Micro Unit 5 Review

Marginal revenue product is defined as the

• change in income that occurs when an individual works additional hours

• total revenue divided by the quantity of labor employed

• change in total revenue when one additional unit of an input is employed

• change in total revenue when one additional unit of the good is produced

• marginal revenue divided by cost

Which of the following describes a factor market with only one buyer?

• a monopoly

• perfectly competitive

• an oligopoliy

• monopolistically competitive

• a monopsony

Which of the following will happen in the labor market if the price of the good produced by the workers decreases?

• The demand curve for labor will shift to the right.

• The supply curve for labor will shift to the right.

• The marginal revenue product of labor will increase.

• The marginal revenue product of labor will decrease.

• Wages for workers will increase.

Assume that a firm is hiring labor in a perfectly competitive market. If MRPL is greater than the wage rate, then

• the firm must be losing money

• the firm should employ more workers

• the firm is maximizing its profits

• the firm is experiencing diminishing marginal utility

• the firm should rent more capital

A profit-maximizing firm will hire

• labor until its wage rate equals its average revenue product

• labor until its wage rate equals its marginal revenue product

• capital until the interest rate equals the wage rate

• capital until the interest rate exceeds the wage rate

• land until the rental rate equals the marginal social benefit

Which of the following is most likely to shift the demand for aircraft mechanics to the right?

• An increase in demand for air travel

• An increase in the price of a license necessary for aircraft mechanics

• A decrease in demand for air travel

• A decrease in the marginal productivity of aircraft mechanics

• An decrease in the cost of cars

Which of the following tends to increase the gap in earnings between skilled and unskilled workers over time?

• An increase in demand for unskilled workers relative to skilled workers

• An increase in supply of skilled workers relative to unskilled workers

• Hazard pay

• A decrease in both demand for and the supply of skilled workers

• A decrease in demand for unskilled workers relative to skilled workers