Fill-in-the-Blank
1. Fill in the blanks to make the following statements correct.
a. The MRP curve for a factor is the same as the firm’s
for that factor.
b. If the marginal product for a factor declines rapidly as
more of that factor is used, demand for that factor will be
relatively.
c. Other things being equal, if the demand for a product that
a factor is used to produce is relatively inelastic, the
demand for that factor will be relatively.
d. An increase in the price at which a competitive firm sells
its product leads the firm’s demand curve for its factor to
.
e. If a technological improvement leads every unit of a given
factor to produce 10 percent more output than previously,
the curve will , and thus the firm’s demand curve
for the factor will.
2. Fill in the blanks to make the following statements correct. Each
firm is assumed to be hiring factors in competitive markets.
a. A tax-preparation firm produces completed tax returns
(one unit of output), which produce revenue of $50 per
unit. The firm hires labour for $22 per hour. If the last
hour of labour hired produces 0.25 units of output, that
hour’s MRP is. The last hour contributes to the