ECONOMICS101_Quiz_6.

ECONOMICS101_Quiz_6. 1. Select the answer below that corresponds to the idea of a derived demand curve. A. A bagel producer hires more workers because she would like to reduce the number of hours she personally works at the bagel factory B. A bagel producer invests in a new bagel oven to take advantage of a new investment tax deduction C. A bagel producer decides to supply more bagels to the market, and as a result her demand for bagel workers increases*** D.All of the above selections are consistent with the idea of a derived demand Correct Answer: C The demand for bagel workers is derived from the decision to supply bagels to the market. 2. If the wage is larger than the marginal revenue product of labor then the profit maximizing firm will A. Reduce the amount of workers hired*** B. Increase the amount of workers hired C. Leave the number work workers hired unchanged D. reduce the wage Correct Answer: A If the wage is greater than the revenue the last worker is bringing into the firm, the firm will reduce the amount of labor hired. 3. The additional revenue earned by the last extra worker hired is referred to as A. The marginal revenue product of labor*** B. The marginal revenue product of capital C. The marginal product of labor D. The marginal product of capital Correct Answer: A The marginal revenue product of labor is the additional revenue generated by the last worker hired. This study source was downloaded by from CourseH on :22:32 GMT -06:00 4. Labor Output MP of labor MRP labor Wage Marginal Profit 0 0 NA NA NA NA 1 4 4 40 30 10 2 10 30 3 5 50 30 4 3 30 0 5 20 Consider the table above. What is the marginal profit when 2 workers are hired? A. $60 B. $10 C. $6 D. $30*** Correct Answer: D The marginal profit is equal to the MRP of labor minus the wage.