Q: A firm is considering hiring an additional worker. The worker's marginal product is 12 units, and each unit sells for $$3. If the wage rate is 40$$, should the firm hire the worker?

No, because $$MRP_L = 12 \times 3 = 36 \u003c 40$$, so the firm should NOT hire the worker

Question 1

Which of the following is NOT considered a factor of production in microeconomics?

Accepted Answer

Government regulation

Question 2

The marginal product of labor (MPL) is defined as:

Accepted Answer

The increase in total output resulting from hiring one more unit of labor

Question 3

If a pizza shop hires a 4th worker and total output increases from 70 to 90 pizzas per day, what is the marginal product of the 4th worker?

Accepted Answer

$$MP_L = 90 - 70 = 20$$

Question 4

Which formula correctly calculates the marginal revenue product of labor (MRP_L)?

Accepted Answer

$$MRP_L = MP_L 	imes MR$$

Question 5

A competitive, profit-maximizing firm will hire workers up to the point where:

Accepted Answer

$$MRP_L = Wage$$

Question 6

If the wage rate is $$10 and the marginal revenue product of labor for the 5th worker is 8$$, what should the firm do?

Accepted Answer

Not hire the 5th worker

Question 7

Which of the following best describes the demand curve for labor?

Accepted Answer

It is the marginal revenue product curve

Question 8

Suppose a firm faces a constant wage rate and a decreasing marginal product of labor. What happens to the marginal revenue product of labor as more workers are hired?

Accepted Answer

It decreases

Question 9

If the marginal product of labor is 5 and the marginal revenue is $2, what is the marginal revenue product of labor?

Accepted Answer

$$MRP_L = 5 	imes 2 = 10$$

Question 10

Which of the following statements is TRUE regarding the marginal product of labor?

Accepted Answer

It typically decreases as more workers are hired due to diminishing returns

Question 11

A firm is considering hiring an additional worker. The worker's marginal product is 12 units, and each unit sells for $$3. If the wage rate is 40$$, should the firm hire the worker?

Accepted Answer

No, because $$MRP_L = 12 	imes 3 = 36 \u003c 40$$, so the firm should NOT hire the worker

Question 12

Which of the following is an example of physical capital?

Accepted Answer

A pizza oven used in a restaurant

Question 13

Entrepreneurship is best described as:

Accepted Answer

The resource that organizes, manages, and assembles the other factors of production

Question 14

If a firm’s marginal revenue product of labor is greater than the wage rate, what should the firm do?

Accepted Answer

Hire more workers

Question 15

Which of the following best explains why the marginal product of labor may eventually decrease as more workers are hired?

Accepted Answer

Diminishing returns due to limited capital and resources

Question 16

A firm’s labor demand curve shifts to the right when:

Accepted Answer

The marginal product of labor increases

Question 17

If the wage rate is $$15 and the marginal revenue product of labor is 20$$, what is the profit from hiring one more worker?

Accepted Answer

$$Profit = MRP_L - Wage = 20 - 15 = 5$$

Question 18

Which of the following would NOT cause a shift in the labor demand curve?

Accepted Answer

A change in the wage rate

Question 19

If a firm’s marginal product of labor is zero, what should the firm do?

Accepted Answer

Not hire any more workers

Question 20

Which of the following best describes the relationship between the marginal product of labor and the marginal revenue product of labor?

Accepted Answer

Marginal revenue product of labor is the marginal product of labor multiplied by marginal revenue

The Production Function and Marginal Revenue Product

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