1. The marginal productivity of a labor unit working in a brewery is 20 bottles of beer. The market price for a bottle of beer is $2 each. The wage paid to the worker is $26. By hiring this labor unit, the brewery's profit will (a) fall by $24. (b) rise by $40. (c) rise by $14. (d) rise by $7. (e) fall by $6. 2. A brewery hires two more labor units and finds that, consequently, its output rises by 44 bottles of beer. Beer sells for $2 per bottle. (a) The two labor units' marginal productivities sum to 44 bottles per labor unit.
(b) Each labor unit's marginal productivity is 22 bottles per labor unit. (c) The labor units' marginal productivities sum to $88 per labor unit. (d) Each labor unit's marginal productivity is $44 per labor unit. (e) The average productivity of the brewery's labor units rises. 3. A firm uses has two inputs, labor and machinery. Labor is a variable input. Machinery is a fixed input. The rental rate (the price paid for each unit of machinery) falls. Statement: Consequently, the marginal productivities of the firm's labor units increase. (a) The statement is true. (b) The statement is false. (c) The statement is true only if the price of the firm's product rises also. (d) The statement is true only if the price of the firm's product falls also. 4. A firm hires one more labor unit. The wage rate paid to all labor units is $15 per unit. (a) The firm's average labor productivity will rise due to hiring one more labor unit. (b) The firm's average labor productivity will rise if the marginal productivity of the extra labor unit is larger than $15. (c) The firm's average labor productivity will rise if the marginal productivity of the extra labor unit is positive. (d) The firm's average labor productivity will rise if the marginal productivity of the extra labor unit is larger than the average labor productivity. 5. The wage rate paid to every labor unit is $30. The price of the firm's product is $60. The firm wishes to maximize its profit. The firm should hire one more labor unit if (a) The marginal product of the extra labor unit is larger than 2 product units per labor unit. (b) The marginal product of the extra labor unit is larger than product units per labor unit. (c) The firm's marginal cost of production is larger than $60. (d) The firm's fixed input cost is less than $30.
