AP Microeconomics Unit 5 Practice Test & Exam | 11 Questions

Questions 1-2 refer to the table below, which shows the production function for a firm that sells its product in a perfectly competitive market for a price of 4 dollars per unit.

1. What is the marginal revenue product of the fourth worker?

(A)15 dollars(B)60 dollars(C)80 dollars(D)320 dollars

2. If the market wage for workers is 80 dollars per day, how many workers will this firm hire to maximize profit?

(A)2 workers(B)3 workers(C)4 workers(D)5 workers

3. A significant increase in the demand for new homes will most likely cause which of the following changes in the labor market for carpenters?

(A)An increase in the supply of carpenters and a decrease in the wage rate.(B)A decrease in the supply of carpenters and an increase in the wage rate.(C)An increase in the demand for carpenters and an increase in the wage rate.(D)A decrease in the demand for carpenters and a decrease in the wage rate.

4. A firm is hiring labor and capital in a perfectly competitive factor market. The price of labor is 20 dollars per unit, and the price of capital is 30 dollars per unit. The marginal product of the last unit of labor hired is 40 units of output, and the marginal product of the last unit of capital hired is 90 units of output. To minimize its costs of production, the firm should

(A)hire more labor and less capital.(B)hire more capital and less labor.(C)hire more of both labor and capital.(D)make no changes to its input mix.

5. The demand curve for a factor of production is downward-sloping primarily because of

(A)the law of diminishing marginal utility.(B)the law of diminishing marginal returns.(C)the perfectly elastic supply of the factor to the firm.(D)economies of scale.

6. Which of the following is a key characteristic of a monopsonistic labor market?

(A)The firm is a "wage taker."(B)The firm's marginal resource cost is equal to the wage rate.(C)The firm faces a perfectly elastic labor supply curve.(D)The firm must increase the wage for all workers to hire an additional worker.

7. Based on the graph above for a monopsonistic firm, what is the profit-maximizing quantity of labor the firm will hire and the wage it will pay?

(A)Quantity = , Wage =(B)Quantity = , Wage =(C)Quantity where MRP intersects S_L, Wage corresponding to that point.(D)Quantity where S_L = MRC, Wage corresponding to that point.

8. A technological innovation significantly increases the productivity of workers in the robotics industry. What is the immediate effect on the labor demand curve and the equilibrium wage in that industry?

(A)Labor demand shifts left; wage decreases.(B)Labor demand shifts right; wage increases.(C)Labor supply shifts right; wage decreases.(D)Labor supply shifts left; wage increases.

9. In a perfectly competitive labor market, the supply curve of labor faced by a single firm is

(A)upward-sloping, because a higher wage is needed to attract more workers.(B)downward-sloping, because of diminishing marginal revenue product.(C)perfectly inelastic, because the firm must hire a fixed number of workers.(D)perfectly elastic, because the firm can hire any number of workers at the market wage.

10. Compared to a perfectly competitive labor market, a monopsonist will hire

(A)more workers at a higher wage.(B)more workers at a lower wage.(C)fewer workers at a higher wage.(D)fewer workers at a lower wage.

AP Microeconomics Unit 5: Factor Markets Practice Exam

Exam Details

A. Multiple-Choice Questions (10 Questions)

B. Short Answer Questions (1 Question)

AP Microeconomics Unit 5: Factor Markets Practice Exam

Exam Details

A. Multiple-Choice Questions (10 Questions)

B. Short Answer Questions (1 Question)