Question 1

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) B) and C)

Question 2

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 $11 per hour. During the summer, he drives a tour bus around the ski resort, earning $13 per hour.
-Refer to Scenario 18-3.If Sam takes fewer hours of leisure in the summer than in the winter,we can assume that his labor supply curve is

Accepted Answer

A)   horizontal.
B)   vertical.
C)   upward sloping.
D)   backward sloping.E) A) and D)
F) A) and B)

Question 3

When a firm hires labor up to the point where the wage is equal to the value of the marginal product of labor,it is

Accepted Answer

A)   minimizing labor costs.
B)   guaranteeing that labor costs do not exceed fixed costs.
C)   maximizing the number of workers it can hire and still experience a positive profit.
D)   maximizing profit.E) C) and D)
F) A) and B)

Question 4

Consider the labor market for computer programmers.Because of the dot.com boom in the late 1990s,a lot of workers went to school to learn how to write computer code for one of thousands of new dot.com companies.However,when these computer programming students graduated the dot.com bust took place.The dot.com bust decreased the value of the marginal product of computer programmers.Holding all else equal what effect did these two circumstances have on the equilibrium quantity in the labor market for computer programmers?

Accepted Answer

A)   The equilibrium quantity of labor increased.
B)   The equilibrium quantity of labor decreased.
C)   The equilibrium quantity of labor did not change.
D)   It is not possible to determine what happens to the equilibrium quantity of labor.E) B) and D)
F) A) and B)

Question 5

Scenario 18-4
In 1997, Albania experienced a civil war. The civil unrest sent thousands of refugees across the Adriatic Sea to Italy where they sought relief from the fighting.
-Refer to Scenario 18-4.The Albanian civil war probably affected Italian labor markets by causing

Accepted Answer

A)   total employment in Italy to decrease.
B)   wages in Italy to increase.
C)   the marginal product of labor in Italy to decrease.
D)   All of the above are correct.E) All of the above
F) B) and D)

Question 6

Suppose that the labor market for high school chemistry teachers is initially in equilibrium.Chemistry teachers use laboratory chemicals as an important part of their jobs.New environmental regulations ban the use of many chemicals,which means that fewer laboratory chemicals are available for high school chemistry teachers to use in their jobs.In the market for high school chemistry teachers,the equilibrium wage

Accepted Answer

A)   increases because the marginal productivity of high school chemistry teachers increases.
B)   decreases because the marginal productivity of high school chemistry teachers decreases.
C)   increases because the supply of high school chemistry teachers increases.
D)   decreases because the supply of high school chemistry teachers decreases.E) A) and B)
F) B) and C)

Question 7

Because of diminishing returns,a factor in abundant supply has a

Accepted Answer

A)   high marginal product and a high rental price.
B)   high marginal product and a low rental price.
C)   low marginal product and a high rental price.
D)   low marginal product and a low rental price.E) A) and D)
F) A) and C)

Question 8

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.Based on the given information,it is likely that Gertrude's firm has

Accepted Answer

A)   some influence over the wages paid to crew members but no influence over the price of salmon.
B)   some influence over the price of salmon but no influence over the wages paid to crew members.
C)   some influence over both the price of salmon and the wages paid to crew members.
D)   no influence over either the price of salmon or the wages paid to crew members.E) All of the above
F) A) and B)

Question 9

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.Assume that two points on the firm's production function are (L = 2,Q = 180) and (L = 3,Q = 228) ,where L = number of workers and Q = quantity of output.The firm pays its workers $120 per day.The firm's non-labor costs are fixed,and they amount to $250 per day.We can conclude that

Accepted Answer

A)   the firm sells its output for $12 per unit.
B)   if the firm is currently employing 2 workers per day, then profit could be increased by $48 per day if a third worker is hired.
C)   the marginal cost per unit of output is $2.50 when output is increased from 180 units per day to 228 units per day.
D)   the firm's maximum profit occurs when it hires 3 workers per day.E) A) and B)
F) None of the above

Question 10

For a profit-maximizing,competitive firm,the value of the marginal product of labor

Accepted Answer

A)   increases when the price of output decreases.
B)   is the firm's demand for labor.
C)   equals the marginal product of labor divided by the wage rate.
D)   All of the above are correct.E) A) and C)
F) A) and B)

Question 11

Figure 18-4
 
-Refer to Figure 18-4.The graph above illustrates the market for bakers who make homemade breads and breakfast pastries.If the price of breakfast pastries falls,what happens in the market for bakers?

