Question 1

A competitive, profit-maximizing firm hires workers up to the point where the

Accepted Answer

A)  marginal product equals zero.
B)  marginal revenue product equals zero.
C)  marginal product equals the wage.
D)  value of the marginal product equals the wage.E) C) and D)
F) A) and C)

Question 2

A consultant interviews the hiring manager of a small, profit-maximizing firm. The manager explains that the firm used to have 15 employees, but the most-recently-hired employee has just left the company. The firm is currently advertising to hire a worker to replace the employee who just left at the same wage rate. We can infer that

Accepted Answer

A)  for the 15th employee, the wage exceeded the value of the marginal product of labor.
B)  for the 15th employee, the value of the marginal product of labor exceeded the wage.
C)  the firm is too large and should remain at 14 employees.
D)  the firm is no longer attempting to maximize profits.E) None of the above
F) A) and B)

Question 3

Scenario 18-2
Gertrude Kelp owns three boats that participate in commercial fishing for fresh Pacific salmon off the coast of Alaska. As part of her business she hires a captain and several crew members for each boat. In the market for fresh Pacific salmon, there are thousands of firms like Gertrude's. While Gertrude usually catches a significant number of fish each year, her contribution to the entire harvest of salmon is negligible relative to the size of the market.
-Refer to Scenario 18-2. If Gertrude is a competitor in both the fresh Pacific salmon market and in the market for crew members, she is called a price

Accepted Answer

A)  taker in the salmon market and a wage setter in the crew market.
B)  taker in the crew market and a price setter in the salmon market.
C)  taker in both markets.
D)  setter in both markets.E) A) and D)
F) C) and D)

Question 4

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 the marginal product of the fifth unit of labor is 30 units of output per day. The figure implies that the

Accepted Answer

A)  price of output is $4.
B)  price of output is $6.
C)  price of output is $8.
D)  daily wage is $120.E) A) and B)
F) C) and D)

Question 5

If Sharnae's individual labor supply curve is backward sloping, then Sharnae responds to an increase in her

Accepted Answer

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

Question 6

Figure 18-10 1 to D2? A) technological progress B) an increase in the price of firms' output C) an increase in the supply of a relevant factor of production other than labor D) All of the above are correct." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 18-10. Which of the following would shift of the labor demand curve from D1 to D2?

Accepted Answer

A)  technological progress
B)  an increase in the price of firms' output
C)  an increase in the supply of a relevant factor of production other than labor
D)  All of the above are correct.E) All of the above
F) None of the above

Question 7

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) B) and D)

Question 8

Table 18-B
Consider the following daily production data for MadeFromScratch, Inc. MadeFromScratch sells cupcakes for $3 each and pays the workers a wage of $325 per day. 
-Refer to Table 18-B. What is the value of the marginal product of the third worker?

Accepted Answer

A)  $125
B)  $375
C)  $450
D)  $1,425E) A) and B)
F) None of the above

Question 9

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 10

In 2015, the total income of all U.S. residents was approximately $16 billion.

Accepted Answer

A) True 
 B)False

Question 11

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 C)
F) B) and C)

Question 12

Figure 18-9 1 due to a shift in demand. B) fall below w1 due to a shift in supply. C) rise above w1 due to a shift in demand. D) rise above w1 due to a shift in supply." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 18-9. If the apple pickers start working fewer hours because they are taking more vacation time, the equilibrium wage will

Accepted Answer

A)  fall below w1 due to a shift in demand.
B)  fall below w1 due to a shift in supply.
C)  rise above w1 due to a shift in demand.
D)  rise above w1 due to a shift in supply.E) None of the above
F) B) and D)

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

The marginal product of any factor of production depends on

Accepted Answer

A)  the quantity of the factor used.
B)  the price of the final good.
C)  the demand for the final good.
D)  All of the above are correct.E) A) and B)
F) A) and C)

Question 15

To maximize profit, a competitive firm hires workers up to the point of intersection of the

Accepted Answer

A)  marginal product curve and the wage line.
B)  value of marginal product curve and the wage line.
C)  value of marginal product curve and the marginal revenue curve.
D)  total revenue curve and the wage line.E) All of the above
F) C) and D)

Question 16

Which of the following statements is correct?

