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Exam 18: The Markets for the Factors of Production

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Question 31

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When a production function exhibits a diminishing, but positive, marginal product of labor,

A) output increases, but at an increasing rate, as more workers are employed.
B) output increases, but at a decreasing rate, as more workers are employed.
C) output declines as more workers are employed.
D) the effects on marginal product are ambiguous.

E) C) and D)
F) A) and B)

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Question 32

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Angie was the last worker hired by a firm that is competitive in the labor market. The labor market always is in equilibrium. The firm sells its output for $24 per unit. When Angie was hired, the firm's output increased by 2 units per hour as a result. What is Angie's hourly wage?

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Question 33

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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.

The value of the marginal product of capital can be calculated as the market price of the good multiplied by the marginal product of capital.

Figure 18-2 -Refer to Figure 18-2. Each August many high school and college students visit a doctor's office to have a sports physical. If the price of sports physicals falls, what happens in the market for nurses?

Suppose that the market for labor is initially in equilibrium. An increase in immigration will cause the equilibrium wage

Define monopsony.

The U.S. economy experienced a significant slowdown in productivity growth that lasted from about 1973 to about __________.

For a snow-removal business, the capital stock would include inputs such as snow blowers and shovels.

Rob was the last worker hired by a firm that is competitive in the labor market. The labor market always is in equilibrium. Rob's wage is $30 per hour. When Rob was hired, the firm's output increased by 4 units per hour as a result. For what price does the firm sell its output?

Scenario 18-5 Rocchetta Industries manufactures and supplies bottled water in Mexico. As a result of a contamination of water supplies at many of Mexico's resort communities, the demand for bottled water has increased. -Refer to Scenario 18-5. When the labor market adjusts to its new equilibrium, we would expect the

A competitive, profit-maximizing pays its workers a wage of $294 per day. The marginal product of the last worker is 35 units of output. What is the firm's marginal cost of producing its last unit of output?

Labor-augmenting technological advances increase the marginal productivity of labor.

The demand curve for capital

Increases in productivity are not responsible for increased standards of living in the United States.

Suppose that the "Millennial" generation values leisure more than past generations. We can expect a decrease in the labor supply as the Millennials enter their prime working ages.

Figure 18-8 The figure shows the relationship between the number of mechanics hired and the number of car repairs performed per day at a car-repair shop. ​ -Refer to Figure 18-8. If the shop charges $120 per repair, then what is the value of the marginal product of the third mechanic?

Christine works for a firm that makes tires for cars. How is Christine's wage affected if the price of tires decreases?

Kofi's Auto World installs tires on automobiles, light trucks, and sport utility vehicles. He is a profit-maximizing business owner whose firm operates in a competitive market. The marginal cost of installing a tire is $15. The marginal productivity of the last worker that Kofi hired was 3 tires per hour. What is the maximum hourly wage that Kofi was willing to pay the last worker hired?

Suppose that a violent earthquake causes the uninhabited Hawaiian island of Mokuauia (also called Goat Island) to fall into the Pacific Ocean. No people are killed or injured, and since the island is undeveloped, no buildings are destroyed. The island was a source of tourist income for Hawaiian landowners. Which of the following statements correctly describes the rents earned by the people who own land on the surrounding islands?