Question 1

Consider the market for land.Suppose the value of the marginal product of land decreases.Holding all else constant,the equilibrium rental price for land will

Accepted Answer

A)   increase.
B)   decrease.
C)   not change.
D)   It is not possible to determine what will happen to the equilibrium rental rate.E) B) and D)
F) None of the above

Question 2

Average productivity can be measured as total output divided by total units of labor.

Accepted Answer

A) True 
 B)False

Question 3

Movements of workers from country to country can cause shifts in the labor supply curves for both countries.

Accepted Answer

A) True 
 B)False

Question 4

Figure 18-2
The figure below shows the production function for a particular firm. 
-Refer to Figure 18-2.Suppose the firm pays a wage equal to $160 per unit of labor and sells its output at $10 per unit.What is the value of the marginal product of labor for the fourth worker?

Accepted Answer

A)   10 units
B)   $100
C)   $1,000
D)   $1,600E) C) and D)
F) None of the above

Question 5

Figure 18-1.On the graph,L represents the quantity of labor and Q represents the quantity of output per week. 
-Refer to Figure 18-1.Suppose the firm sells its output for $12 per unit,and it pays each of its workers $700 per week.How many workers will the firm hire to maximize its profit?

Accepted Answer

A)   2
B)   3
C)   4
D)   5E) A) and C)
F) A) and D)

Question 6

Table 18-8
The following table shows the production function for a particular business.The numbers represent the various labor and output combinations the firm may choose for its output on a daily basis.
 
-Refer to Table 18-8.What is the marginal product of the fifth unit of labor?

Accepted Answer

A)   30 units
B)   40 units
C)   50 units
D)   250 unitsE) C) and D)
F) All of the above

Question 7

Table 18-9
 
-Refer to Table 18-9.This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor.Each baseball sells for $5 in a competitive market.What is the total revenue per day that the firm will earn if it employs five workers?

Accepted Answer

A)   $500
B)   $300
C)   $2,200
D)   $2,500E) C) and D)
F) A) and C)

Question 8

In 2010,the total income of all U.S.residents was about

Accepted Answer

A)   $10 billion.
B)   $15 billion.
C)   $10 trillion.
D)   $15 trillion.E) A) and C)
F) A) and D)

Question 9

Table 18-6
 
-Refer to Table 18-6.To maximize its profit,how many workers will the firm hire?

Accepted Answer

A)   2
B)   3
C)   4
D)   5E) None of the above
F) A) and C)

Question 10

What causes the labor demand curve to shift? (i) 
Changes in productivity
(ii) 
Changes in wages
(iii) 
Changes in output prices

Accepted Answer

A)   (i) and (ii) 
B)   (ii) and (iii) 
C)   (i) and (iii) 
D)   All of the above are correct.E) C) and D)
F) B) and D)

Question 11

Figure 18-2
The figure below shows the production function for a particular firm. 
-Refer to Figure 18-2.Suppose the firm pays a wage equal to $320 per unit of labor and sells its output at $15 per unit.How many units of labor should the firm hire to maximize profit?

Accepted Answer

A)   2 units
B)   3 units
C)   4 units
D)   5 unitsE) B) and D)
F) None of the above

Question 12

Value of marginal product is defined as the additional

Accepted Answer

A)   output a firm would receive after hiring one more factor of production.
B)   cost of hiring one more factor of production.
C)   revenue earned from selling one more unit of product.
D)   revenue earned from hiring one more factor of production.E) A) and D)
F) B) and D)

Question 13

Figure 18-6 
-Refer to Figure 18-6.The graph above illustrates the market for bakers who make homemade breads and breakfast pastries.If the wages paid to wedding cake bakers increase,what happens in the market for bread bakers?

Accepted Answer

A)   Demand increases from D1 to D2.
B)   Demand decreases from D2 to D1.
C)   Supply increases from S1 to S2.
D)   Supply decreases from S2 to S1.E) A) and B)
F) A) and C)

Question 14

Suppose that in January a profit-maximizing firm has 25 employees.By February,the firm has decreased employment.One can infer that,when 25 employees are hired,the

Accepted Answer

A)   firm is losing market share.
B)   firm is minimizing losses.
C)   wage exceeds the value of the marginal product of labor.
D)   value of the marginal product of labor exceeds the wage.E) None of the above
F) B) and C)

Question 15

Daryn is raking leaves to earn money for his university's economics club.In the first hour,he rakes 8 bags of leaves.In the second hour,he rakes 6 bags of leaves.If he earns $8 per hour,the value of the marginal product of the second hour of labor is $16.

