Question 1

Suppose the prices of agricultural products such as corn and soybeans increase. What is the effect of these price increases on the marginal product of the 1,000th farm worker? What is the effect on the value of the marginal product of the 1,000th farm worker?

Accepted Answer

The marginal product of the 1,...

Question 2

In the 1980s, the dangerous Ebola virus entered the United States through contaminated monkeys that were imported for use in medical experiments. Suppose this virus had not been contained but had spread to the general population. Assume that the virus is lethal in half of the people who are exposed to it. Describe the resulting effect on labor productivity.

Accepted Answer

There are two possible direct effects: O...

Question 3

Consider the market for capital equipment. Suppose the market price of firms' output decreases. Holding all else constant, the equilibrium quantity 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 quantity of capital equipment.E) A) and B)
F) A) and C)

Question 4

A recent flood in the Midwest has destroyed much of the farmland that lies in fertile regions near the rivers. Describe the effect of the flood on the marginal productivity of land, labor, and capital. How would the flood affect the price of inputs? Provide some examples.

Accepted Answer

The flood would increase the marginal pr...

Question 5

Suppose a labor-augmenting technology were developed for a product that increased the marginal product of labor for all workers. Which of the following would happen in the labor market for this product?

Accepted Answer

A)   Demand would decrease.
B)   Demand would increase.
C)   Supply would decrease.
D)   Supply would increase.E) B) and C)
F) A) and D)

Question 6

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. Suppose that the firm suffers a loss of some of their technology such as the theft of their industrial mixers. After the theft, MadeFromScratch employees produce fewer cupcakes than they could before because they must mix the cupcake batter by hand rather than using the high-speed mixers. Because of this change, the firm's

Accepted Answer

A)   demand for labor shifts right.
B)   demand for labor shifts left.
C)   supply of labor shifts right.
D)   supply of labor shifts left.E) None of the above
F) A) and B)

Question 7

Suppose that a college physics experiment goes horribly wrong and releases an electronic pulse that renders all electronic equipment in the cities of Columbus, Cleveland and Cincinnati, Ohio permanently useless. No people are hurt, and no buildings are damaged. After the accident, the wages earned by Ohio workers will

Accepted Answer

A)   increase because the marginal productivities of Ohio workers will increase.
B)   decrease because the marginal productivities of Ohio workers will decrease.
C)   decrease because the marginal productivities of Ohio workers will increase.
D)   increase because the marginal productivities of Ohio workers will decrease.E) A) and B)
F) A) and C)

Question 8

Which of the following events would shift a labor supply curve? (i)  immigration of high-skilled workers
(ii)  immigration of low-skilled workers
(iii)  changes in the number of women willing to work full time

Accepted Answer

A)   (i)  and (iii)  only
B)   (ii)  and (iii)  only
C)   (iii)  only
D)   (i) , (ii) , and (iii) E) All of the above
F) B) and D)

Question 9

When deciding whether to hire an additional worker, firms need only consider how the additional worker would affect

Accepted Answer

A)   costs.
B)   revenues.
C)   output.
D)   profit.E) A) and B)
F) All of the above

Question 10

The equilibrium rental income paid to landowners at any point in time equals the

Accepted Answer

A)   purchase price of land.
B)   value of the marginal product of land.
C)   marginal product of land.
D)   wage paid to laborers.E) A) and B)
F) B) and C)

Question 11

An increase in the output price will increase the firm's demand for labor, all else equal.

Accepted Answer

A) True 
 B)False

Question 12

Consider the market for medical doctors. Suppose the opportunity cost of going to medical school increases for many individuals. Suppose it generally takes about ten years to become a practicing doctor. Holding all else constant, in ten years the equilibrium wage for doctors will

Accepted Answer

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

Question 13

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) A) and B)
F) None of the above

Question 14

Christine works for a firm that makes tires for cars. How is Christine's wage affected if the demand for cars increases?

Accepted Answer

The increase in the demand for...

Question 15

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 third worker's marginal product of labor?

Accepted Answer

A)   120 cupcakes
B)   140 cupcakes
C)   160 cupcakes
D)   180 cupcakesE) B) and D)
F) C) and D)

Question 16

When firms are able to increase the amount of physical capital available to workers, the

Accepted Answer

A)   marginal product of labor will decrease.
B)   value of the marginal product of labor will decrease.
C)   value of the marginal product of labor will increase.
D)   final product price will increase.E) B) and C)
F) All of the above

Question 17

If hiring more workers results in each additional worker contributing successively smaller amounts of output, then which of the following is present?

Accepted Answer

A)   diminishing profitability
B)   diminishing total product
C)   diminishing marginal product
D)   Both b and c are correct.E) All of the above
F) None of the above

Question 18

An increase in the value of the marginal product of labor has the effect of increasing the

Accepted Answer

A)   demand for labor.
B)   wage.
C)   quantity of labor employed.
D)   All of the above are correct.E) A) and D)
F) A) and B)

Question 19

Which of the following statements is correct?

