Practise Exam Chapter 13 PDF

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Practise Exam Chapter 13...

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Microeconomics 12e, Ragan - Ch 13 Name___________________________________

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) When studying income distribution, the Classical economists were primarily concerned with the distribution of income among

1)

A) the government and capitalists. B) workers, capitalists, and landowners. C) workers and landowners. D) workers and capitalists. E) workers and the government. 2) The "functional distribution of income" refers to the distribution of income

2)

A) among the various social classes. B) between the various economic sectors of a country. C) among the major factors of production. D) between the government and the factors of production. E) among the industrial nations. 3) The "size distribution of income" refers to the distribution of income

3)

A) among different households without reference to the source of the income. B) among different households with reference to the source of the income. C) to a particular factor of production in different time periods. D) between capitalists and workers. E) between capitalists and landowners. 4) A Lorenz curve shows the

4)

A) functional distribution of income. B) degree of inequality across households in the distribution of income. C) ratio of workers' income to capitalists' income. D) level of a country's income relative to its foreign trade. E) level of a country's income relative to its productive capacity.

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5) In a Lorenz curve diagram, the size of the area between the Lorenz curve and the diagonal line represents

5)

A) the dollar incomes of the bottom 40 percent of families. B) the percentage of income received by the bottom 20 percent of families. C) the degree of inequality in the distribution of income. D) the percentage of income received by the top 5 percent of families. E) complete income equality. 6) The diagonal line on a Lorenz curve diagram represents

6)

A) where the Lorenz curve would be if there were complete income equality. B) the percentage of income received by the top 50 percent of families. C) the percentage of income received by the bottom 50 percent of families. D) the dollar incomes of the bottom 50 percent of families. E) the degree of inequality in the distribution of income.

FIGURE 13 -1 7) Refer to Figure 13 -1. The diagonal line in the diagram A) has no real purpose. B) illustrates the functional distribution of income. C) shows that 100 percent of families earn 100 percent of the income. D) shows where the Lorenz curve would be if there were complete income equality E) shows the actual distribution of income.

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7)

8) Refer to Figure 13 -1. Which point shows that 100 percent of families earn 100 percent of the income? A) A

B) B

C) C

D) D

E) E

9) Refer to Figure 13 -1. Which point shows that 20 percent of families earn almost 40 percent of total income? A) A

B) B

C) C

D) D

B) B

C) C

D) D

9)

E) E

10) Refer to Figure 13 -1. Which point shows that the bottom 60 percent of families earn just under 40 percent of total income? A) A

8)

10)

E) E

11) Refer to Figure 13 -1. On the Lorenz curve shown in the diagram,

11)

A) the richest 20 percent of families earn almost 40 percent of total income. B) perfect equality of income distribution occurs. C) the poorest 20 percent of families earn almost 90 percent of total income. D) the functional distribution of income is shown. E) the richest 20 percent of families earn over 60 percent of total income. 12) Suppose all Canadians earned equal incomes. In this case, Canada's Lorenz curve would be

12)

A) below the diagonal line. B) non -existent. C) above the diagonal line. D) coincident with the horizontal axis. E) the diagonal line. 13) Suppose that the last unit of a factor of production employed has a marginal physical product of 12. The factor's price is $8, and the product's competitive market price is $6. This factor's marginal revenue product is A) $96.

B) $48.

C) $6.

D) $36.

E) $72.

14) For any firm in any market structure, a factor's marginal revenue product is A) the change in revenue caused by the sale of an additional unit of output B) the increase in output resulting from the use of an additional unit of the factor multiplied by the cost of that factor. C) the average product of the factor multiplied by the price of the output. D) marginal revenue multiplied by total product. E) the change in revenue caused by the sale of the product contributed by an additional unit of input.

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13)

14)

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

15)

A) producing one more unit of output. B) hiring one more unit of labour input. C) a change in the wage rate paid to labour. D) an increase in the marginal physical product of labour. E) a change in the product's price. 16) 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's marginal revenue product is A) $1.20.

B) $4.44.

C) $64.

D) $80.

E) $144.

17) 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 A) $62; less

B) $62; more

C) $64; more

D) -$64; less

16)

17)

E) $0; no

18) 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.

18)

A) no; equal to B) more; greater than C) less; greater than D) more; less than E) less; less than 19) 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. A) $0; no B) - $128; more C) $16; more D) $16; less E) - $2; less

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19)

20) 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.

20)

A) more; less than B) less; greater than C) less; less than D) no; equal to E) more; greater than Consider the following production and cost schedule for a firm. Total Number of Units of the Factor 10 11 12 13 14 15

Total Number of Units of Output 30 44 64 78 84 86

Price per Unit of Output $10 $10 $10 $10 $10 $10

Total Cost of Production $100 $110 $120 $130 $140 $150

TABLE 13 -1 21) Refer to Table 13- 1. The marginal physical product of the 15th unit of the factor of production is ________. A) - 2

B) 0

C) 2

D) 82

E) 84

22) Refer to Table 13- 1. The marginal physical product of the 12th unit of the factor of production is ________. A) 4

B) 14

C) 20

D) 44

B) $520

C) $640

D) $768

B) $150

C) $640

D) $780

B) $60.

