Question 1

Competitive firms hire workers until the additional benefit they receive from the last worker hired is equal to
(i) the additional cost of that worker.
(ii) the wage paid to that worker.
(iii) the marginal product of that worker.

Accepted Answer

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

Question 2

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

Question 3

Which of the following best describes the economy's stock of equipment and structures?

Accepted Answer

A)   capital
B)   aggregate demand
C)   long-term inventory
D)   aggregate stockE) C) and D)
F) All of the above

Question 4

Suppose that in January a profit-maximizing firm has 25 employees.By February,the firm has decreased employment.One can infer that,when 25 employees are hired,the

Accepted Answer

A)   firm is losing market share.
B)   firm is minimizing losses.
C)   wage exceeds the value of the marginal product of labor.
D)   value of the marginal product of labor exceeds the wage.E) A) and C)
F) A) and B)

Question 5

Figure 18-5
The figure shows a particular profit-maximizing, competitive firm's value-of-marginal-product (VMP)  curve. On the horizontal axis, L represents the number of workers. The time frame is daily.
 
-Refer to Figure 18-5.Suppose one point on the firm's production function is (L = 3,Q = 180) ,where L = number of workers and Q = quantity of output.If the firm sells its output for $5 per unit,then

Accepted Answer

A)   a second point on the firm's production function is (L = 4, Q = 216) .
B)   the firm's production function exhibits the property of diminishing marginal product of labor.
C)   the firm will maximize profit by hiring four workers if it pays workers $160 per day.
D)   All of the above are correct.E) A) and C)
F) A) and D)

Question 6

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

Question 7

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.Suppose the firm hires each unit of labor for $700 per week,and each unit of output sells for $9.How many workers will the firm hire to maximize its profit?

Accepted Answer

A)   2
B)   3
C)   4
D)   5E) A) and B)
F) None of the above

Question 8

Table 18-7
Harold owns a cranberry bog in which he grows cranberries. Harold's farm is a competitive, profit-maximizing firm. Harold's production function is detailed in the table below.
 
-Refer to Table 18-7.If Harold pays his workers $250 per day and sells his cranberries for $5 per bushel,what is the maximum number of workers that he will hire?

Accepted Answer

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

Question 9

Consider the labor market for short-order cooks.An increase in immigration will cause

Accepted Answer

A)   both equilibrium wages and equilibrium employment to increase.
B)   both equilibrium wages and equilibrium employment to decrease.
C)   equilibrium wages to increase and equilibrium employment to decrease.
D)   equilibrium wages to decrease and equilibrium employment to increase.E) C) and D)
F) A) and B)

Question 10

The production function is the

Accepted Answer

A)   increase in the amount of output from an additional unit of labor.
B)   marginal product of an input times the price of output.
C)   relationship between the quantity of inputs and output.
D)   shift in labor demand caused by a change in the price of output.E) B) and C)
F) C) and D)

Question 11

As a result of severe flooding,a farmer loses half of his productive farmland.If the property of diminishing returns applies to all factors of production,he should expect to see

Accepted Answer

A)   an increase in the marginal productivity of his remaining land and an increase in the marginal productivity of his labor.
B)   an increase in the marginal productivity of his remaining land and a decrease in the marginal productivity of his labor.
C)   a decrease in the marginal productivity of his remaining land and an increase in the marginal productivity of his labor.
D)   a decrease in the marginal productivity of his remaining land and a decrease in the marginal productivity of his labor.E) B) and D)
F) B) and C)

Question 12

The rental price of land is

Accepted Answer

A)   the price paid for ownership of the land.
B)   the price paid for the flow of services from land over a specified time period.
C)   always more than the purchase price.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 13

Land,labor,and capital are examples of factors of production.

Accepted Answer

A) True 
 B)False

Question 14

Rent,interest,and profit are all forms of income paid to the owners of

Accepted Answer

A)   aggregate stock.
B)   aggregate demand.
C)   firms and not-for-profit organizations.
D)   land and capital.E) C) and D)
F) A) and D)

Question 15

Which of the following qualify as part of our economy's capital income?

Accepted Answer

A)   wages paid to workers
B)   interest paid to the owners of corporate bonds
C)   rent paid on farmland
D)   All of the above are correct.E) A) and D)
F) B) and C)

Question 16

Which of the following would shift a market labor supply curve to the right?

Accepted Answer

A)   an increase in the price of output
B)   an increase in immigration
C)   a labor-saving technological change
D)   a decrease in the wage rateE) C) and D)
F) A) and D)

Question 17

Figure 18-2
The figure below shows the production function for a particular firm.
 
-Refer to Figure 18-2.Suppose the firm pays a wage equal to $320 per unit of labor and sells its output at $15 per unit.How many units of labor should the firm hire to maximize profit?

