Question 1

Related to the Economics in Practice on page 221: Because land is demand determined, an acre of land in downtown San Francisco, California ________ an acre of land in downtown Knoxville, Tennessee.

Accepted Answer

A)   would most likely cost more than
B)   would most likely cost less than
C)   should cost approximately the same as
D)   would cost exactly the same asE) A) and B)
F) A) and C)

Question 2

The law of diminishing marginal returns explains why a marginal revenue product schedule

Accepted Answer

A)   first declines and then increases.
B)   is always negative.
C)   eventually increases.
D)   eventually declines.E) A) and B)
F) B) and D)

Question 3

Which of the following is related to the additional revenues business owners expect to enjoy as a result of hiring the employee?

Accepted Answer

A)   the salary of Dallas Mavericks' player Dirk Nowitski
B)   the wages for Wendy Peffercorn, a cashier at the Piggly Wiggly
C)   the signing bonus for Saul Goodman, a new attorney at the Hamlin, Hamlin, and McGill law firm
D)   All of the above are correct.E) C) and D)
F) A) and B)

Question 4

Firms will hire additional workers only as long as the value of their product is less than the relevant market wage.

Accepted Answer

A) True 
 B)False

Question 5

Suppose the supply of labor schedule decreases in a perfectly competitive labor market while the market demand schedule remains unchanged. A profit-maximizing representative firm will

Accepted Answer

A)   hire more workers.
B)   hire less workers.
C)   hire the same number of workers.
D)   substitute capital for labor.E) B) and C)
F) A) and D)

Question 6

Rent depends on what the potential users of the land are willing to pay for it.

Accepted Answer

A) True 
 B)False

Question 7

A wheat farmer sells wheat in a perfectly competitive market and hires labor in a perfectly competitive market. The market price of wheat is $2 a bushel, the wage rate is $10, and the farmer employs five workers. If the farmer is maximizing his profits, then the marginal product of the fifth worker is

Accepted Answer

A)   0.2 bushels.
B)   5 bushels.
C)   20 bushels.
D)   indeterminate from the given informationE) A) and C)
F) C) and D)

Question 8

Shifts in factor demand result from changes in

Accepted Answer

A)   demand for outputs.
B)   the quantity of other factors with which it works.
C)   the price of other inputs.
D)   All of the above are correct.E) A) and C)
F) C) and D)

Question 9

If Tie-Dyed T-Shirts is currently employing labor so that the wage is greater than the marginal revenue product of labor, it must also be true that

Accepted Answer

A)   total revenues would be less than total costs.
B)   the wage is less than marginal cost.
C)   the price of the product must be less than marginal cost.
D)   the price of the product must be greater than marginal cost.E) None of the above
F) A) and B)

Question 10

In general, the production and use of capital ________ the productivity of labor and normally ________ wages.

Accepted Answer

A)   enhances; drives up
B)   enhances; drives down
C)   diminishes; drives down
D)   has no effect on; has no effect onE) B) and D)
F) B) and C)

Question 11

If the supply of labor increases, which of the following events will occur?

Accepted Answer

A)   The wage rate will fall and firms will increase employment up until the point where MRP equals the new wage rate.
B)   The wage rate will fall and firms will decrease employment to the point where MRP equals the new wage rate.
C)   The wage rate will increase and firms will decrease employment to the point where MRP equals the new wage rate.
D)   The wage rate will increase and firms will increase employment up until the point where MRP equals the new wage rate.E) None of the above
F) B) and C)

Question 12

Liu's Potato Chips is a perfectly competitive firm currently employing 30 workers. The marginal revenue product of the 30th worker is $7.00 per hour. The wage rate is $8.00 per hour. To increase profits, this firm should

Accepted Answer

A)   decrease employment until the MRP of labor equals $8.00.
B)   increase employment until the MRP of labor equals $8.00.
C)   continue hiring 30 workers because the firm earns a surplus of $1.00 on each worker hired.
D)   increase the price of potato chips so that the marginal revenue product increases to $8.00 per hour.E) A) and B)
F) A) and C)