C) $140.

D) $700.

25) E) $840.

26) Refer to Table 13- 1. The marginal revenue product of the 15th unit of the factor is A) - $20.

B) $20.

C) $60.

D) $150.

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24)

E) $1440.

25) Refer to Table 13- 1. The marginal revenue product of the 14th unit of the factor is A) - $60.

23)

E) $1440

24) Refer to Table 13- 1. The total revenue of the output produced by 15 units of the factor is ________ A) $860

22)

E) 64

23) Refer to Table 13- 1. The total revenue of the output produced by 12 units of the factor is ________ A) $120

21)

26) E) $820.

27) Refer to Table 13- 1. Diminishing marginal returns begins to set in with the ________ unit of the factor of production. A) 14th

B) 12th

C) 11th

D) 15th

27)

E) 13th

28) Refer to Table 13- 1. How many units of this factor of production would the profit-maximizing firm choose to hire?

28)

A) 11 B) 12 C) 13 D) 14 E) It is not possible to determine with the data provided. Consider the following table for a firm. Total Number of Units of the Factor 2 3 4 5 6 7 8

Total Number of Units of Output 100 110 128 148 162 170 166

TABLE 13-2 29) Refer to Table 13- 2. The marginal physical product of the 7th unit of the factor is ________ A) - 8

B) 162

C) 170

D) 0

E) 8

30) Refer to Table 13- 2. Suppose the firm is a perfect competitor and faces a given price of the product equal to $2 per unit. The marginal revenue product of the 5th unit of the factor is ________ A) $2

B) $128

C) $20

D) $148

B) 4th

C) 5th

D) 6th

B) $110

C) $100

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D) $1000

31)

E) 7th

32) Refer to Table 13- 2. Suppose this firm is a perfect competitor and faces a given price of the product equal to $10 per unit. The marginal revenue product of the 3rd unit of the factor is ________ A) $1100

30)

E) $40

31) Refer to Table 13- 2. This firm begins to experience diminishing marginal productivity when it hires the ________ unit of the factor. A) 3rd

29)

E) $30

32)

Consider the following production and cost schedule for a firm. Total Number of Units of the Factor 2 3 4 5 6 7

Total Number of Units of Output 12 20 26 30 32 32

Price per Unit Total Cost of of Output Production $10 $50 $9 $55 $8 $60 $7 $65 $6 $70 $5 $75

TABLE 13-3 33) Refer to Table 13- 3. The marginal physical product of the 4th unit of the factor of production is ________. A) 26

B) 30

C) 6

D) 4

E) 8

34) Refer to Table 13- 3. The marginal physical product of the 6th unit of the factor of production is ________. A) 4

B) -2

C) 2

D) 32

B) $160.

C) $192.

D) $202.

B) $192.

C) $180.

D) $210.

B) $7.50.

C) $2.00.

D) $3.67.

B) -$11.00.

C) -$2.00.

D) $2.00.

B) 5th

C) 4th

D) 3rd

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38)

E) $7.50.

39) Refer to Table 13- 3. A profit -maximizing firm would never hire more than the ________ unit of this factor of production. A) 7th

37)

E) $28.00.

38) Refer to Table 13- 3. The increase in total revenue generated by hiring the 5th unit of the factor o production is A) $11.00.

36)

E) $160.

37) Refer to Table 13- 3. The rise in total revenue generated by hiring the 4th unit of the factor o production is A) $ -11.00.

35)

E) $180.

36) Refer to Table 13- 3. The total revenue obtained if the 7th unit of the factor of production is hired is A) $202.

34)

E) 8

35) Refer to Table 13- 3. The total revenue obtained if the 5th unit of the factor of production is hired is A) $210.

33)

E) 6th

39)

40) All profit -maximizing firms increase production up to the point at which the last unit of the variable factor employed adds

40)

A) nothing to marginal revenue. B) just as much to revenue as to cost. C) nothing to marginal cost. D) just as much to revenue as to profit. E) positive economic profits. 41) If a firm is a perfect competitor in its product market, the marginal physical product of a factor multiplied by the product's price equals

41)

A) marginal cost. B) total revenue. C) marginal profit. D) marginal revenue product. E) marginal revenue. 42) The marginal revenue product curve for a monopolist would be ________ its marginal product curve because ________.

