Grace maximizes her utility by consuming both gourmet cookies and ice cream. If the price of a dozen cookies is three times that of a pint of ice cream, we would expect that:
a. the total utility of a dozen cookies is three times that of a pint of ice cream.
b. the total utility of a dozen cookies is one-third that of a pint of ice cream.
c. the marginal utility of the last dozen cookies is three times that of the last pint of ice cream.
d. the marginal utility of the last dozen cookies is one-third times that of the last pint of ice cream.
QUESTION 2Consider a perfectly competitive firm that produces computers. Each additional worker at this firm can produce four computers. Calculate the marginal factor cost if the computers are sold for 1,000 each, and the firm is maximizing profit. (Assume that marginal revenue product is the product of marginal product of the input and the marginal revenue of the firm.)
a. 4,000
b. 500
c. 1,000
d. 1,500
e. 400
QUESTION 3What do you mean by the term 'equilibrium wage'?
a. It is the wage that is determined when potential employers and potential employees are free to transact as they wish.
b. It is a wage determined by the government with an intention to narrow the gap between the higher and the lower income groups.
c. It is a wage at which the workers refuse to offer labor.
d. It is a minimum possible rate that an employer must pay in order to hire a labor.
e. It is a wage at which there is an excess supply of workers.
QUESTION 4Daniel enjoys both soda and pizza, allocating his purchases across these two goods so that his utility is maximized. If Daniel receives one-third as much utility from the last can of soda as from the last slice of pizza, we can say that:
a. the price of pizza is one-third that of soda.
b. the price of pizza is equal to that of soda.
c. the price of pizza is twice that of soda.
d. the price of pizza is three times that of soda.
QUESTION 5The producer can raise the level of profit by hiring more units of a resource if:
a. the marginal revenue product of the resource is equal to the marginal factor cost.
b. the marginal factor cost becomes negative.
c. the marginal revenue product of the resource is greater than the marginal factor cost.
d. the marginal revenue product falls to zero.
e. the marginal revenue product of the resource is less than the marginal factor cost.
QUESTION 6Which of the following statements is true?
a. The intention of a minimum wage is to raise the wage rate for the skilled workers.
b. The lowest of the federal or state minimum wage levels prevails in each state.
c. The federal minimum wage, in the United States, is followed by all the states as their minimum wage.
d. The minimum wage has the greatest impact on the unskilled labor market.
e. The minimum wage has the greatest impact on the skilled labor market.
QUESTION 7The price of a bagel with cream cheese equals 2 and the price of a donut equals 50 cents. The marginal utility to Jade of the last bagel consumed equals 16 utils. If Jade maximizes her satisfaction by consuming both bagels and donuts, we would expect the marginal utility of the last donut consumed to equal:
a. 20 utils.
b. 12 utils.
c. 8 utils.
d. 4 utils.
QUESTION 8If a firm hires its fourth worker for 5 and its fifth worker for 8, then
a. the firm is a monopolist.
b. the firm must be substituting capital for labor.
c. the fifth worker must have been less productive than the fourth.
d. the firm is not maximizing its profit.
e. the labor market is not perfectly competitive.
QUESTION 9Which of the following is the purpose of a minimum wage?
a. To reduce the wage rates of high-income workers
b. To keep a track of the changes in the wage rate in an unskilled labor market
c. To deal with the problem of unemployment in the market
d. To help increase the profits earned by the producers
e. To raise the wage rate for the lowest income workers
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