Jeremy maximizes utility by consuming both iced tea and coffee. Iced tea is priced at 1.50 per bottle and coffee at 2.00 per 16-ounce cup. Which of the following marginal utility pairs is inconsistent with Jeremy's consumer equilibrium at these prices?
a. MU of iced tea = 3; MU of coffee = 4
b. MU of iced tea = 4; MU of coffee = 3
c. MU of iced tea = 6; MU of coffee = 8
d. MU of iced tea = 3/4; MU of coffee = 1
QUESTION 2Other things being equal, the marginal revenue product for labor hired by a firm that is a monopolist in the output market:
a. is represented by an upward sloping curve.
b. is equal to the marginal revenue product for labor hired by a perfectly competitive firm.
c. is less than the marginal revenue product for labor hired by a perfectly competitive firm.
d. is greater than the marginal revenue product for labor hired by a perfectly competitive firm.
e. is equal to the value of marginal product of labor.
QUESTION 3Which of the following is true?
a. If minimum wage is set below the equilibrium wage, it leads to a labor surplus.
b. If anything interferes with the voluntary exchanges that make up a market, equilibrium does not occur.
c. Minimum wage helps deal with the problem of unemployment in the market for unskilled labor.
d. Producers are willing to employ more labor at a minimum wage.
e. Minimum wage leads to a situation of labor deficit in a market.
QUESTION 4Rebecca consumes both iced tea and coffee. Iced tea is priced at 1.50 per bottle and coffee at 2.00 per 16-ounce cup. Which of the following marginal utility pairs is consistent with Rebecca's consumer equilibrium at these prices?
a. MU of iced tea = 1; MU of coffee = 1
b. MU of iced tea = 1; MU of coffee = 2
c. MU of iced tea = 2; MU of coffee = 3
d. MU of iced tea = 3; MU of coffee = 4
QUESTION 5A monopsonist firm pays a price to a factor that is:
a. equal to the marginal revenue product of the factor.
b. greater than the marginal revenue product of the factor.
c. equal to the marginal factor cost.
d. greater than the marginal factor cost.
e. less than the marginal revenue product of the factor.
QUESTION 6Which of the following is true with regard to minimum wages?
a. A minimum wage does little to alleviate poverty.
b. A minimum wage helps deal with the problem of poverty.
c. A minimum wage leads to a surplus or unemployment in the skilled labor market.
d. A minimum wage adversely affects the unskilled laborers between the age group 40 and 45.
e. A minimum wage helps provide employment to teenagers and improve their standard of living.
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