Question 13

Refer to the data provided in Table 10.1 below to answer the following question(s) .
Table 10.1   Total Labor Units  Total Product  Marginal Product of Price per  (employees)   (T-shirts per day)   Labor (per day)   T-shirt 00−−12020$52503053752554952055110155\begin{array}{l}	ext { Total Labor Units } \quad 	ext { Total Product } \quad 	ext { Marginal Product of Price per }\\begin{array} { c c c c } 	ext { (employees)  } & 	ext { (T-shirts per day)  } & 	ext { Labor (per day)  } & 	ext { T-shirt } \\hline 0 & 0 & - & - \1 & 20 & 20 & \$ 5 \2 & 50 & 30 & 5 \3 & 75 & 25 & 5 \4 & 95 & 20 & 5 \5 & 110 & 15 & 5\end{array}\end{array} Total Labor Units  Total Product  Marginal Product of Price per  (employees)  012345​ (T-shirts per day)  020507595110​ Labor (per day)  −2030252015​ T-shirt −$55555​​​ 
-Refer to Table 10.1. If the payment to labor per day is $125, this T-shirt manufacturer is maximizing profits if he will hire ________ employees.

Accepted Answer

A)   two
B)   three
C)   four
D)   five E) A) and B)
F) All of the above

Question 14

The demand for ________ is a ʺderived demand.ʺ

Accepted Answer

A)   ice cream cones on a hot day
B)   tax-free municipal bonds
C)   a hair stylist by a salon owner
D)   a birthday cake for your brotherE) A) and D)
F) A) and C)

Question 15

Tony's Lawn Service uses only one variable input, fertilizer. The firm's demand curve for fertilizer in the short run is the input's

Accepted Answer

A)   total product curve.
B)   marginal product curve.
C)   marginal revenue product curve.
D)   total cost curve.E) B) and C)
F) A) and B)

Question 16

The marginal revenue product of labor is

Accepted Answer

A)   the additional revenue a firm earns by employing one additional unit of labor.
B)   the additional profit a firm earns by employing one additional unit of labor.
C)   the marginal product of capital times the price of labor.
D)   the additional revenue the firm makes by selling one unit of labor.E) None of the above
F) A) and B)

Question 17

The supply of land is perfectly elastic.

Accepted Answer

A) True 
 B)False

Question 18

Bonita's Braidworks hires workers to braid hair. The store sells the service for $25 per customer. The marginal revenue product of this storeʹs fifth worker is $50. The marginal product of the fifth worker is

Accepted Answer

A)   0.5 braided customers.
B)   2 braided customers.
C)   25 braided customers.
D)   indeterminate from this information.E) A) and B)
F) B) and C)

Question 19

Related to the Economics in Practice on page 221: Because land is demand determined, an acre of land in downtown Harlingen, Texas ________ an acre of land in downtown Chicago, Illinois.

Accepted Answer

A)   would most likely cost more than
B)   would most likely cost less than
C)   should cost approximately the same as
D)   would cost exactly the same asE) None of the above
F) B) and D)

Question 20

You have been hired by the No Hassle Collection Agency to provide economic advice. The owner of the agency tells you that No Hassle's only variable input is the number of collection agents. The hourly wage for collection agents is $30.00. The marginal revenue product curve for collection agents reaches its maximum at five workers with a marginal revenue product of $34.00. What advice would you give this firm?

Accepted Answer

A)   Hire five collection so as to maximize profits.
B)   Shut down immediately, as the firm is not able to cover all of its variable costs.
C)   Decrease the wage rate paid to collection agents so that their marginal revenue product will decrease.
D)   Hire collection agents until the marginal revenue product is equal to the wage-which will occur when more than five agents are employed.E) None of the above
F) All of the above

Exam 10: Input Demand: the Labor and Land Markets

The supply of land is perfectly elastic.

Correct Answer
verified

If Tie-Dyed T-Shirts is currently employing labor so that the wage is greater than the marginal revenue product of labor, it must also be true that

Correct Answer
verified

Correct Answer
verified

Which of the following is related to the additional revenues business owners expect to enjoy as a result of hiring the employee?

