Question 1

Suppose that the labor market for life guards is initially in equilibrium. Then the marginal productivity of life guards increases. What happens to the equilibrium wage and quantity of life guards?

Accepted Answer

A)  Both the equilibrium wage and quantity increase.
B)  Both the equilibrium wage and quantity decrease.
C)  The equilibrium wage increases, and the equilibrium quantity decreases.
D)  The equilibrium wage decreases, and the equilibrium quantity increases.E) A) and B)
F) A) and C)

Question 2

Which of the following is an example of a firm's derived demand?

Accepted Answer

A)  Workers with higher levels of education earn more, on average, than workers with lower levels of education.
B)  Factors that decrease the demand for labor will decrease the equilibrium wage.
C)  A tractor manufacturer's demand for assembly-line workers is inseparably linked to the supply of tractors.
D)  All of the above are correct.E) B) and D)
F) A) and D)

Question 3

Consider the market for capital equipment. Suppose the price of firms' output increases. Holding all else constant, the equilibrium rental price of capital equipment will

Accepted Answer

A)  increase.
B)  decrease.
C)  not change.
D)  It is not possible to determine what will happen to the equilibrium rental price of capital equipment.E) A) and B)
F) A) and C)

Question 4

If a firm experiences diminishing marginal productivity of labor, the marginal product

Accepted Answer

A)  increases as total product increases.
B)  decreases as total product increases.
C)  increases as total product decreases.
D)  decreases as total product decreases.E) B) and C)
F) None of the above

Question 5

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?

Accepted Answer

A)  As the supply of vacation land decreases, the marginal productivity of the remaining land will decrease; thus rents will decrease.
B)  As the supply of vacation land decreases, the marginal productivity of the remaining land will increase; thus, rents will decrease.
C)  As the supply of vacation land decreases, the marginal productivity of the remaining land will increase; thus, rents will increase.
D)  There would be no change in the rents earned by the other landowners because the effects of supply and demand would exactly cancel each other out.E) All of the above
F) A) and D)

Question 6

The term "factor market" applies to the market for

Accepted Answer

A)  labor.
B)  capital.
C)  land.
D)  All of the above are correct.E) B) and C)
F) A) and D)

Question 7

Assume the market for candles is competitive. A new invention leads to labor-augmenting technological progress in the production of candles. This development

Accepted Answer

A)  decreases the demand for workers who make candles and decreases their equilibrium wage.
B)  increases the demand for workers who make candles and increases their equilibrium wage.
C)  increases the supply of workers who make candles and decreases their equilibrium wage.
D)  increases the supply of workers who make candles and increases their equilibrium wage.E) B) and C)
F) A) and C)

Question 8

Figure 18-10 1 and the labor market is in equilibrium, A) the value of the marginal product of labor to firms is less than W1. B) the opportunity cost of leisure to workers is greater than W1. C) the wage is W1. D) All of the above are correct." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 18-10. When the relevant labor demand curve is D1 and the labor market is in equilibrium,

Accepted Answer

A)  the value of the marginal product of labor to firms is less than W1.
B)  the opportunity cost of leisure to workers is greater than W1.
C)  the wage is W1.
D)  All of the above are correct.E) B) and C)
F) A) and D)

Question 9

Which of the following would not shift a market labor supply curve to the right?

Accepted Answer

A)  a decrease in the wage paid to workers in a competing market
B)  labor-augmenting technology
C)  a change in worker tastes so that workers want to retire later
D)  an increase in immigrationE) None of the above
F) A) and C)

Question 10

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?

Accepted Answer

Since the labor mark...

Question 11

Table 18-B
Consider the following daily production data for MadeFromScratch, Inc. MadeFromScratch sells cupcakes for $3 each and pays the workers a wage of $325 per day. 
-Refer to Table 18-11. What is the sixth worker's marginal product of labor?

Accepted Answer

A)  100 cupcakes
B)  120 cupcakes
C)  140 cupcakes
D)  160 cupcakesE) B) and C)
F) A) and B)

Question 12

According to the neoclassical theory of distribution, the wages paid to workers

Accepted Answer

A)  reflect the market prices of the goods those workers produce.
B)  reflect the degree of market power held by the firms that pay those wages.
C)  fail to reflect those workers' opportunity costs of leisure.
D)  are unrelated to the forces of supply and demand.E) B) and D)
F) C) and D)

Question 13

Suppose that a new invention increases the marginal productivity of labor, shifting labor demand to the right. Such an invention would be an example of

Accepted Answer

A)  labor-saving technology.
B)  labor-augmenting technology.
C)  revenue technology.
D)  supply-shifting technology.E) B) and D)
F) A) and B)

Question 14

Table 18-1 
-Refer to Table 18-1. Suppose that the firm pays its workers $50 per day. Each unit of output sells for $20. How many days of labor should the firm hire?

Accepted Answer

A)  3
B)  4
C)  5
D)  6E) B) and D)
F) B) and C)

Question 15

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

Accepted Answer

The answer of The U.S. economy experienced a significant slowdown...

Question 16

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

Accepted Answer

A)  marginal cost of labor.
B)  marginal profit of labor.
C)  marginal product of labor.
D)  value of the marginal product of labor.E) All of the above
F) C) and D)

Question 17

If the value of the marginal product of labor exceeds the wage, then hiring another worker increases the firm's

Accepted Answer

A)  profit.
B)  total cost.
C)  total revenue.
D)  All of the above are correct.E) B) and D)
F) All of the above

Question 18

Table 18-9
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 18-9. Suppose this firm charges a price of $5 per unit of output and pays workers a wage equal to $160 per day. How many workers should this firm hire to maximize its profit?