Accepted Answer

A) True 
 B)False

Question 16

In a representative labor market,

Accepted Answer

A)   the wage adjusts to balance the supply and demand for labor.
B)   the wage equals the value of the marginal product of labor.
C)   an increase in the supply of labor increases the equilibrium wage.
D)   Both a and b are correct.E) All of the above
F) B) and C)

Question 17

Restaurants' demand for cooks and waiters is inseparably linked to the supply of __________.

Accepted Answer

The answer of Restaurants' demand for cooks and waiters is...

Question 18

Capital is paid according to the value of its marginal product

Accepted Answer

A)   only if earnings from capital are paid to households in the form of dividends.
B)   only if earnings from capital are kept within firms as retained earnings.
C)   regardless of whether earnings from capital are paid to households in the form of dividends or whether those earnings are kept within firms as retained earnings.
D)   None of the above is correct;unlike labor,capital is a factor of production for which earnings are unrelated to the value of marginal product.E) B) and D)
F) B) and C)

Question 19

A decrease in population can be expected to

Accepted Answer

A)   increase the marginal product of land.
B)   decrease the supply of land.
C)   decrease the rents on land.
D)   increase the demand for land.E) B) and D)
F) None of the above

Question 20

Labor markets are different from most other markets because labor demand is

Accepted Answer

A)   unresponsive to changes in wages.
B)   unresponsive to changes in the final prices of the products produced by the labor.
C)   a derived demand.
D)   very responsive to labor supply.E) All of the above
F) A) and C)

Exam 18: The Market for the Factors of Production

Figure 18-1.On the graph,L represents the quantity of labor and Q represents the quantity of output per week. -Refer to Figure 18-1.Suppose the firm sells its output for $12 per unit,and it pays each of its workers $700 per week.How many workers will the firm hire to maximize its profit?

Correct AnswerverifiedShow Answer

Consider the market for land.Suppose the value of the marginal product of land decreases.Holding all else constant,the equilibrium rental price for land will

Correct AnswerverifiedShow Answer

Value of marginal product is defined as the additional

Correct AnswerverifiedShow Answer

What causes the labor demand curve to shift? (i) Changes in productivity (ii) Changes in wages (iii) Changes in output prices

Correct AnswerverifiedShow Answer

Figure 18-6 -Refer to Figure 18-6.The graph above illustrates the market for bakers who make homemade breads and breakfast pastries.If the wages paid to wedding cake bakers increase,what happens in the market for bread bakers?

Correct AnswerverifiedShow Answer

A decrease in population can be expected to

Correct AnswerverifiedShow Answer

In 2010,the total income of all U.S.residents was about

Correct AnswerverifiedShow Answer

Movements of workers from country to country can cause shifts in the labor supply curves for both countries.

Correct AnswerverifiedShow Answer

In a representative labor market,

Correct AnswerverifiedShow Answer

Daryn is raking leaves to earn money for his university's economics club.In the first hour,he rakes 8 bags of leaves.In the second hour,he rakes 6 bags of leaves.If he earns $8 per hour,the value of the marginal product of the second hour of labor is $16.

Correct AnswerverifiedShow Answer

Table 18-6 -Refer to Table 18-6.To maximize its profit,how many workers will the firm hire?

Correct AnswerverifiedShow Answer

Average productivity can be measured as total output divided by total units of labor.

Correct AnswerverifiedShow Answer

Suppose that in January a profit-maximizing firm has 25 employees.By February,the firm has decreased employment.One can infer that,when 25 employees are hired,the

Correct AnswerverifiedShow Answer

Figure 18-2 The figure below shows the production function for a particular firm. -Refer to Figure 18-2.Suppose the firm pays a wage equal to $320 per unit of labor and sells its output at $15 per unit.How many units of labor should the firm hire to maximize profit?

Correct AnswerverifiedShow Answer

Labor markets are different from most other markets because labor demand is

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Capital is paid according to the value of its marginal product

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Figure 18-2 The figure below shows the production function for a particular firm. -Refer to Figure 18-2.Suppose the firm pays a wage equal to $160 per unit of labor and sells its output at $10 per unit.What is the value of the marginal product of labor for the fourth worker?

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Table 18-8 The following table shows the production function for a particular business.The numbers represent the various labor and output combinations the firm may choose for its output on a daily basis. -Refer to Table 18-8.What is the marginal product of the fifth unit of labor?

Correct AnswerverifiedShow Answer

Restaurants' demand for cooks and waiters is inseparably linked to the supply of __________.

Correct AnswerverifiedShow Answer

Table 18-9 -Refer to Table 18-9.This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor.Each baseball sells for $5 in a competitive market.What is the total revenue per day that the firm will earn if it employs five workers?

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