Accepted Answer

A)   Demand increases from D1 to D2.
B)   Demand decreases from D2 to D1.
C)   Supply increases from S1 to S2.
D)   Supply decreases from S2 to S1.E) C) and D)
F) All of the above

Question 12

A recent flood in the Midwest has destroyed much of the farmland that lies in fertile regions near the rivers.Describe the effect of the flood on the marginal productivity of land,labor,and capital.How would the flood affect the price of inputs? Provide some examples.

Accepted Answer

The flood would increase the marginal pr...

Question 13

When we focus on the firm as a supplier of a good or a service,we assume that the firm is a profit maximizer.When we focus on the firm as a demander of labor,we assume that the firm's objective is to

Accepted Answer

A)   minimize wages.
B)   minimize variable costs.
C)   maximize the number of workers hired.
D)   maximize profit.E) A) and D)
F) B) and D)

Question 14

Scenario 18-4
In 1997, Albania experienced a civil war. The civil unrest sent thousands of refugees across the Adriatic Sea to Italy where they sought relief from the fighting.
-Refer to Scenario 18-4.The Italian government started to patrol the Adriatic Sea and had a policy of returning all refugees to Albania.This policy would contribute to

Accepted Answer

A)   an increase in the supply of labor in Italy.
B)   an increase in the demand labor in Italy.
C)   a decrease in the demand for labor in Italy.
D)   preventing an increase in the supply of labor in Italy.E) B) and C)
F) All of the above

Question 15

When a competitive firm maximizes profit,it will hire workers up to the point where the

Accepted Answer

A)   marginal product of labor is equal to the product price.
B)   marginal product of labor is equal to the wage.
C)   value of the marginal product of labor is equal to the product price.
D)   value of the marginal product of labor is equal to the wage.E) B) and D)
F) A) and B)

Question 16

Figure 18-7
 
-Refer to Figure 18-7.Which of the following would shift the labor supply curve from S₁ to S₂?

Accepted Answer

A)   a change in workers' attitudes toward the work-leisure tradeoff
B)   decreases in wages in other labor markets
C)   immigration of workers into the region or country
D)   All of the above are correct.E) C) and D)
F) All of the above

Question 17

Which of the following events would lead to an increase in the supply of labor?

Accepted Answer

A)   The price of a firm's product increases.
B)   A country experiences an increase in immigrant labor.
C)   The development of a new labor-augmenting technology.
D)   All of the above are correct.E) None of the above
F) C) and D)

Question 18

Which of the following is an example of a firm's derived demand?

Accepted Answer

A)   Workers with higher levels of education earn more, on average, than workers with lower levels of education.
B)   Factors that decrease the demand for labor will decrease the equilibrium wage.
C)   A tractor manufacturer's demand for assembly-line workers is inseparably linked to the supply of tractors.
D)   All of the above are correct.E) A) and C)
F) A) and B)

Question 19

Suppose that the market for labor is initially in equilibrium.An increase in the price of output will cause the equilibrium wage

Accepted Answer

A)   and the equilibrium quantity of labor to rise.
B)   and the equilibrium quantity of labor to fall.
C)   to rise and the equilibrium quantity of labor to fall.
D)   to fall and the equilibrium quantity of labor to rise.E) B) and D)
F) B) and C)

Question 20

The opportunity cost of leisure is impossible to measure because we cannot measure leisure time in dollars.

Accepted Answer

A) True 
 B)False

Exam 18: The Market For the Factors of Production.

Correct Answer
verified

Which of the following events would lead to an increase in the supply of labor?

