CLEP Microeconomics chapter practice4 questions

26 Derived Demand and Marginal Revenue Product

These questions come directly from the chapter practice in the book. Choose the best answer, check your reasoning, and use the explanation to correct any gap.

Question 1

Question 1 of 4

One more worker makes seven saleable units. If each unit contributes $9 of marginal revenue, hiring that worker adds how much to the firm's revenue?

Marginal revenue product is marginal product times marginal revenue: 7(9)=63.
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C. $63

Marginal revenue product is marginal product times marginal revenue: 7(9)=63.

Question 2

Question 2 of 4

A profit-maximizing competitive employer hires labor up to the point where

A competitive employer adds workers while the additional revenue they create is at least as large as the wage, their marginal resource cost.
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A. marginal revenue product equals the wage

A competitive employer adds workers while the additional revenue they create is at least as large as the wage, their marginal resource cost.

Question 3

Question 3 of 4

Demand for a firm's product increases, raising the product's price while worker productivity is unchanged. The firm's demand for labor will most likely

The additional output produced by labor is now more valuable, so MRP and labor demand rise.
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E. shift right because marginal revenue product rises

The additional output produced by labor is now more valuable, so MRP and labor demand rise.

Question 4

Question 4 of 4

If a firm has product-market power, the value used in MRP_L=MP_L× MR is

For a seller with downward-sloping demand, marginal revenue is below price and is the correct revenue contribution of added output.
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B. marginal revenue rather than product price

For a seller with downward-sloping demand, marginal revenue is below price and is the correct revenue contribution of added output.

Quiz complete