Question 1

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 D)
F) A) and B)

Question 2

If the wage exceeds the value of the marginal product of labor, then hiring another worker

Accepted Answer

A)   decreases the firm's total revenue.
B)   increases the firm's profit.
C)   decreases the firm's total cost.
D)   decreases the firm's profit.E) A) and B)
F) C) and D)

Question 3

Factor markets for chocolate bars are influenced by the

Accepted Answer

A)   demand for chocolate bars.
B)   marginal productivities of labor and capital.
C)   market prices for final goods and services.
D)   All of the above are correct.E) All of the above
F) None of the above

Question 4

A firm hires some number of custodians to clean a large warehouse. When only a few custodians are hired, they can quickly find and remove a lot of dust and debris. As the number of custodians increases, additional custodians have to go to greater lengths and spend more time to find and remove additional dust and debris. What property of production functions is relevant to the custodians' situation?

Accepted Answer

The property is dimi...

Question 5

Who has a greater opportunity cost of leisure - a president of a major corporation or a babysitter?

Accepted Answer

The opportunity cost...

Question 6

Bill is a laborer. What is the relationship between Bill's wage and his opportunity cost of an hour of leisure?

Accepted Answer

Bill's wage is equal...

Question 7

Which of the following is not correct?

Accepted Answer

A)   Earnings from capital may be paid to households in the form of dividends.
B)   Earnings from capital may be retained by firms to purchase additional capital.
C)   Firms may not pay out all of their earnings to households.
D)   Firms earn the highest profits when the owners of capital receive a value above the marginal product.E) All of the above
F) A) and B)

Question 8

Miguel receives a pay raise at his part-time job from $7.50 to $9 per hour. He used to work 10 hours per week, but now he decides to work 12 hours per week. For this price range, his labor supply curve is

Accepted Answer

A)   vertical.
B)   horizontal.
C)   upward sloping.
D)   backward sloping.E) All of the above
F) B) and C)

Question 9

Scenario 18-3
Sam has two jobs, one for the winter and one for the summer. In the winter, he works as a lift attendant at a ski resort where he earns $13 per hour. During the summer, he drives a tour bus around the ski resort, earning $11 per hour.
-Refer to Scenario 18-3. If Sam takes fewer hours of leisure in the summer than in the winter, we can assume that his labor supply curve for the range of earnings in this example

Accepted Answer

A)   is horizontal.
B)   is vertical.
C)   is upward sloping.
D)   has a backward-bending portion.E) None of the above
F) A) and D)

Question 10

The value of the marginal product of any input is equal to the marginal product of that input multiplied by the

Accepted Answer

A)   wage.
B)   marginal cost of the output.
C)   change in total profit.
D)   market price of the output.E) All of the above
F) A) and D)

Question 11

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) All of the above
F) A) and B)

Question 12

Which of the following best illustrates the concept of "derived demand?"

Accepted Answer

A)   An increase in the wages of auto workers will lead to an increase in the demand for robots in automobile factories.
B)   An automobile producer's decision to supply more cars will lead to an increase in the demand for automobile production workers.
C)   An automobile producer's decision to supply more minivans results from a decrease in the demand for station wagons.
D)   An increase in the price of gasoline will lead to an increase in the demand for small cars.E) All of the above
F) A) and B)

Question 13

Table 18-1 
-Refer to Table 18-1. What is the marginal product of the third worker?

Accepted Answer

A)   7
B)   8
C)   25
D)   75E) A) and D)
F) B) and C)

Question 14

Labor supply curves are always upward sloping.

Accepted Answer

A) True 
 B)False

Question 15

Figure 18-4
The graph below illustrates the market for nurses who work in doctors' offices. 
-Refer to Figure 18-4. Each August many high school and college students visit a doctor's office to have a sports physical. If the price of sports physicals rises, what happens in the market for nurses?

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) All of the above

Question 16

Which of the following is correct?

Accepted Answer

A)   Any event that changes the supply or demand for labor must change the value of the marginal product.
B)   A profit-maximizing firm hires workers so long as the wage rate exceeds the value of the marginal product of labor.
C)   An increase in the supply of labor increases both employment and wages.
D)   A decrease in the demand for labor decreases wages but increases employment.E) B) and D)
F) All of the above

Question 17

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) All of the above
F) None of the above

Question 18

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

Question 19

Over the last 60 or so years, the percentage of women with paid jobs has increased significantly. Is this increase in female employment associated with an increase in the demand for labor, or is it associated with an increase in the supply of labor?

Accepted Answer

The increase in fema...