Accepted Answer

A)  The value of the marginal product curve is the labor demand curve for competitive, profit-maximizing firms.
B)  A competitive, profit-maximizing firm hires workers up to the point where the value of the marginal product of labor equals the wage.
C)  By hiring labor up to the point where the value of the marginal product of labor equals the wage, the firm is producing where price equals marginal cost.
D)  All of the above are correct.E) A) and B)
F) B) and C)

Question 17

The demand curve for capital

Accepted Answer

A)  is vertical.
B)  is horizontal.
C)  is derived from households' decisions concerning saving and spending.
D)  reflects the marginal productivity of capital.E) B) and C)
F) A) and D)

Question 18

Figure 18-8
This figure below shows the labor market for automobile workers. The curve labeled S is the labor supply curve, and the curves labeled D1 and D2 are the labor demand curves. On the horizontal axis, L represents the quantity of labor in the market. 1 and D2 are the labor demand curves. On the horizontal axis, L represents the quantity of labor in the market.   -Refer to Figure 18-8. Which of the following events would most likely explain a shift of the labor-demand curve from D2 back to D1? A) The price of automobiles decreased. B) A large number of immigrants entered the automobile-worker market. C) A technological advance increased the marginal product of automobile workers. D) The demand for automobiles increased." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 18-8. Which of the following events would most likely explain a shift of the labor-demand curve from D2 back to D1?

Accepted Answer

A)  The price of automobiles decreased.
B)  A large number of immigrants entered the automobile-worker market.
C)  A technological advance increased the marginal product of automobile workers.
D)  The demand for automobiles increased.E) B) and D)
F) None of the above

Question 19

The value of the marginal product of capital can be calculated as the market price of the good multiplied by the marginal product of capital.

Accepted Answer

A) True 
 B)False

Question 20

An event that changes the supply of any factor of production can alter the earnings of all the factors.

Accepted Answer

A) True 
 B)False

Exam 18: The Markets for the Factors of Production

The demand curve for capital

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

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

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

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 marginal product of any factor of production depends on

Correct Answer
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Table 18-B Consider the following daily production data for MadeFromScratch, Inc. MadeFromScratch sells cupcakes for $3 each and pays the workers a wage of $325 per day. -Refer to Table 18-B. What is the value of the marginal product of the third worker?

Correct Answer
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An event that changes the supply of any factor of production can alter the earnings of all the factors.

Correct Answer
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If Sharnae's individual labor supply curve is backward sloping, then Sharnae responds to an increase in her

Correct Answer
verified

Correct Answer
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The value of the marginal product of capital can be calculated as the market price of the good multiplied by the marginal product of capital.

Correct Answer
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In 2015, the total income of all U.S. residents was approximately $16 billion.

Correct Answer
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Figure 18-9 -Refer to Figure 18-9. If the apple pickers start working fewer hours because they are taking more vacation time, the equilibrium wage will

Correct Answer
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Correct Answer
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Figure 18-10 -Refer to Figure 18-10. Which of the following would shift of the labor demand curve from D₁ to D₂?

Correct Answer
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To maximize profit, a competitive firm hires workers up to the point of intersection of the

Correct Answer
verified

A competitive, profit-maximizing firm hires workers up to the point where the

Correct Answer
verified

Correct Answer
verified

Exam 18: The Markets for the Factors of Production

The demand curve for capital

Correct AnswerverifiedShow Answer

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

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The marginal product of any factor of production depends on

Correct AnswerverifiedShow Answer

Table 18-B Consider the following daily production data for MadeFromScratch, Inc. MadeFromScratch sells cupcakes for $3 each and pays the workers a wage of $325 per day. -Refer to Table 18-B. What is the value of the marginal product of the third worker?

Correct AnswerverifiedShow Answer

An event that changes the supply of any factor of production can alter the earnings of all the factors.

Correct AnswerverifiedShow Answer

If Sharnae's individual labor supply curve is backward sloping, then Sharnae responds to an increase in her

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The value of the marginal product of capital can be calculated as the market price of the good multiplied by the marginal product of capital.

Correct AnswerverifiedShow Answer

In 2015, the total income of all U.S. residents was approximately $16 billion.

Correct AnswerverifiedShow Answer

Figure 18-9 -Refer to Figure 18-9. If the apple pickers start working fewer hours because they are taking more vacation time, the equilibrium wage will

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 18-10 -Refer to Figure 18-10. Which of the following would shift of the labor demand curve from D1 to D2?

Correct AnswerverifiedShow Answer

To maximize profit, a competitive firm hires workers up to the point of intersection of the

Correct AnswerverifiedShow Answer

A competitive, profit-maximizing firm hires workers up to the point where the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

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Figure 18-10 -Refer to Figure 18-10. Which of the following would shift of the labor demand curve from D₁ to D₂?

Correct Answer
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