Question 1

Consider the market for land. Suppose the value of the marginal product of land decreases. Holding all else constant, the equilibrium rental price for land will

Accepted Answer

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

Question 2

Both theory and history point to a close relationship between increases in

Accepted Answer

A)   labor demand and increases in labor supply.
B)   labor demand and decreases in real wages.
C)   the productivity of labor and increases in real wages.
D)   interest rates and decreases in real wages.E) C) and D)
F) B) and D)

Question 3

In a competitive market for labor, the equilibrium wage always equals the value of the marginal product.

Accepted Answer

A) True 
 B)False

Question 4

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

Question 5

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. Assume that Sam has an upward-sloping labor supply curve. If the opportunity cost of Sam's leisure time increases, he will respond by working

Accepted Answer

A)   more hours.
B)   fewer hours.
C)   an equal number of hours.
D)   a number of hours that cannot be determined from the information. The labor demand curve is needed to make this determination.E) None of the above
F) B) and C)

Question 6

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 7

A change in the supply of one factor of production

Accepted Answer

A)   will not change either the marginal productivities or the prices of other factors.
B)   will not change the prices of other factors, but it may change their marginal productivities.
C)   will not change the marginal productivities of other factors, but it may change their prices.
D)   changes the marginal productivities and the prices of other factors.E) All of the above
F) A) and B)

Question 8

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

Accepted Answer

A)   5
B)   7.5
C)   8
D)   30E) A) and B)
F) None of the above

Question 9

Which of the following events can not cause the labor-supply curve to shift?

Accepted Answer

A)   a change in people's attitudes toward work
B)   an increase in the price of output
C)   a change in workers' alternative opportunities
D)   an increase in the rate of immigrationE) B) and D)
F) B) and C)

Question 10

Linda's Autoplex performs oil changes on automobiles, light trucks, and sport utility vehicles. She is a profit­ maximizing business owner whose firm operates in a competitive market. The marginal cost of an oil change is $10. The marginal productivity of the last worker that Linda hired was 1.5 oil changes per hour. What is the maximum hourly wage that Linda was willing to pay the last worker hired?

Accepted Answer

A)   $10
B)   $15
C)   $20
D)   $30E) A) and C)
F) A) and D)

Question 11

Table 18-5
 
-Refer to Table 18-5. The price of output is

Accepted Answer

A)   $1
B)   $2.
C)   $3.
D)   $4.E) None of the above
F) B) and C)

Question 12

Diminishing marginal product occurs when

Accepted Answer

A)   the increases to total output are declining.
B)   marginal product is negative.
C)   total output is decreasing.
D)   All of the above are correct.E) C) and D)
F) A) and C)

Question 13

As a result of a fire, a small business owner loses some of her computers and other equipment. If the property of diminishing returns applies to all factors of production, she should expect to see

Accepted Answer

A)   an increase in the marginal productivity of her remaining capital and an increase in the marginal productivity of her labor.
B)   an increase in the marginal productivity of her remaining capital and a decrease in the marginal productivity of her labor.
C)   a decrease in the marginal productivity of her remaining capital and an increase in the marginal productivity of her labor.
D)   a decrease in the marginal productivity of her remaining capital and a decrease in the marginal productivity of her labor.E) A) and B)
F) None of the above

Question 14

Which of the following statements is correct?

Accepted Answer

A)   An increase in the supply of other factors, such as capital, will increase the demand for labor.
B)   Labor-saving technology will increase the demand for labor.
C)   Labor-augmenting technology will decrease the demand for labor.
D)   A decrease in the price of output will increase the demand for labor.E) A) and C)
F) None of the above

Question 15

Table 18-8
Harold and Maude own a dance studio where they and their employees teach ballroom dancing. Their company is a competitive, profit-maximizing firm. Harold and Maude's production function is detailed in the table below.
 
-Refer to Table 18-8. If Harold and Maude offer a special sale for one day where dance lessons are $5 each, and if they pay their workers $200 per day for that day, what is the maximum number of workers that they will hire for that day?

Accepted Answer

A)   1
B)   2
C)   3
D)   4E) A) and B)
F) None of the above

Question 16

For competitive firms, the curve that represents the value of marginal product of labor is the same as the demand for labor curve.

Accepted Answer

A) True 
 B)False

Question 17

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. Suppose the shop pays each of its mechanics $210 per day. Over what interval of prices (that is, charges per car repair, P) would the shop maximize its profit by hiring exactly 3 mechanics? (Determine P1 and P2 such that P1 < P < P2.)