Question 20

Figure 18-2
The figure below shows the production function for a particular firm. 
-Refer to Figure 18-2. The marginal product of the third worker is

Accepted Answer

A)   20 units.
B)   30 units.
C)   40 units.
D)   70 units.E) All of the above
F) A) and B)

Exam 18: The Markets for the Factors of Production

Figure 18-2 The figure below shows the production function for a particular firm. -Refer to Figure 18-2. The marginal product of the third worker is

Correct Answer
verified

Factor markets for chocolate bars are influenced by the

Correct Answer
verified

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

Correct Answer
verified

Table 18-1 -Refer to Table 18-1. What is the marginal product of the third worker?

Correct Answer
verified

Figure 18-4 The graph below illustrates the market for nurses who work in doctors' offices. -Refer to Figure 18-4. Each August many high school and college students visit a doctor's office to have a sports physical. If the price of sports physicals rises, what happens in the market for nurses?

Correct Answer
verified

Correct Answer
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The property is dimi...
View Answer

Who has a greater opportunity cost of leisure - a president of a major corporation or a babysitter?

Correct Answer
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The opportunity cost...
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Correct Answer
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Which of the following is correct?

Correct Answer
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Which of the following is not correct?

Correct Answer
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Miguel receives a pay raise at his part-time job from $7.50 to $9 per hour. He used to work 10 hours per week, but now he decides to work 12 hours per week. For this price range, his labor supply curve is

Correct Answer
verified

A decrease in population can be expected to

Correct Answer
verified

Value of marginal product is defined as the additional

Correct Answer
verified

Labor supply curves are always upward sloping.

Correct Answer
verified

Which of the following best illustrates the concept of "derived demand?"

Correct Answer
verified

The value of the marginal product of any input is equal to the marginal product of that input multiplied by the

Correct Answer
verified

Over the last 60 or so years, the percentage of women with paid jobs has increased significantly. Is this increase in female employment associated with an increase in the demand for labor, or is it associated with an increase in the supply of labor?

Correct Answer
verified
The increase in fema...
View Answer

Bill is a laborer. What is the relationship between Bill's wage and his opportunity cost of an hour of leisure?

Correct Answer
verified
Bill's wage is equal...
View Answer

Correct Answer
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If the wage exceeds the value of the marginal product of labor, then hiring another worker

Correct Answer
verified

Exam 18: The Markets for the Factors of Production

Figure 18-2 The figure below shows the production function for a particular firm. -Refer to Figure 18-2. The marginal product of the third worker is

Correct AnswerverifiedShow Answer

Factor markets for chocolate bars are influenced by the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 18-1 -Refer to Table 18-1. What is the marginal product of the third worker?

Correct AnswerverifiedShow Answer

Figure 18-4 The graph below illustrates the market for nurses who work in doctors' offices. -Refer to Figure 18-4. Each August many high school and college students visit a doctor's office to have a sports physical. If the price of sports physicals rises, what happens in the market for nurses?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe property is dimi...View AnswerShow Answer

Who has a greater opportunity cost of leisure - a president of a major corporation or a babysitter?

Correct AnswerverifiedThe opportunity cost...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedShow Answer

Miguel receives a pay raise at his part-time job from $7.50 to $9 per hour. He used to work 10 hours per week, but now he decides to work 12 hours per week. For this price range, his labor supply curve is

Correct AnswerverifiedShow Answer

A decrease in population can be expected to

Correct AnswerverifiedShow Answer

Value of marginal product is defined as the additional

Correct AnswerverifiedShow Answer

Labor supply curves are always upward sloping.

Correct AnswerverifiedShow Answer

Which of the following best illustrates the concept of "derived demand?"

Correct AnswerverifiedShow Answer

The value of the marginal product of any input is equal to the marginal product of that input multiplied by the

Correct AnswerverifiedShow Answer

Over the last 60 or so years, the percentage of women with paid jobs has increased significantly. Is this increase in female employment associated with an increase in the demand for labor, or is it associated with an increase in the supply of labor?

Correct AnswerverifiedThe increase in fema...View AnswerShow Answer

Bill is a laborer. What is the relationship between Bill's wage and his opportunity cost of an hour of leisure?

Correct AnswerverifiedBill's wage is equal...View AnswerShow Answer

Correct AnswerverifiedShow Answer

If the wage exceeds the value of the marginal product of labor, then hiring another worker

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The property is dimi...
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Correct Answer
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The opportunity cost...
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The increase in fema...
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Correct Answer
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Bill's wage is equal...
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Correct Answer
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Correct Answer
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