a monopoly producer of a nonscarce good

3.For a monopsonistic hirer of labor, the gap between labor's marginal value product and its wage rate will be greater

A) the more elastic the supply curve for labor.
B) the more inelastic the supply curve for labor.
C) the more elastic the firm's demand for labor.
D) the more inelastic the firm's demand for labor.

4 A profit-maximizing firm will never hire that quantity of a factor of production for which that factor has an increasing marginal productivity because

A) it would not be maximizing output.
B) it would not be maximizing the productivity of labor.
C) it would not be minimizing costs.
D) it would not be maximizing profits.

5.

If a firm is a price taker in both the input and output markets, its marginal revenue product of labor is given by

A) the price of its output times labor's marginal physical productivity.
B) the marginal value product of labor.
C) the marginal revenue product of capital times the ratio of the wage rate to the rental rate on capital.
D) all of the above.

6. The rental rate approach to investment choices by firms and the present value approachA) always agree.
B) agree only if depreciation is 0.
C) agree only if the price of equipment does not change.
D) agree only when inflation rates are zero.

7. A fall in the real interest rate leads toA) an increase in the rental rate on a machine.
B) a decrease in the rental rate on a machine.
C) no change in the rental rate on a machine.
D) a fall in the marginal productivity of capital.