Lesson 4.1.6.1

4.1.6.1 The demand for labour, marginal productivity theory Quiz: AQA Economics, Unit 1

20 questions

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Lesson 4.1.6.1, The demand for labour, marginal productivity theory: 20 multiple choice questions for the AQA Economics (7136), Unit 1: Individuals, firms, markets and market failure, written with Revision Ninja.

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The 20 questions

  1. The demand for labour is termed a derived demand because it depends on:

    • Level of wages
    • Worker productivity
    • Supply of labour
    • Demand for goods

  2. A profit-maximising firm hires labour up to the point where wage equals:

    • Marginal physical product
    • Total revenue product
    • Marginal revenue product
    • Average revenue product

  3. Marginal revenue product of labour is marginal physical product multiplied by:

    • Total revenue
    • Average cost
    • Marginal revenue
    • Wage rate

  4. The demand curve for labour shows the relationship between employment and the:

    • Wage rate
    • Price level
    • Interest rate
    • Profit rate

  5. Which of the following causes a shift in the demand curve for labour?

    • Income tax change
    • Wage rate change
    • Labour supply increase
    • Product price change

  6. Which factor makes the demand for labour more wage elastic?

    • Difficult capital substitution
    • Low labour share
    • Elastic product demand
    • Inelastic product demand

  7. A worker's MRP is £20 and the wage is £15. What should the firm do?

    • Hire more workers
    • Stop production
    • Keep employment unchanged
    • Hire fewer workers

  8. If the price of the final product rises, how does the labour demand curve shift?

    • Shifts left
    • Moves along curve
    • Does not shift
    • Shifts right

  9. Which condition makes the price elasticity of demand for labour more elastic?

    • Low labour cost
    • Inelastic product demand
    • Few substitute inputs
    • Elastic product demand

  10. If labour accounts for only 10% of total costs, how elastic is labour demand?

    • Relatively elastic
    • Perfectly elastic
    • Unit elastic
    • Relatively inelastic

  11. What key goal does marginal productivity theory assume firms aim to achieve?

    • Sales maximisation
    • Revenue maximisation
    • Cost minimisation
    • Profit maximisation

  12. A firm employs 10 workers producing 100 units and 11 workers producing 108 units. The marginal product of the 11th worker is:

    • 8 units
    • 100 units
    • 10 units
    • 108 units

  13. What shape is a firm's demand curve for labour due to diminishing marginal productivity?

    • Upward sloping
    • Horizontal
    • Vertical
    • Downward sloping

  14. Which event causes a firm's labour demand curve to shift to the left?

    • Lower product demand
    • Higher product demand
    • Higher productivity
    • Lower wage rates

  15. Which law explains why the marginal revenue product curve slopes downwards?

    • Increasing scale returns
    • Supply and demand
    • Diminishing marginal returns
    • Diminishing utility

  16. Which factor makes the price elasticity of demand for labour lower?

    • Few substitute inputs
    • High cost proportion
    • Many substitute inputs
    • Elastic product demand

  17. If MRP is £400 for 5 workers and £360 for 6, how many are hired at a £380 wage?

    • 4 workers
    • 6 workers
    • 0 workers
    • 5 workers

  18. How does an increase in worker productivity affect the marginal revenue product of labour?

    • Reduces product price
    • Decreases MRP
    • Increases MRP
    • Has no effect

  19. In a competitive labour market, at what point does a profit-maximising firm stop hiring?

    • Wage exceeds MRP
    • MRP equals zero
    • MRP exceeds wage
    • MRP equals wage

  20. What is the extra output produced by employing one additional worker called?

    • Average product
    • Marginal product
    • Total product
    • Marginal revenue product

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