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Exam 18: The Markets for the Factors of Production

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Question 201

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Suppose that eight workers can manufacture 70 radios per day and that nine workers can manufacture 90 radios per day. If radios can be sold for $20 each, the value of marginal product of the ninth worker is

A) 20 radios.
B) 90 radios.
C) $200.
D) $400.

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

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Question 202

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Figure 18-8 This figure below shows the labor market for automobile workers. The curve labeled S is the labor supply curve, and the curves labeled D₁ and D₂ are the labor demand curves. On the horizontal axis, L represents the quantity of labor in the market. -Refer to Figure 18-8. What is measured along the vertical axis on the graph?

A) the quantity of automobiles produced
B) the price of automobiles
C) the wage paid to automobile workers
D) time spent by workers producing automobiles

E) A) and D)
F) None of the above

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Question 203

Multiple Choice

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Which of the following is not an example of a factor of production?

Because of diminishing returns, a factor in abundant supply has a

An increase in the supply of labor has the effect of decreasing the

Consider the labor market for computer programmers. During the late 1990s, the value of the marginal product of all computer programmers increased dramatically. Holding all else equal, what effect did this process have on the labor market for computer programmers? The equilibrium wage

When a firm experiences diminishing marginal product, what is the shape of the curve that represents the value of the marginal product of labor?

Which of the following would shift a market labor supply curve to the left?

Consider the labor market for computer programmers. During the late 1990s, the value of the marginal product of all computer programmers increased dramatically. Holding all else equal, the equilibrium wage in the labor market for computer programmers

Suppose an increase in the demand for labor results in an increase of $4 per hour in the equilibrium wage. How does the increase in the demand for labor affect the value of the marginal product of labor (VMPL) ?

Table 18-7 -Refer to Table 18-7. It is apparent from this table that increasing marginal product

Using the theory of wage determination, explain why wages in developing countries, where levels of capital are small, are typically quite low.

When a competitive firm produces output up to the point at which the price is equal to marginal cost, it also hires labor up to the point at which the wage is equal to the

Over time, carpenters become aware of more attractive employment opportunities outside of carpentry. Does this development affect the demand for carpenters, or does it affect the supply of carpenters?

Table 18-11 Consider the following daily production data for MadeFromScratch, Inc. MadeFromScratch sells cupcakes for $2 each and pays the workers a wage of $325 per day. -Refer to Table 18-11. What is the marginal profit of the fourth worker?

Owners of land are compensated according to the

Table 18-11 Consider the following daily production data for MadeFromScratch, Inc. MadeFromScratch sells cupcakes for $2 each and pays the workers a wage of $325 per day. -Refer to Table 18-11. The marginal product of labor begins to diminish with the addition of which worker?

The substantial increases in output per worker over the last 50 or so years are largely explained by .

Scenario 18-2 Gertrude Kelp owns three boats that participate in commercial fishing for fresh Pacific salmon off the coast of Alaska. As part of her business she hires a captain and several crew members for each boat. In the market for fresh Pacific salmon, there are thousands of firms like Gertrude's. While Gertrude usually catches a significant number of fish each year, her contribution to the entire harvest of salmon is negligible relative to the size of the market. -Refer to Scenario 18-2. Based on the given information, it is likely that Gertrude's firm has

When labor is the only input a firm uses, the marginal cost of a unit of output can be defined as the