Employment and Pricing of Inputs1. Suppose a competitive firm produces 100 units of X for a price of $10 a unit. The firm is employing labor and capital such that the marginal physical product of labor and capital is 20 and 5 and the prices paid to labor and capital are $60 and $40 respectively. How would you characterize the firm? a. The firm is in long-run equilibrium. b. The firm is earning excess profits. c. The firm should expand production. d. The firm should contract production.2. The competitive firmâs marginal value product curve of labor is the firmâs input demand curve for labor if a. the price of labor is held constant. b. the prices of other inputs are held constant. c. the labor is used in fixed proportions with other inputs. d. the quantities of other inputs are held constant.3. A competitive firm will hire inputs up to the point where a. the price of the input equals its marginal physical product of the input. b. the marginal product of the input reaches a maximum. c. the price of the input equals the value of the marginal product of the input. d. the price of the input equals the price of the output.4. The competitive firmâs VMP curve for an input slopes downward because a. the productivity of complementary inputs declines as more are used. b. the law of diminishing marginal returns applies. c. the price of the output falls as output increases. d. none of the above.5. The demand curve for labor for a monopolist when other inputs are fixed is equal to its a. marginal value product curve. b. marginal revenue product curve. c. horizontal summation of the firmâs demand curve at different output prices. d. marginal physical product curve.6. Because a monopoly hires workers up to the point where their marginal revenue product equals the wage rate, the monopoly will a. pay less than the going wage rate. b. pay a wage equal to the value of the marginal product of labor. c. pay less than the value of the marginal product of labor. d. pay workers what they are worth to society.7. A monopsony is a. the sole supplier of an input. b. the sole supplier of an output. c. the sole buyer of some type of input. d. a unionized industry.Questions 8-12 are based on the figure below:8. Given the cost and demand functions assumed in the diagram, the firm would hire 1a. 0Q . 2b. 0Q . 3c. 0Q . 4d. 0Q .9. The firm would pay a wage of 1a. w . 2b. w . 3c. w . 4d. w .210. If a union organized labor in the industry and got the firm to pay a wage of w , the firm wuld employ 1a. 0Q . 2b. 0Q . 3c. 0Q . 4d. 0Q .