Correct Answer
verified

Because of diminishing returns,a factor in abundant supply has a

Correct Answer
verified

The opportunity cost of leisure is impossible to measure because we cannot measure leisure time in dollars.

Correct Answer
verified

When a firm hires labor up to the point where the wage is equal to the value of the marginal product of labor,it is

Correct Answer
verified

Correct Answer
verified

Diminishing marginal product occurs when

Correct Answer
verified

When a competitive firm maximizes profit,it will hire workers up to the point where the

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Suppose that the market for labor is initially in equilibrium.An increase in the price of output will cause the equilibrium wage

Correct Answer
verified

Scenario 18-4 In 1997, Albania experienced a civil war. The civil unrest sent thousands of refugees across the Adriatic Sea to Italy where they sought relief from the fighting. -Refer to Scenario 18-4.The Albanian civil war probably affected Italian labor markets by causing

Correct Answer
verified

When we focus on the firm as a supplier of a good or a service,we assume that the firm is a profit maximizer.When we focus on the firm as a demander of labor,we assume that the firm's objective is to

Correct Answer
verified

Figure 18-4 -Refer to Figure 18-4.The graph above illustrates the market for bakers who make homemade breads and breakfast pastries.If the price of breakfast pastries falls,what happens in the market for bakers?

Correct Answer
verified

A recent flood in the Midwest has destroyed much of the farmland that lies in fertile regions near the rivers.Describe the effect of the flood on the marginal productivity of land,labor,and capital.How would the flood affect the price of inputs? Provide some examples.

Correct Answer
verified
The flood would increase the marginal pr...
View Answer

Figure 18-7 -Refer to Figure 18-7.Which of the following would shift the labor supply curve from S₁ to S₂?

Correct Answer
verified

Correct Answer
verified

Which of the following is an example of a firm's derived demand?

Correct Answer
verified

Correct Answer
verified

For a profit-maximizing,competitive firm,the value of the marginal product of labor

Correct Answer
verified

Exam 18: The Market For the Factors of Production.

Correct AnswerverifiedShow Answer

Which of the following events would lead to an increase in the supply of labor?

Correct AnswerverifiedShow Answer

Because of diminishing returns,a factor in abundant supply has a

Correct AnswerverifiedShow Answer

The opportunity cost of leisure is impossible to measure because we cannot measure leisure time in dollars.

Correct AnswerverifiedShow Answer

When a firm hires labor up to the point where the wage is equal to the value of the marginal product of labor,it is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Diminishing marginal product occurs when

Correct AnswerverifiedShow Answer

When a competitive firm maximizes profit,it will hire workers up to the point where the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that the market for labor is initially in equilibrium.An increase in the price of output will cause the equilibrium wage

Correct AnswerverifiedShow Answer

Scenario 18-4 In 1997, Albania experienced a civil war. The civil unrest sent thousands of refugees across the Adriatic Sea to Italy where they sought relief from the fighting. -Refer to Scenario 18-4.The Albanian civil war probably affected Italian labor markets by causing

Correct AnswerverifiedShow Answer

When we focus on the firm as a supplier of a good or a service,we assume that the firm is a profit maximizer.When we focus on the firm as a demander of labor,we assume that the firm's objective is to

Correct AnswerverifiedShow Answer

Figure 18-4 -Refer to Figure 18-4.The graph above illustrates the market for bakers who make homemade breads and breakfast pastries.If the price of breakfast pastries falls,what happens in the market for bakers?

Correct AnswerverifiedShow Answer

A recent flood in the Midwest has destroyed much of the farmland that lies in fertile regions near the rivers.Describe the effect of the flood on the marginal productivity of land,labor,and capital.How would the flood affect the price of inputs? Provide some examples.

Correct AnswerverifiedThe flood would increase the marginal pr...View AnswerShow Answer

Figure 18-7 -Refer to Figure 18-7.Which of the following would shift the labor supply curve from S₁ to S₂?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is an example of a firm's derived demand?

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Correct AnswerverifiedShow Answer

For a profit-maximizing,competitive firm,the value of the marginal product of labor

Correct AnswerverifiedShow Answer

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The flood would increase the marginal pr...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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