Tackle the Test: Multiple-Choice Questions

1. Question

   An automobile factory employs either assembly line workers or robotic arms to produce automobile engines. In this case, labor and capital are considered

   A.

   independent.

   B.

   complements.

   C.

   substitutes.

   D.

   supplements.

   E.

   human capital.

   An automobile factory employs either assembly line workers or robotic arms to produce automobile engines. In this case, labor and capital are considered

2. Question

   If an increase in the amount of capital employed by a firm leads to an increase in the marginal product of labor, labor and capital are considered

   A.

   independent.

   B.

   complements.

   C.

   substitutes.

   D.

   supplements.

   E.

   human capital.

   If an increase in the amount of capital employed by a firm leads to an increase in the marginal product of labor, labor and capital are considered

3. Question

   If the marginal product of labor per dollar is greater than the marginal product of capital per dollar, which of the following is true? The firm should

   A.

   not change its employment of capital and labor.

   B.

   rent more capital.

   C.

   hire more labor.

   D.

   hire less labor.

   E.

   rent more capital and hire more labor.

   If the marginal product of labor per dollar is greater than the marginal product of capital per dollar, which of the following is true? The firm should

4. Question

   The cost-minimization rule states that costs are minimized when

   A.

   MP per dollar is equal for all factors.

   B.

   (MP × P) is equal for all factors.

   C.

   each factor’s MP is the same.

   D.

   MRP is maximized.

   E.

   MFC is minimized.

   The cos
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   Question

   A firm currently produces its desired level of output. Its marginal product of labor is 400, its marginal product of capital is 1,000, the wage rate is $20 and the rental rate of capital is $100. In this case, the firm should

   A.

   employ more capital and more labor.

   B.

   employ less labor and less capital.

   C.

   employ less labor and more capital.

   D.

   employ less capital and more labor.

   E.

   not change its allocation of capital and labor.

   A firm currently produces its desired level of output. Its marginal product of labor is 400, its marginal product of capital is 1,000, the wage rate is $20 and the rental rate of capital is $100. In this case, the firm should