Quick Quiz


1	If the total product of labour per day is as shown in the chart below and the price of the product is $10/unit, how many employees will be hired if the wage rate is $99/labour-day? frank_mci_14-1.gif
		A)	1
		B)	2
		C)	3
		D)	4
		E)	5


2	Given the information in question 14-1, what is the value of the marginal product (VMPL) of the 5th worker?
		A)	5
		B)	10
		C)	50
		D)	82
		E)	410


3	If the going wage rate in a small community falls and a firm in that community is selling its product in the national market, that firm moves down its VMPL curve and hires more workers. If the wage rate falls across the entire country for all firms producing the product, then the VMPL curve for labour:
		A)	does not shift.
		B)	shifts right, as workers work overtime to make up for lost wages.
		C)	shifts left, as more labour and increased output cause product prices to fall.
		D)	shifts right, because employees seek more labour at the lower wage rate.
		E)	shifts left, because this change implies decreased demand nationally for the product.


4	Refer to the following table for questions 14-4 and 14-5. Of the four possible market situations shown below, for an industry with a given production function, which of the four cells would lead to the most labour being hired by the industry? frank_mci_14-4.gif
		A)	1
		B)	2
		C)	3
		D)	4


5	With reference to the table in the previous question, which combination of market structures leads to the least labour being hired?
		A)	1
		B)	2
		C)	3
		D)	4


6	The marginal factor cost of the third labourer (in dollars per labour-day) is _____, if the labour supply curve has the following wage rate/quantity of labour coordinates: frank_mci_14-6.gif
		A)	15
		B)	20
		C)	25
		D)	30
		E)	35


7	Which of the following possible points on a labour supply curve is consistent with the income-leisure tradeoff graph below? frank_mci_14-7.gif
		A)	Wage rate = $1/labour-hour; hours worked = 12.
		B)	Wage rate = $2/labour-hour; hours worked = 10.
		C)	Wage rate = $3/labour-hour; hours worked = 14.
		D)	All of the above are consistent with the information on the graph.


8	Which statement is true?
		A)	If Ingrid has a target level of income she seeks to maintain, she will have a backward-bending labour supply curve.
		B)	If leisure is an inferior good to Ingrid, she will not have a backward-bending labour supply curve.
		C)	It is more likely that Ingrid would have a backward-bending supply of labour curve than that the entire labour market would have a backward-bending labour supply curve.
		D)	All of the above are true.
		E)	None of the above are true.


9	A minimum wage set above the market equilibrium wage rate could lead to more workers being hired at the higher wage rate if
		A)	the product produced is sold in a perfectly competitive market.
		B)	the employer is a monopsonist.
		C)	The supply of labour curve is backward-bending at high wage rates.
		D)	the supply of labour curve is horizontal.


10	In the VMPL measurement, the MPL and the price of the output are key determinants of the equilibrium wage rate. The text suggests that the puzzling "winner take all" phenomenon could still fit marginal productivity theory if:
		A)	one realized that MPL measurements are vastly underestimated for a few stars.
		B)	the public''s fascination with winners dramatically raised the price of what the winner is selling.
		C)	the unseen earnings of less heralded, second-rank performers were fully known.
		D)	perfect competition were present in the labour markets where superstars perform.

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