Accepted Answer

A)  2 workers
B)  3 workers
C)  4 workers
D)  5 workersE) All of the above
F) B) and C)

Question 19

A competitive, profit-maximizing pays its workers a wage of $200 per day and it sells its output for $10 per unit. Determine the marginal product, on a daily basis, of the last worker hired.

Accepted Answer

Using the profit-max...

Question 20

Of the total income earned in the U.S. economy, approximately

Accepted Answer

A)  33 percent is earned by workers, and 67 percent is earned by landowners.
B)  50 percent is earned by workers, 25 percent is earned by landowners, and 25 percent is earned by owners of capital.
C)  67 percent is earned by workers, and 33 percent is earned by owners of land and capital.
D)  90 percent is earned by workers, and 10 percent is earned by owners of land and capital.E) None of the above
F) All of the above

Exam 18: The Markets for the Factors of Production

Which of the following is an example of a firm's derived demand?

Correct Answer
verified

Which of the following would not shift a market labor supply curve to the right?

Correct Answer
verified

If the value of the marginal product of labor exceeds the wage, then hiring another worker increases the firm's

Correct Answer
verified

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

Correct Answer
verified

Figure 18-10 -Refer to Figure 18-10. When the relevant labor demand curve is D₁ and the labor market is in equilibrium,

Correct Answer
verified

Suppose that a new invention increases the marginal productivity of labor, shifting labor demand to the right. Such an invention would be an example of

Correct Answer
verified

Assume the market for candles is competitive. A new invention leads to labor-augmenting technological progress in the production of candles. This development

Correct Answer
verified

Consider the market for capital equipment. Suppose the price of firms' output increases. Holding all else constant, the equilibrium rental price of capital equipment will

Correct Answer
verified

Table 18-B Consider the following daily production data for MadeFromScratch, Inc. MadeFromScratch sells cupcakes for $3 each and pays the workers a wage of $325 per day. -Refer to Table 18-11. What is the sixth worker's marginal product of labor?

Correct Answer
verified

If a firm experiences diminishing marginal productivity of labor, the marginal product

Correct Answer
verified

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?

Correct Answer
verified
Since the labor mark...
View Answer

Of the total income earned in the U.S. economy, approximately

Correct Answer
verified

According to the neoclassical theory of distribution, the wages paid to workers

Correct Answer
verified

Correct Answer
verified

Table 18-1 -Refer to Table 18-1. Suppose that the firm pays its workers $50 per day. Each unit of output sells for $20. How many days of labor should the firm hire?

Correct Answer
verified

The term "factor market" applies to the market for

Correct Answer
verified

Suppose that the labor market for life guards is initially in equilibrium. Then the marginal productivity of life guards increases. What happens to the equilibrium wage and quantity of life guards?

Correct Answer
verified

A competitive, profit-maximizing pays its workers a wage of $200 per day and it sells its output for $10 per unit. Determine the marginal product, on a daily basis, of the last worker hired.

Correct Answer
verified
Using the profit-max...
View Answer

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

Correct Answer
verified

Correct Answer
verified

Exam 18: The Markets for the Factors of Production

Which of the following is an example of a firm's derived demand?

Correct AnswerverifiedShow Answer

Which of the following would not shift a market labor supply curve to the right?

Correct AnswerverifiedShow Answer

If the value of the marginal product of labor exceeds the wage, then hiring another worker increases the firm's

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 18-10 -Refer to Figure 18-10. When the relevant labor demand curve is D1 and the labor market is in equilibrium,

Correct AnswerverifiedShow Answer

Suppose that a new invention increases the marginal productivity of labor, shifting labor demand to the right. Such an invention would be an example of

Correct AnswerverifiedShow Answer

Assume the market for candles is competitive. A new invention leads to labor-augmenting technological progress in the production of candles. This development

Correct AnswerverifiedShow Answer

Consider the market for capital equipment. Suppose the price of firms' output increases. Holding all else constant, the equilibrium rental price of capital equipment will

Correct AnswerverifiedShow Answer

Table 18-B Consider the following daily production data for MadeFromScratch, Inc. MadeFromScratch sells cupcakes for $3 each and pays the workers a wage of $325 per day. -Refer to Table 18-11. What is the sixth worker's marginal product of labor?

Correct AnswerverifiedShow Answer

If a firm experiences diminishing marginal productivity of labor, the marginal product

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedSince the labor mark...View AnswerShow Answer

Of the total income earned in the U.S. economy, approximately

Correct AnswerverifiedShow Answer

According to the neoclassical theory of distribution, the wages paid to workers

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 18-1 -Refer to Table 18-1. Suppose that the firm pays its workers $50 per day. Each unit of output sells for $20. How many days of labor should the firm hire?

Correct AnswerverifiedShow Answer

The term "factor market" applies to the market for

Correct AnswerverifiedShow Answer

Suppose that the labor market for life guards is initially in equilibrium. Then the marginal productivity of life guards increases. What happens to the equilibrium wage and quantity of life guards?

Correct AnswerverifiedShow Answer

A competitive, profit-maximizing pays its workers a wage of $200 per day and it sells its output for $10 per unit. Determine the marginal product, on a daily basis, of the last worker hired.

Correct AnswerverifiedUsing the profit-max...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Figure 18-10 -Refer to Figure 18-10. When the relevant labor demand curve is D₁ and the labor market is in equilibrium,

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Since the labor mark...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Using the profit-max...
View Answer

Correct Answer
verified

Correct Answer
verified