42)

A) steeper than; its MR decreases as output increases B) the same as; the MRP curve always has the same shape as the MP curve C) steeper than; its product's price increases as output increases. D) flatter than; its product's price decreases as output increases. E) flatter than; it must pay a higher wage to labour 43) Which of the following is the best definition of the marginal revenue product (MRP) of a factor of production? A) the change in revenue generated by the sale of the product produced by an additional unit o input B) the change in revenue caused by the sale of an additional unit of outpu C) the increase in output resulting from the use of an additional unit of the factor multiplied by the cost of that factor D) the average product of the factor multiplied by the price of the output E) marginal revenue multiplied by total product

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43)

The table below shows the total production for varying numbers of hours worked producing yo-yos. The firm sells its product and hires its workers in competitive markets. Number of Hours Worked 10 11 12 13 14 15

Number of Yo-Yos Produced 60 70 78 84 88 90

Wage Rate per Hour ($) 10 10 10 10 10 10

Price of Yo-Yos ($) 5 5 5 5 5 5

TABLE 13-4 44) Refer to Table 13- 4. What is the MRP for the 13th hour worked? A) $84

B) $78

C) $10

44) D) $30

E) $5

45) Refer to Table 13- 4. What is the marginal cost of the variable factor employed by this firm? A) $10

B) $20

C) $5

D) $30

E) $0

46) Refer to Table 13- 4. How many worker- hours should this profit-maximizing firm hire? A) 12

B) 13

C) 11

D) 15

B) 12

C) 13

D) 14

46)

E) 14

47) Refer to Table 13- 4. If the market price of yo-yos drops to $2.50, how many worker-hours should this profit- maximizing firm hire? A) 11

45)

47)

E) 15

48) In a competitive labour market, an increase in the demand for labour might be due to an increase in the

48)

A) supply of the other factors. B) demand for the product that labour produces. C) supply of labour. D) wage rate. E) supply of the product that labour produces. 49) A demand for a factor of production is said to be "derived" because the factor's demand depends A) entirely on the cost of the factor. B) heavily on public choice. C) on the demand for the good or services it helps to make. D) entirely on corporate advertising. E) heavily on government policy.

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49)

50) Which of the following is the best example of a derived demand?

50)

A) A decrease in the price of TVs will increase the demand for VCRs. B) An increase in demand for cars will increase the demand for auto workers. C) An increase in the price of butter increases the demand for margarine. D) A decrease in interest rates increases the demand for housing E) An increase in the wage rate causes firms to substitute capital for labour 51) The demand curve for a variable factor is always

51)

A) flatter than that factor's MRP curve. B) steeper than that factor's MRP curve. C) that factor's marginal cost curve. D) that factor's MRP curve. E) that factor's MPP curve. 52) In a perfectly competitive labour market, a profit- maximizing firm will employ labour until the

52)

A) MPP = MRP. B) wage = MRP. C) wage = the product's price. D) MRP = the product's price. E) wage = MPP. 53) The demand for a factor will be more elastic if

53)

A) it is easier to substitute between this factor and others B) there is little substitutability between factors C) that factor determines a small percentage of total cost. D) the supply of the factor is elastic . E) the demand for the good being produced is inelastic. 54) The demand for a factor will be less elastic if

54)

A) the supply of the factor is elastic. B) there is a high degree of substitutability between factors C) marginal physical product decreases slowly as more of the factor is used. D) the demand for the good being produced is elastic. E) that factor determines a small percentage of total cost.

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55) If the cost of a particular factor of production accounts for a large percentage of the total cost of producing some good, we can expect the demand for this factor of production to

55)

A) be perfectly inelastic. B) be relatively elastic. C) be relatively inelastic. D) have an elasticity equal to one. E) have an elasticity equal to zero. 56) If a technological change makes it easier to substitute capital for labour, the demand curve for labour

56)

A) is not affected. B) becomes more elastic. C) becomes more inelastic. D) shifts parallel to the left. E) shifts parallel to the right. 57) Which of the following is the best example of a derived demand? A) an increase in the wage for yoga instructors causes an increase in the demand for yoga classes B) an increase in awareness about fitness causes an increase in demand for yoga classes C) an increase in demand for yoga classes causes an increase in demand for yoga instructors D) a decrease in the demand for yoga mats causes a decrease in demand for yoga classes E) a decrease in the price of Pilates classes causes an increase in the demand for yoga classes

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57)

The diagram below shows the MRP curve for a firm producing high school math textbooks. The factor of production being considered here is hours of labour.

FIGURE 13 -2 58) Refer to Figure 13 -2. Assume that the firm is a perfect competitor and the price of the firm's output is fixed. We know that the firm's MRP curve is

58)

A) steeper than the firm's marginal product curve for labour. B) the same shape as the firm's marginal product curve for labour. C) flatter than the firm's marginal product curve for labour. D) horizontal, if the firm is perfectly competitive. E) the same shape as the firm's marginal revenue curve. 59) Refer to Figure 13 -2. This firm's MRP curve is the firm's A) marginal revenue product of textbooks. B) demand curve for labour. C) derived demand for labour. D) derived demand for textbooks. E) both B and C.

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59)

60) Refer to Figure 13 -2. Suppose this firm initially has the marginal revenue product curve MRP1 .

60)

One reason that the curve could shift to MRP2 is A) a decrease in demand for the firm's output, math textbooks. B) an increase in the supply of labour. C) an increase in the quality of workers employed by the firm. D) a decrease in the market price of math textbooks. E) a decrease in the wage rate. 61) Refer to Figure 13 -2...