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9422 Plus Answes

1. In a competitive industry, suppose the marginal revenue product (MRP) of the last doughnut baker hired is $35, the MRP of the last bagel baker hired is $15, and a bakery must pay doughnut bakers $40 a day and bagel bakers $10 per day. To maximize profits the bakery should hire:
A) more doughnut bakers and less bagel bakers.
B) less doughnut bakers and more bagel bakers.
C) less of both doughnut bakers and bagel bakers.
D) more of both doughnut bakers and bagel bakers.

Answer: B

2. If two inputs are complementary an increase in the price of one input will:
A) decrease the demand for the other input.
B) increase the demand for the other input.
C) increase the quantity demanded for the other input.
D) have no effect on the demand for the other input.
Answer: A

3. If the marginal revenue product (MRP) of labor is less than the wage rate:
A) the firm is making profits. C) more labor should be employed.
B) the firm is incurring losses. D) less labor should be employed.
Answer: D

4. Conglomerate mergers are combinations of:
A) many small firms.
B) firms producing the same product.
C) firms producing unrelated products.
D) firms operating at different stages in a given production process.
Answer: C

5. "Vertical integration" refers to mergers between firms:
A) making unrelated types of products.
B) at the same stage of production of the same end product.
C) at the same stage of production of different end products.
D) at different stages of production of the same end product.
Answer: D

6. Which produces market failure problems in private markets?
A) the maximization of consumer satisfaction
B) spillover costs and benefits
C) allocative efficiency
D) productive efficiency
Answer: B




7. A profit-maximizing firm's daily total revenue is $155 with 3 workers, $200 with 4 workers, and $250 with 5 workers. The marginal cost of each worker is $60 per day. The firm...