Suppose a factor price taker purchases one unit of factor X for $10. At what price would i

Suppose a factor price taker purchases one unit of factor X for $10. At what price would it purchase the second unit, and what would marginal factor cost (MFC) equal?

a.It would purchase the second unit for $10, and MFC equals $10.

b.There is not enough information to know what it would purchase the second unit for, and thus we do not know what MFC equals.

c.It would purchase the second unit for $10, but there is not enough information to know what MFC equals.

d.There is not enough information to know what it would purchase the second unit for, but MFC equals $10.

 

 

 

20.Why does the marginal revenue product (MRP) curve slope downward for a perfectly competitive firm?

a.Because MRP = MR x MPP.  After some point, as more of a factor is employed, the lower its MPP is; thus MRP declines.

b.Because MRP = MFC x MPP. After some point, as more of a factor is employed, the lower its MFC is; thus MRP declines.

c.Because MRP = MR x MPP. After some point, MR declines for a product price taker; thus, MRP declines.

d.Because MRP = MFC x MR. After some point, MFC and MR decline; thus, MRP declines.

 

 

 

21.A firm will maximize its profits by hiring factors up to the point at which

a.MR = MC, if the firm is a monopolist, monopolistic competitor, or oligopolist.

b.P = MC, if the firm is a perfect competitor.

c.MRP = MFC.

d.VMP = MFC, if the firm is a price searcher (monopolist, etc.).

e.a and b

 

 

 

22.A firm that is perfectly competitive will continue to hire factor units as long as

a.MRP

b.MRP > MFC.

c.VMP

d.MC > MR.

 

 

 

23.If for a firm MRP > MFC, then the firm

a.is maximizing profits and should continue producing its current output.

b.is minimizing factor costs and therefore is maximizing profits.

c.should produce more output by increasing the quantity of factors employed.

d.should produce less output by decreasing the quantity of factors employed.

 

 

 

24.The firm's factor demand curve is the

a.MRP curve if the firm is a price taker (perfectly competitive firm).

b.MFC curve if the firm is a price taker (perfectly competitive firm).

c.VMP curve if the firm is a price searcher (monopolist, monopolistic competitor, oligopolist).

d.MFC curve if the firm is a price searcher (monopolist, monopolistic competitor, oligopolist).

 

 

 

25.The firm's factor demand curve is the

a.MRP curve if the firm is a price taker (perfectly competitive firm).

b.MRP curve if the firm is a price searcher (monopolist, monopolistic competitor, oligopolist).

c.VMP curve if the firm is a price taker (perfectly competitive firm).

d.VMP curve if the firm is a price searcher (monopolist, monopolistic competitor, oligopolist).

e.a, b, and c

 

 

 

26.Value marginal product (VMP) is

a.a measure of additional revenue minus additional cost as a result of additional output.

b.the price of the product multiplied by the additional output resulting from an additional factor unit employed.

c.the marginal revenue of the product divided by the additional output resulting from an additional factor unit employed.

d.the value of an additional unit of product as measured in terms of additional factor cost.

e.the total value of the total output of a firm divided by the total quantity of output.

 

 

 

27.Value marginal product (VMP) equals

a.P x MPP.

b.P/MPP.

c.P x MFC.

d.b and c

e.none of the above

 

 

 

28.For a perfectly competitive firm,

a.VMP > MRP.

b.VMP

c.VMP = MRP.

d.There is not enough information to answer the question.

 

 

 

29.A measure of the value that one unit of a factor adds to the firm's output is value __________ product.

a.average

b.marginal

c.variable

d.fixed

 

 

 

30.Which of the following will cause a firm's factor demand curve to shift to the left?

a.a decrease in factor costs

b.an increase in factor costs

c.a decrease in marginal physical product

d.an increase in marginal physical product

 

 

 

31.If a firm is a factor price taker in the labor market,

a.it must pay higher wages in order to hire additional workers.

b.it can hire all the workers it wants to at the going wage rate.

c.it must hire all workers who apply for a job.

d.it will continue to hire workers as long as MFC > MRP.

 

 

 

32.For a perfectly competitive firm, a decrease in the price of the product it sells will shift

a.the demand curve of its product to the left.

b.the demand curve of its product to the right.

c.its MRP curve to the left.

d.its MRP curve to the right.

e.b and c