CHAPTER 9
INPUT MARKET
Matching Questions
1. Firms will employ each input up to the point that its………..….equal its marginal revenue product.
2. The amount of output produced per unit of that input.
3. The additional revenue a firm earns by employing one additional unit of input .
4. The additional output produced by one additional unit of labor.
5. In the short run, some factor of production is………………..
6. The tendency of firms to substitute away from a factor whose price has risen and toward a factor whose price has fallen.
7. A wage increase, it will increases…………….............for the firm.
8. The return to any factor of production that is in fixed supply
9. Higher cost may lead to lower output and ……………………. Demand for all inputs, including labor.
10. The introduction of new methods of production or new products intended to increase the productivity of existing inputs or to rise marginal products.
True - False
1. Marginal product of labor (MPL) is the additional revenue a firm earns by employing one additional unit of input.
2. In a competitive firm, marginal revenue product is the value of a factor’s marginal product.
3. When only a small amount of output is produced per unit of the input, the input is said to be highly productive.
4. The firm will use land up to the point at which MRPA = PA, where A is land
5. The Supply of land is perfectly inelastic
6. The incomes of landowners depent on the rental values of their land.
7. If labor market are competitive, the wages in these markets are determined by interaction of supply and demand.
8. If market are competitive, the equilibrium price of each input is equal to its marginal revenue product (W = MPL).
9. Marginal revenue product reflects productivity.
10. When a firm uses only one variable factor of production, that factor’s marginal revenue product curve is the firms demandcurve for thar factor in the short run ..
Multiple Choices
1. The firm hires in large amount of labor than capital. It called……………..
a. Labor intensive
b. Capital intensive
c. Technological intensive
d. Land intensives
2. …………………is the return to any factor of production that in fixed supply.
a. Dividend
b. Profit
c. Pure land
d. Pure wage
3. If product demand increase, product price will...................and marginal revenue product(factor demand) will...............
a. Rise , Decrease
b. Rise , Increase
c. Fall , Decrease
d. Fall , Increase
4. Technologies, that are capital intensives are also ……………………… intensive.
a. Method
b. Input
c. Energy
d. Prices
5. If product demand declines, product price will.....................and MRP curve will shift to the ..................
a. Fall , Left
b. Rise , Right
c. Rise , Left
d. Fall , Right
6. Firm will hire wokers only as long as the value of their product ..............the relevant market wages
a. Exceeds
b. Is Equal
c. Unaffected
d. None all above
7. W* = MRPL condition is equals with the …………….. Condition.
a. P=MC
b. P=AVC
c. P=ATC
d. P=FC
8. If the market wage ……………….. , The quantity of labor demand will………………
a. Rise, fall
b. Fall, fall
c. Rise, rise
d. None all above
9. Competitive firms are……………… in both output and input market.
a. Price makers
b. Price takers
c. Profit makers
d. Profit takers
10. A perfectly competitive firm will hire labor as long as MRPL is…………………….than the going wage, W*.
a. Equal
b. Cheap
c. Greater
d. Smaller
Essay
1. What does technological change means?
2. Draw a graph of the rent on land is demand determined!
3. Fill in the blank in the table!
The firm wants for $5 per shirt
| Number of Workers | Number of Shirts produced per day | MPL | TR | MRPL |
| 0 | 0 | | | |
| 1 | 30 | | | |
| 2 | | 45 | | |
| 3 | 100 | | | |
| 4 | | | | 100 |
| 5 | | | | 50 |
4. Explain about marginal productivity theory of income distribution?
5. Mention of three main inputs?
6. Gives an example about substitutable input!
7. What the things can influence a shifting in a firms demand curve for a factor of production?
8. Why is the supply of land fixed?
9. Why is the fertile land more expensive than the unfertile land?
10. Explain about output effect of the wage increase!
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