Lesson 5.1.1

5.1.1 Derived demand and marginal revenue product theory Quiz: OCR Economics, Unit 5

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 5.1.1, Derived demand and marginal revenue product theory: 20 multiple choice questions for the OCR Economics (H460), Unit 5: The labour market, written with Revision Ninja.

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The 20 questions

  1. If demand for steel increases, what happens to the demand for steelworkers?

    • It decreases
    • It remains unchanged
    • It becomes perfectly elastic
    • It increases

  2. Which theory states that demand for labour depends on worker productivity and product price?

    • Keynesian theory
    • Comparative advantage
    • Monetarism
    • MRP theory

  3. What does Marginal Physical Product measure in production?

    • Labour cost per unit
    • Extra output per worker
    • Extra revenue per worker
    • Total output per firm

  4. What is the extra revenue gained by employing one additional unit of labour?

    • Marginal Physical Product
    • Total Revenue Product
    • Marginal Revenue Product
    • Average Revenue Product

  5. How is Marginal Revenue Product calculated for a firm?

    • MPP × MR
    • APP × MR
    • MPP + MR
    • MPP ÷ MR

  6. In a perfectly competitive product market, what is Marginal Revenue equal to?

    • Average cost
    • Marginal cost
    • Product price
    • Total revenue

  7. A competitive firm sells goods at £10 each. A worker's MPP is 8 units. What is MRP?

    • £800
    • £0.80
    • £80
    • £18

  8. According to MRP theory, what represents a firm's demand curve for labour?

    • The MPP curve
    • The wage curve
    • The ARP curve
    • The MRP curve

  9. Under MRP theory, when does a profit-maximising firm stop hiring additional labour?

    • When MPP is zero
    • When MRP equals wage
    • When ARP equals wage
    • When total revenue peaks

  10. Why does the Marginal Revenue Product curve slope downwards in the short run?

    • Diseconomies of scale
    • Rising fixed costs
    • Diminishing marginal returns
    • Falling wage rates

  11. A worker produces 6 units of output sold at £5 each. What is the MRP?

    • £1.20
    • £11
    • £25
    • £30

  12. If the price of the final product rises, what happens to the labour demand curve?

    • Pivots downwards
    • Shifts left
    • Shifts right
    • Remains unchanged

  13. If capital replaces labour due to technological advances, what happens to labour demand?

    • It decreases
    • It stays constant
    • It becomes inelastic
    • It increases

  14. What measures the responsiveness of labour demand to changes in the wage rate?

    • Marginal revenue product
    • Wage rate sensitivity
    • Labour productivity index
    • Wage elasticity of labour

  15. Labour demand is more elastic when labour can easily be substituted by which factor?

    • Raw materials
    • Capital
    • Land
    • Enterprise

  16. If a worker's wage is £80 and their MRP is £100, what should the firm do?

    • Fire workers
    • Stop production
    • Reduce wage rates
    • Hire more workers

  17. Labour demand is more elastic if labour costs form what share of total costs?

    • A zero share
    • A negligible share
    • A small share
    • A large share

  18. If demand for a final product is inelastic, how is the wage elasticity of labour demand affected?

    • Completely unaffected
    • More elastic
    • Perfectly elastic
    • More inelastic

  19. What happens to a firm's labour demand curve when worker productivity increases?

    • Becomes perfectly inelastic
    • Shifts right
    • Shifts left
    • Remains unchanged

  20. Why is the demand for labour generally more wage elastic in the long run?

    • Lower product demand
    • Decreasing worker mobility
    • Fixed worker wages
    • Easier capital substitution

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