Accepted Answer

A)   2 units
B)   3 units
C)   4 units
D)   5 unitsE) C) and D)
F) B) and C)

Question 18

The current value of the marginal product of land influences the

Accepted Answer

A)   demand for land.
B)   equilibrium rental price of land.
C)   equilibrium purchase price of land.
D)   all of the above.E) B) and D)
F) None of the above

Question 19

Increases in productivity are not responsible for increased standards of living in the United States.

Accepted Answer

A) True 
 B)False

Question 20

If Ernie's individual labor supply curve is upward sloping,then Ernie responds to an increase in the

Accepted Answer

A)   wage by working more hours per week.
B)   opportunity cost of leisure by working fewer hours per week.
C)   opportunity cost of leisure by taking more hours of leisure per week.
D)   Both a and b are correct.E) A) and C)
F) None of the above

Exam 18: The Market For the Factors of Production.

If Ernie's individual labor supply curve is upward sloping,then Ernie responds to an increase in the

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

Correct Answer
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Figure 18-2 The figure below shows the production function for a particular firm. -Refer to Figure 18-2.Suppose the firm pays a wage equal to $320 per unit of labor and sells its output at $15 per unit.How many units of labor should the firm hire to maximize profit?

Correct Answer
verified

Correct Answer
verified

Rent,interest,and profit are all forms of income paid to the owners of

Correct Answer
verified

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

Correct Answer
verified

The rental price of land is

Correct Answer
verified

The production function is the

Correct Answer
verified

Correct Answer
verified

Suppose that in January a profit-maximizing firm has 25 employees.By February,the firm has decreased employment.One can infer that,when 25 employees are hired,the

Correct Answer
verified

Increases in productivity are not responsible for increased standards of living in the United States.

Correct Answer
verified

As a result of severe flooding,a farmer loses half of his productive farmland.If the property of diminishing returns applies to all factors of production,he should expect to see

Correct Answer
verified

Land,labor,and capital are examples of factors of production.

Correct Answer
verified

Consider the labor market for short-order cooks.An increase in immigration will cause

Correct Answer
verified

Competitive firms hire workers until the additional benefit they receive from the last worker hired is equal to (i) the additional cost of that worker. (ii) the wage paid to that worker. (iii) the marginal product of that worker.

Correct Answer
verified

Which of the following would shift a market labor supply curve to the right?

Correct Answer
verified

Which of the following qualify as part of our economy's capital income?

Correct Answer
verified

The current value of the marginal product of land influences the

Correct Answer
verified

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.Suppose the firm hires each unit of labor for $700 per week,and each unit of output sells for $9.How many workers will the firm hire to maximize its profit?

Correct Answer
verified

Which of the following best describes the economy's stock of equipment and structures?

Correct Answer
verified

Exam 18: The Market For the Factors of Production.

If Ernie's individual labor supply curve is upward sloping,then Ernie responds to an increase in the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 18-2 The figure below shows the production function for a particular firm. -Refer to Figure 18-2.Suppose the firm pays a wage equal to $320 per unit of labor and sells its output at $15 per unit.How many units of labor should the firm hire to maximize profit?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Rent,interest,and profit are all forms of income paid to the owners of

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The rental price of land is

Correct AnswerverifiedShow Answer

The production function is the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that in January a profit-maximizing firm has 25 employees.By February,the firm has decreased employment.One can infer that,when 25 employees are hired,the

Correct AnswerverifiedShow Answer

Increases in productivity are not responsible for increased standards of living in the United States.

Correct AnswerverifiedShow Answer

As a result of severe flooding,a farmer loses half of his productive farmland.If the property of diminishing returns applies to all factors of production,he should expect to see

Correct AnswerverifiedShow Answer

Land,labor,and capital are examples of factors of production.

Correct AnswerverifiedShow Answer

Consider the labor market for short-order cooks.An increase in immigration will cause

Correct AnswerverifiedShow Answer

Competitive firms hire workers until the additional benefit they receive from the last worker hired is equal to (i) the additional cost of that worker. (ii) the wage paid to that worker. (iii) the marginal product of that worker.

Correct AnswerverifiedShow Answer

Which of the following would shift a market labor supply curve to the right?

Correct AnswerverifiedShow Answer

Which of the following qualify as part of our economy's capital income?

Correct AnswerverifiedShow Answer

The current value of the marginal product of land influences the

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.Suppose the firm hires each unit of labor for $700 per week,and each unit of output sells for $9.How many workers will the firm hire to maximize its profit?

Correct AnswerverifiedShow Answer

Which of the following best describes the economy's stock of equipment and structures?

Correct AnswerverifiedShow Answer

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