Correct Answer
verified

Suppose the supply of labor schedule decreases in a perfectly competitive labor market while the market demand schedule remains unchanged. A profit-maximizing representative firm will

Correct Answer
verified

The marginal revenue product of labor is

Correct Answer
verified

Bonita's Braidworks hires workers to braid hair. The store sells the service for $25 per customer. The marginal revenue product of this storeʹs fifth worker is $50. The marginal product of the fifth worker is

Correct Answer
verified

Related to the Economics in Practice on page 221: Because land is demand determined, an acre of land in downtown San Francisco, California ________ an acre of land in downtown Knoxville, Tennessee.

Correct Answer
verified

Rent depends on what the potential users of the land are willing to pay for it.

Correct Answer
verified

Liu's Potato Chips is a perfectly competitive firm currently employing 30 workers. The marginal revenue product of the 30th worker is $7.00 per hour. The wage rate is $8.00 per hour. To increase profits, this firm should

Correct Answer
verified

Shifts in factor demand result from changes in

Correct Answer
verified

Tony's Lawn Service uses only one variable input, fertilizer. The firm's demand curve for fertilizer in the short run is the input's

Correct Answer
verified

Correct Answer
verified

Firms will hire additional workers only as long as the value of their product is less than the relevant market wage.

Correct Answer
verified

The demand for ________ is a ʺderived demand.ʺ

Correct Answer
verified

If the supply of labor increases, which of the following events will occur?

Correct Answer
verified

Related to the Economics in Practice on page 221: Because land is demand determined, an acre of land in downtown Harlingen, Texas ________ an acre of land in downtown Chicago, Illinois.

Correct Answer
verified

The law of diminishing marginal returns explains why a marginal revenue product schedule

Correct Answer
verified

Correct Answer
verified

In general, the production and use of capital the productivity of labor and normally wages.

Correct Answer
verified

Exam 10: Input Demand: the Labor and Land Markets

The supply of land is perfectly elastic.

Correct AnswerverifiedShow Answer

If Tie-Dyed T-Shirts is currently employing labor so that the wage is greater than the marginal revenue product of labor, it must also be true that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is related to the additional revenues business owners expect to enjoy as a result of hiring the employee?

Correct AnswerverifiedShow Answer

Suppose the supply of labor schedule decreases in a perfectly competitive labor market while the market demand schedule remains unchanged. A profit-maximizing representative firm will

Correct AnswerverifiedShow Answer

The marginal revenue product of labor is

Correct AnswerverifiedShow Answer

Bonita's Braidworks hires workers to braid hair. The store sells the service for $25 per customer. The marginal revenue product of this storeʹs fifth worker is $50. The marginal product of the fifth worker is

Correct AnswerverifiedShow Answer

Related to the Economics in Practice on page 221: Because land is demand determined, an acre of land in downtown San Francisco, California ________ an acre of land in downtown Knoxville, Tennessee.

Correct AnswerverifiedShow Answer

Rent depends on what the potential users of the land are willing to pay for it.

Correct AnswerverifiedShow Answer

Liu's Potato Chips is a perfectly competitive firm currently employing 30 workers. The marginal revenue product of the 30th worker is $7.00 per hour. The wage rate is $8.00 per hour. To increase profits, this firm should

Correct AnswerverifiedShow Answer

Shifts in factor demand result from changes in

Correct AnswerverifiedShow Answer

Tony's Lawn Service uses only one variable input, fertilizer. The firm's demand curve for fertilizer in the short run is the input's

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Firms will hire additional workers only as long as the value of their product is less than the relevant market wage.

Correct AnswerverifiedShow Answer

The demand for ________ is a ʺderived demand.ʺ

Correct AnswerverifiedShow Answer

If the supply of labor increases, which of the following events will occur?

Correct AnswerverifiedShow Answer

Related to the Economics in Practice on page 221: Because land is demand determined, an acre of land in downtown Harlingen, Texas ________ an acre of land in downtown Chicago, Illinois.

Correct AnswerverifiedShow Answer

The law of diminishing marginal returns explains why a marginal revenue product schedule

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In general, the production and use of capital ________ the productivity of labor and normally ________ wages.

Correct AnswerverifiedShow Answer

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In general, the production and use of capital the productivity of labor and normally wages.

Correct Answer
verified