APM- PFQ EXAM LATEST 2024 ACTUAL 170
QUESTIONS AND CORRECT DETAILED
ANSWERS (VERIFIED ANSWERS) |ALREADY
GRADED A+
Lupita grows cantaloupes in central Florida and is in a perfectly competitive market. The marginal
physical product of labor is 10 units while the price per unit is $2. What is the marginal revenue product
of labor of Lupita's farm? - ANSWER-$20
The wages of workers at Frank's Framing Shop are higher than their marginal revenue product. What
should Frank do? - ANSWER-Reduce the number of worker-hours he employs.
Lupita grows cantaloupes in central Florida. She is in a perfectly competitive market. Assuming that
Lupita wants to maximize profit, she will hire workers until the marginal revenue product of labor is -
ANSWER-equal to the wage
Firm X is in a monopsonistic market and bears a marginal revenue cost of $40 per hour for each worker.
For the firm to maximize its profit, what should the marginal revenue product of labor be? - ANSWER-
$40
Farmer Frank operates in perfectly competitive product and factor markets. The marginal revenue
product of labor depends on the marginal physical product of labor and - ANSWER-The price of output
ElectroHeat, Inc. is in a perfectly competitive market and makes electric heaters. The price of a heater is
$20. The wage paid to a worker is $200. The firm should hire workers to the point where the marginal
physical product of the last worker hired is - ANSWER-10 Units
Harold rents out forty acres of bottom land to a vegetable farmer. In the Circular Flow Model, where
would Harold reside and where would his rental transactions occur? - ANSWER-Harold resides in the
household and the transaction occurs in the resource market.
The Marginal Productivity Theory of Resource Demand tells us that - ANSWER-the firm's profits are
greatest when marginal revenue product = marginal resource cost.
,Under conditions of imperfect competition, the MRP for the twelth worker is calculated by - ANSWER-
subtracting the total revenue with eleven workers from the total revenue with twelve workers.
Bob's Blades is in a perfectly competitive market, manufacturing in-line skates. The firm installs a new
machine that increases the productivity of labor. Consequently, - ANSWER-the demand for labor
increases.
Assume that Dell Computer hires resources in a perfectly competitive resource market. The amount Dell
pays to its resources - ANSWER-is equal to the value of their marginal product.
Apple Computer increases its number of workers without increasing its amount of capital. As a result, -
ANSWER-the output increases at a decreasing rate.
Seamstresses at Rear Gear, a large maker of backpacks, have become more productive due to the firm's
recent purchase of new sewing machines. Because Rear Gear is a profit-maximizing firm, it will -
ANSWER-hire more labor and increase the output.
The local hospital is a monopsonist employer who pays a wage of $300 per week to nurses. The
government imposes a minimum wage of $400 per week. How is the firm affected? - ANSWER-It
increases the number of people hired.
The productivity of labor in a firm has decreased due to the recent retirement of many of the firm's
most skilled workers. Assuming that the firm is a profit maximizer in a perfectly competitive situation,
the firm will
Increase the average wage.
Decrease the average wage.
Reduce the number of worker-hours it hires.
Hire additional labor.
Increase the number of worker-hours it hires. - ANSWER-Statements II and III only.
Simpson's Buffalo Wings is in a perfectly competitive market when the government imposes a minimum
wage, above the equilibrium wage. As a result, - ANSWER-the quantity of labor supplied increases.
, Firm X is in a perfectly competitive market, and firm Y is a monopsonist. Compared to firm X, firm Y hires
- ANSWER-fewer workers at a lower wage.
Households play two separate roles in the Circular Flow Model. What are the roles and where are they
played? - ANSWER-Households are the demanders in the product market and the suppliers in the
resource market.
Which of the following correctly matches resources and their payments in the Circular Flow Model.
Labor = wages, Land = interest
Entrepreneurship = profits, Labor = wages
Capital = rent, Land = profits
Investment = capital gains, Government = taxes
Labor = wages, Land = rent - ANSWER-Statements II and V are the only correct statements.
If capital and labor are substitutes for each other and the price of capital falls, what will happen? -
ANSWER-The demand for labor will decrease.
An increase in the minimum wage normally attempts to help which group or groups? - ANSWER-
Unskilled and teenage workers are most generally helped.
One person's spending becomes another person's income. This statement is the basis for - ANSWER-the
Circular Flow Model.
Passive smoke is an example of a negative externality. To reduce this negative externality, the
government should - ANSWER-impose taxes on cigarettes and encourage less cigarette production.
If there are positive externalities involved with the delivery or consumption of a product, the level of
output will be - ANSWER-less than the efficient amount of production.
Which is an acceptable market method of regulating negative externalities? - ANSWER-Tradable
pollution credits
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