Accepted Answer

A)   Neither economic theory nor evidence from the U.S. economy suggests that there is a close link between productivity and real wages.
B)   Economic theory suggests that there is a close link between productivity and real wages, but evidence from the U.S. economy fails to confirm that link.
C)   Evidence from the U.S. economy suggests a close link between productivity and real wages, but economic theory provides no basis for such a link.
D)   Both economic theory and evidence from the U.S. economy suggest that there is a close link between productivity and real wages.E) B) and D)
F) All of the above

Question 20

The Black Death in fourteenth-century Europe resulted in

Accepted Answer

A)   a lower marginal product of land.
B)   a lower marginal product of labor of surviving workers.
C)   economic hardship for surviving peasants.
D)   economic prosperity for surviving landowners.E) A) and B)
F) C) and D)

Exam 18: The Markets for the Factors of Production

An increase in the output price will increase the firm's demand for labor, all else equal.

Correct Answer
verified

Correct Answer
verified

The equilibrium rental income paid to landowners at any point in time equals the

Correct Answer
verified

An increase in the value of the marginal product of labor has the effect of increasing the

Correct Answer
verified

The Black Death in fourteenth-century Europe resulted in

Correct Answer
verified

If hiring more workers results in each additional worker contributing successively smaller amounts of output, then which of the following is present?

Correct Answer
verified

Correct Answer
verified

Suppose the prices of agricultural products such as corn and soybeans increase. What is the effect of these price increases on the marginal product of the 1,000th farm worker? What is the effect on the value of the marginal product of the 1,000th farm worker?

Correct Answer
verified
The marginal product of the 1,...
View Answer

Christine works for a firm that makes tires for cars. How is Christine's wage affected if the demand for cars increases?

Correct Answer
verified
The increase in the demand for...
View Answer

Which of the following statements is correct?

Correct Answer
verified

Consider the market for medical doctors. Suppose the opportunity cost of going to medical school increases for many individuals. Suppose it generally takes about ten years to become a practicing doctor. Holding all else constant, in ten years the equilibrium wage for doctors will

Correct Answer
verified

Correct Answer
verified
There are two possible direct effects: O...
View Answer

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 third worker's marginal product of labor?

Correct Answer
verified

Suppose a labor-augmenting technology were developed for a product that increased the marginal product of labor for all workers. Which of the following would happen in the labor market for this product?

Correct Answer
verified

Which of the following events would shift a labor supply curve? (i) immigration of high-skilled workers (ii) immigration of low-skilled workers (iii) changes in the number of women willing to work full time

Correct Answer
verified

A recent flood in the Midwest has destroyed much of the farmland that lies in fertile regions near the rivers. Describe the effect of the flood on the marginal productivity of land, labor, and capital. How would the flood affect the price of inputs? Provide some examples.

Correct Answer
verified
The flood would increase the marginal pr...
View Answer

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

Correct Answer
verified

When deciding whether to hire an additional worker, firms need only consider how the additional worker would affect

Correct Answer
verified

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

Correct Answer
verified

When firms are able to increase the amount of physical capital available to workers, the

Correct Answer
verified

Exam 18: The Markets for the Factors of Production

An increase in the output price will increase the firm's demand for labor, all else equal.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The equilibrium rental income paid to landowners at any point in time equals the

Correct AnswerverifiedShow Answer

An increase in the value of the marginal product of labor has the effect of increasing the

Correct AnswerverifiedShow Answer

The Black Death in fourteenth-century Europe resulted in

Correct AnswerverifiedShow Answer

If hiring more workers results in each additional worker contributing successively smaller amounts of output, then which of the following is present?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose the prices of agricultural products such as corn and soybeans increase. What is the effect of these price increases on the marginal product of the 1,000th farm worker? What is the effect on the value of the marginal product of the 1,000th farm worker?

Correct AnswerverifiedThe marginal product of the 1,...View AnswerShow Answer

Christine works for a firm that makes tires for cars. How is Christine's wage affected if the demand for cars increases?

Correct AnswerverifiedThe increase in the demand for...View AnswerShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Consider the market for medical doctors. Suppose the opportunity cost of going to medical school increases for many individuals. Suppose it generally takes about ten years to become a practicing doctor. Holding all else constant, in ten years the equilibrium wage for doctors will

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThere are two possible direct effects: O...View AnswerShow Answer

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 third worker's marginal product of labor?

Correct AnswerverifiedShow Answer

Suppose a labor-augmenting technology were developed for a product that increased the marginal product of labor for all workers. Which of the following would happen in the labor market for this product?

Correct AnswerverifiedShow Answer

Which of the following events would shift a labor supply curve? (i) immigration of high-skilled workers (ii) immigration of low-skilled workers (iii) changes in the number of women willing to work full time

Correct AnswerverifiedShow Answer

A recent flood in the Midwest has destroyed much of the farmland that lies in fertile regions near the rivers. Describe the effect of the flood on the marginal productivity of land, labor, and capital. How would the flood affect the price of inputs? Provide some examples.

Correct AnswerverifiedThe flood would increase the marginal pr...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

When deciding whether to hire an additional worker, firms need only consider how the additional worker would affect

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When firms are able to increase the amount of physical capital available to workers, the

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
The marginal product of the 1,...
View Answer

Correct Answer
verified
The increase in the demand for...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
There are two possible direct effects: O...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The flood would increase the marginal pr...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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