Accepted Answer

The marginal product of the third mechan...

Question 18

Table 18-7
 
-Refer to Table 18-7. What is the value of the cell labeled GG?

Accepted Answer

A)   $400
B)   $100
C)   $0
D)   −$100E) None of the above
F) A) and B)

Question 19

Suppose that the market for labor is initially in equilibrium. Suppose that workers' tastes change so that they choose to retire at age 70 rather than age 67. Then the equilibrium wage

Accepted Answer

A)   and the equilibrium quantity of labor will rise.
B)   and the equilibrium quantity of labor will fall.
C)   will rise, and the equilibrium quantity of labor will fall.
D)   will fall, and the equilibrium quantity of labor will rise.E) A) and B)
F) All of the above

Question 20

Figure 18-1
On the graph, L represents the quantity of labor and Q represents the quantity of output per week. 
-Refer to Figure 18-1. The shape of the curve suggests the presence of

Accepted Answer

A)   an inverted production function.
B)   diminishing total product.
C)   increasing marginal product.
D)   diminishing marginal product.E) B) and D)
F) B) and C)

Exam 18: The Markets for the Factors of Production

For competitive firms, the curve that represents the value of marginal product of labor is the same as the demand for labor curve.

Correct Answer
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Correct Answer
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The marginal product of the third mechan...
View Answer

Correct Answer
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Correct Answer
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Both theory and history point to a close relationship between increases in

Correct Answer
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In a competitive market for labor, the equilibrium wage always equals the value of the marginal product.

Correct Answer
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Suppose that the market for labor is initially in equilibrium. Suppose that workers' tastes change so that they choose to retire at age 70 rather than age 67. Then the equilibrium wage

Correct Answer
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Which of the following statements is correct?

Correct Answer
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Correct Answer
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The property is dimi...
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Consider the market for land. Suppose the value of the marginal product of land decreases. Holding all else constant, the equilibrium rental price for land will

Correct Answer
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A change in the supply of one factor of production

Correct Answer
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Figure 18-1 On the graph, L represents the quantity of labor and Q represents the quantity of output per week. -Refer to Figure 18-1. The shape of the curve suggests the presence of

Correct Answer
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Table 18-5 -Refer to Table 18-5. The price of output is

Correct Answer
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Table 18-7 -Refer to Table 18-7. What is the value of the cell labeled GG?

Correct Answer
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Correct Answer
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Which of the following events can not cause the labor-supply curve to shift?

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

Correct Answer
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Diminishing marginal product occurs when

Correct Answer
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Table 18-1 -Refer to Table 18-1. What is the marginal product of the fourth worker?

Correct Answer
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As a result of a fire, a small business owner loses some of her computers and other equipment. If the property of diminishing returns applies to all factors of production, she should expect to see

Correct Answer
verified

Exam 18: The Markets for the Factors of Production

For competitive firms, the curve that represents the value of marginal product of labor is the same as the demand for labor curve.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe marginal product of the third mechan...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Both theory and history point to a close relationship between increases in

Correct AnswerverifiedShow Answer

In a competitive market for labor, the equilibrium wage always equals the value of the marginal product.

Correct AnswerverifiedShow Answer

Suppose that the market for labor is initially in equilibrium. Suppose that workers' tastes change so that they choose to retire at age 70 rather than age 67. Then the equilibrium wage

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe property is dimi...View AnswerShow Answer

Consider the market for land. Suppose the value of the marginal product of land decreases. Holding all else constant, the equilibrium rental price for land will

Correct AnswerverifiedShow Answer

A change in the supply of one factor of production

Correct AnswerverifiedShow Answer

Figure 18-1 On the graph, L represents the quantity of labor and Q represents the quantity of output per week. -Refer to Figure 18-1. The shape of the curve suggests the presence of

Correct AnswerverifiedShow Answer

Table 18-5 -Refer to Table 18-5. The price of output is

Correct AnswerverifiedShow Answer

Table 18-7 -Refer to Table 18-7. What is the value of the cell labeled GG?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following events can not cause the labor-supply curve to shift?

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

Diminishing marginal product occurs when

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

As a result of a fire, a small business owner loses some of her computers and other equipment. If the property of diminishing returns applies to all factors of production, she should expect to see

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
The marginal product of the third mechan...
View Answer

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
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The property is dimi...
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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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Correct Answer
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