Question 1

Christopher owns and manages a small tea shop. We assume that Christopher (i)  does not directly care about the quantity of tea that he sells.
(ii)  does not directly care about the number of workers that he hires.
(iii)  wants to maximize the quantity of tea that he sells.
(iv)  wants to minimize the number of workers that he hires.
(v)  wants to maximize profits.

Accepted Answer

A)   (i)  and (ii)  only
B)   (i) , (ii) , and (v)  only
C)   (iii)  and (iv)  only
D)   (iii) , (iv) , and (v)  onlyE) B) and C)
F) None of the above

Question 2

Your college roommate receives a pay raise at her part-time job from $9 to $11 per hour. She used to work 25 hours per week, but now she decides to work 20 hours per week in order to spend more time studying economics. For this price range, her labor supply curve is

Accepted Answer

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

Question 3

Most of the total income earned in the U.S. economy is ultimately paid to

Accepted Answer

A)   landowners in the form of rent.
B)   owners of capital in the form of interest.
C)   households in the form of wages and fringe benefits.
D)   households in the form of welfare, disability, and Social Security payments.E) All of the above
F) None of the above

Question 4

Figure 18-12. 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 18-12. The relationship depicted on the graph is called a _______ function.

Accepted Answer

The answer of Figure 18-12. The figure shows the relationship...

Question 5

Labor-augmenting technology causes which of the following? (i)  The marginal productivity of labor increases.
(ii)  The marginal productivity of labor decreases.
(iii)  Labor demand shifts to the right.
(iv)  Labor demand shifts to the left.

Accepted Answer

A)   (i)  only
B)   (ii)  only
C)   (i)  and (iii)  only
D)   (ii)  and (iv)  onlyE) All of the above
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. What is the marginal profit of the sixth worker?

Accepted Answer

A)   $100
B)   −$50
C)   −$75
D)   −$125E) All of the above
F) A) and B)

Question 7

Figure 18-3 
-Refer to Figure 18-3. Suppose that the price of the output is $20. What is the value of the marginal product of the second worker?

Accepted Answer

A)   $4
B)   $5
C)   $80
D)   $240E) A) and C)
F) A) and D)

Question 8

Figure 18-7 
-Refer to Figure 18-7. Assume W1 = $20 and W2 = $18, and the market is always in equilibrium. A shift of the labor supply curve from S1 to S2 would

Accepted Answer

A)   increase the value of the marginal product of labor by $2.
B)   decrease the value of the marginal product of labor by $2.
C)   decrease the value of the marginal product of labor by more than $2.
D)   not change the value of the marginal product of labor.E) A) and C)
F) C) and D)

Question 9

Typically, as a firm hires additional workers, the marginal product of labor

Accepted Answer

A)   decreases, and the value of the marginal product of labor decreases.
B)   stays constant, and the value of the marginal product of labor decreases.
C)   decreases, and the value of the marginal product of labor stays constant.
D)   decreases, and the value of the marginal product of labor increases.E) B) and C)
F) A) and B)

Question 10

A pretzel-stand owner in Chicago hires workers to make hot pretzels and sell them to customers. If the firm is competitive in both the market for pretzels and in the market for pretzel-makers, then it has

Accepted Answer

A)   some control over both the price of pretzels and the wage it pays to its workers.
B)   no control over the price of pretzels but some control over the wage it pays to its workers.
C)   some control over the price of pretzels but no control over the wage it pays to its workers.
D)   no control over either the price of pretzels or the wage it pays to its workers.E) B) and C)
F) A) and B)

Question 11

Define monopsony.

Accepted Answer

A monopson...

Question 12

Because a firm's demand for a factor of production is derived from its decision to supply a good in the market, it is called a

Accepted Answer

A)   marginal product of demand.
B)   secondary demand.
C)   derived demand.
D)   compensatory demand.E) C) and D)
F) B) and C)

Question 13

The labor supply curve shifts when

Accepted Answer

A)   employers need to hire more people.
B)   employers develop new technology.
C)   workers change the number of hours that they want to work at any given wage.
D)   workers become more productive.E) None of the above
F) A) and B)

Question 14

If the value of the marginal product of labor exceeds the wage, then the firm could

Accepted Answer

A)   increase profit by hiring additional labor.
B)   increase profit by reducing the amount of labor hired.
C)   increase revenue by lowering output.
D)   reduce total cost by hiring additional workers.E) A) and B)
F) A) and C)

Question 15

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) A) and D)

Question 16

An upward-sloping labor supply curve means that

Accepted Answer

A)   workers prefer to buy more leisure time when their incomes increase.
B)   workers prefer to supply less labor when wages are high.
C)   an increase in the opportunity cost of leisure leads workers to increase the quantity of labor they supply.
D)   All of the above are correct.E) All of the above
F) B) and C)

Question 17

Suppose that Chloe opens a dog grooming business in a local shopping center. Which of the following would be an example of a factor of production used by Chloe? (i)  her employees' time
(ii)  brushes, combs, scissors, and clippers
(iii)  shampoo, water, and flea prevention treatments
(iv)  Chloe's time spent on bookkeeping and bill paying

Accepted Answer

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

Question 18

Figure 18-7 
-Refer to Figure 18-7. When the relevant labor supply curve is S1, and the labor market is in equilibrium, the

Accepted Answer

A)   wage is W1.
B)   opportunity cost of leisure to workers is W1.
C)   value of the marginal product of labor to firms is W1.
D)   All of the above are correct.E) None of the above
F) C) and D)

Question 19

Figure 18-9 
-Refer to Figure 18-9. If the marginal product of labor falls and the price of apples remains unchanged, (i)  the value of the marginal product of labor will fall.
(ii)  the quantity of labor demanded will increase above L1.
(iii)  the labor supply curve will remain unchanged.

