Practice Questions
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In a competitive labor market, what primarily determines the wage level for workers?
Wages are mainly set by how many workers are available and how many jobs there are. Other options are incorrect because Some think rules from the gove...
How does the seasonal employment pattern affect the unemployment rate in certain industries during off-peak seasons?
When seasonal jobs end, many workers lose their jobs. Other options are incorrect because Some might think that hiring during busy times makes unemplo...
How does globalization typically affect labor supply in developing countries?
Globalization often leads people to move from developing countries to developed ones for better jobs. Other options are incorrect because Some might t...
In a perfectly competitive labor market, if the demand for labor decreases while the supply remains constant, what is likely to happen to the equilibrium wage?
When fewer workers are needed, employers pay less. Other options are incorrect because Some might think that less demand means higher wages to attract...
How does an increase in human capital impact labor supply and job market trends in a competitive economy?
When people gain more skills and education, they can do more jobs. Other options are incorrect because Some might think that more skills mean fewer jo...
What is the primary factor that influences labor supply in an economy?
Wage levels are the main reason people decide to work. Other options are incorrect because Some might think what people want to buy affects job supply...
What is typically indicated by an increase in labor demand in an economy?
When more workers are needed, companies often pay higher wages to attract them. Other options are incorrect because Some might think that more demand ...
What does the unemployment rate in the labor market typically indicate?
The unemployment rate shows the percentage of people who want to work but can't find a job. Other options are incorrect because Some might think the u...
A local bakery operates in a perfectly competitive market and is evaluating whether to hire an additional baker. The bakery estimates that the marginal revenue product (MRP) of the new baker is $30 per hour, while the marginal factor cost (MFC) of hiring that baker is $25 per hour. What should the bakery do to maximize its profits?
The bakery should hire the new baker. Other options are incorrect because This answer misunderstands profit; This option suggests waiting for a lower ...
Arrange the following steps in the correct order for a firm to determine the optimal number of workers to hire in a perfectly competitive labor market?
First, a firm needs to find out how much extra money each new worker can bring in. Other options are incorrect because Some might think comparing MRP ...
In a perfectly competitive labor market, firms hire workers until the _______ of labor equals the marginal factor cost of hiring that labor.
Firms hire workers until the extra value created by one more worker matches the cost of hiring them. Other options are incorrect because Total product...
Which of the following statements correctly describe the relationship between marginal revenue product (MRP) and marginal factor cost (MFC) in a perfectly competitive labor market? Select all that apply.
In a perfectly competitive labor market, MRP and MFC have specific relationships that are not accurately described in any of the options. Other option...
In a perfectly competitive labor market, what should a firm consider when deciding how many workers to hire?
A firm should hire workers until the extra money made from hiring one more worker equals the cost of that worker. Other options are incorrect because ...
Marginal revenue product (MRP) : Marginal factor cost (MFC) :: Total revenue : ?
Total revenue is the money a business makes from selling goods. Other options are incorrect because Average revenue is the revenue per unit sold; Prof...
If a firm continues to hire additional workers until the marginal revenue product (MRP) equals the marginal factor cost (MFC), what is the likely effect on the firm's profitability?
The firm makes the best choice when the money earned from each new worker matches what it costs to hire them. Other options are incorrect because Some...
A firm operates in a perfectly competitive labor market and is deciding how many workers to hire. It calculates that the marginal revenue product (MRP) of the fourth worker is $20, while the marginal factor cost (MFC) of hiring that worker is $15. Which category does this scenario belong to, and why?
The firm should hire the worker because the extra money made from the worker (MRP) is greater than what it costs to hire them (MFC). Other options are...
In a perfectly competitive labor market, how should a firm decide to hire additional workers?
A firm should hire workers until the extra money they make from hiring one more worker equals the cost of that worker. Other options are incorrect bec...
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