Accepted Answer

A)   (i)  and (ii)  only
B)   (ii)  and (iii)  only
C)   (i)  and (iii)  only
D)   (i) , (ii) , and (iii) E) A) and B)
F) None of the above

Question 20

Which of the following statements is correct?

Accepted Answer

A)   The market for capital is unlike the market for labor because the rental price of capital is unaffected by the marginal product of capital, whereas the price of labor is affected by the marginal product of labor.
B)   The market for capital is unlike the market for labor because the purchase price of capital is unaffected by the marginal product of capital, whereas the price of labor is affected by the marginal product of labor.
C)   The market for capital is like the market for labor because the rental price of capital is affected by the marginal product of capital, and the price of labor is affected by the marginal product of labor.
D)   Both a and b are correct.E) A) and B)
F) A) and C)

Exam 18: The Markets for the Factors of Production

Figure 18-7 -Refer to Figure 18-7. Assume W1 = $20 and W2 = $18, and the market is always in equilibrium. A shift of the labor supply curve from S1 to S2 would

Correct Answer
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Define monopsony.

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A monopson...
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Most of the total income earned in the U.S. economy is ultimately paid to

Correct Answer
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Correct Answer
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Figure 18-7 -Refer to Figure 18-7. When the relevant labor supply curve is S1, and the labor market is in equilibrium, the

Correct Answer
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Typically, as a firm hires additional workers, the marginal product of labor

Correct Answer
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Figure 18-3 -Refer to Figure 18-3. Suppose that the price of the output is $20. What is the value of the marginal product of the second worker?

Correct Answer
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The labor supply curve shifts when

Correct Answer
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A pretzel-stand owner in Chicago hires workers to make hot pretzels and sell them to customers. If the firm is competitive in both the market for pretzels and in the market for pretzel-makers, then it has

Correct Answer
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An upward-sloping labor supply curve means that

Correct Answer
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Labor-augmenting technology causes which of the following? (i) The marginal productivity of labor increases. (ii) The marginal productivity of labor decreases. (iii) Labor demand shifts to the right. (iv) Labor demand shifts to the left.

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

Correct Answer
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If the value of the marginal product of labor exceeds the wage, then the firm could

Correct Answer
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Which of the following statements is correct?

Correct Answer
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Figure 18-9 -Refer to Figure 18-9. If the marginal product of labor falls and the price of apples remains unchanged, (i) the value of the marginal product of labor will fall. (ii) the quantity of labor demanded will increase above L1. (iii) the labor supply curve will remain unchanged.

Correct Answer
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Your college roommate receives a pay raise at her part-time job from $9 to $11 per hour. She used to work 25 hours per week, but now she decides to work 20 hours per week in order to spend more time studying economics. For this price range, her labor supply curve is

Correct Answer
verified

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 sixth worker?

Correct Answer
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Figure 18-12. 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 18-12. The relationship depicted on the graph is called a _______ function.

Correct Answer
verified

Because a firm's demand for a factor of production is derived from its decision to supply a good in the market, it is called a

Correct Answer
verified

Exam 18: The Markets for the Factors of Production

Figure 18-7 -Refer to Figure 18-7. Assume W1 = $20 and W2 = $18, and the market is always in equilibrium. A shift of the labor supply curve from S1 to S2 would

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Define monopsony.

Correct AnswerverifiedA monopson...View AnswerShow Answer

Most of the total income earned in the U.S. economy is ultimately paid to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 18-7 -Refer to Figure 18-7. When the relevant labor supply curve is S1, and the labor market is in equilibrium, the

Correct AnswerverifiedShow Answer

Typically, as a firm hires additional workers, the marginal product of labor

Correct AnswerverifiedShow Answer

Figure 18-3 -Refer to Figure 18-3. Suppose that the price of the output is $20. What is the value of the marginal product of the second worker?

Correct AnswerverifiedShow Answer

The labor supply curve shifts when

Correct AnswerverifiedShow Answer

A pretzel-stand owner in Chicago hires workers to make hot pretzels and sell them to customers. If the firm is competitive in both the market for pretzels and in the market for pretzel-makers, then it has

Correct AnswerverifiedShow Answer

An upward-sloping labor supply curve means that

Correct AnswerverifiedShow Answer

Labor-augmenting technology causes which of the following? (i) The marginal productivity of labor increases. (ii) The marginal productivity of labor decreases. (iii) Labor demand shifts to the right. (iv) Labor demand shifts to the left.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the value of the marginal product of labor exceeds the wage, then the firm could

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Figure 18-9 -Refer to Figure 18-9. If the marginal product of labor falls and the price of apples remains unchanged, (i) the value of the marginal product of labor will fall. (ii) the quantity of labor demanded will increase above L1. (iii) the labor supply curve will remain unchanged.

Correct AnswerverifiedShow Answer

Your college roommate receives a pay raise at her part-time job from $9 to $11 per hour. She used to work 25 hours per week, but now she decides to work 20 hours per week in order to spend more time studying economics. For this price range, her labor supply curve is

Correct AnswerverifiedShow 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 marginal profit of the sixth worker?

Correct AnswerverifiedShow Answer

Figure 18-12. 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 18-12. The relationship depicted on the graph is called a _______ function.

Correct AnswerverifiedShow Answer

Because a firm's demand for a factor of production is derived from its decision to supply a good in the market, it is called a

Correct AnswerverifiedShow Answer

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A monopson...
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