Question 1

The term "factor market" applies to the market for

Accepted Answer

A)   labor.
B)   capital.
C)   land.
D)   All of the above are correct.E) B) and C)
F) A) and C)

Question 2

Changes in supply and demand in the labor market will cause changes in wages.

Accepted Answer

A) True 
 B)False

Question 3

The purchase price of capital is

Accepted Answer

A)   the value of the capital to the firm.
B)   always less than the rental price.
C)   the price received from the flow of some capital services.
D)   the price a person pays to own that factor of production indefinitely.E) A) and B)
F) C) and D)

Question 4

A sandwich shop hires workers to make sandwiches and sell them to customers.If the firm is competitive in both the market for sandwiches and in the market for sandwich-makers,then it has

Accepted Answer

A)   some control over both the price of sandwiches and the wage it pays to its workers.
B)   no control over the price of sandwiches but some control over the wage it pays to its workers.
C)   some control over the price of sandwiches but no control over the wage it pays to its workers.
D)   no control over either the price of sandwiches or the wage it pays to its workers.E) B) and D)
F) A) and C)

Question 5

Which of the following events could increase the demand for labor?

Accepted Answer

A)   A decrease in output price
B)   A decrease in the amount of capital available for workers to use
C)   An increase in the marginal productivity of workers
D)   A decrease in the wage paid to workersE) A) and B)
F) None of the above

Question 6

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

Accepted Answer

A)   always rising.
B)   falling only when marginal product is rising.
C)   the labor supply curve.
D)   the labor demand curve.E) A) and B)
F) B) and D)

Question 7

Suppose that a toxic waste spill renders half of the land in New Jersey uninhabitable.Assuming that land and labor are complements in the production function,what would happen to the wages earned by workers and rents earned by landowners?

Accepted Answer

A)   Both wages and rents would increase.
B)   Both wages and rents would decrease.
C)   Wages would increase,and rents would decrease.
D)   Wages would decrease,and rents would increase.E) A) and B)
F) None of the above

Question 8

Table 18-10
Consider the following daily production data for Caroline's Cookies,Inc.Caroline's sells cookies for $2.50 each and pays the workers a wage of $325 per day.
 
-Refer to Table 18-10.Assume that Caroline's Cookies is a competitive,profit-maximizing firm.If the market price of cookies decreases from $2.50 to $2.00,how many workers would the firm then hire?

Accepted Answer

A)   2 workers
B)   3 workers
C)   4 workers
D)   5 workersE) A) and B)
F) A) and C)

Question 9

The rental price of capital is

Accepted Answer

A)   determined outside the realm of factor markets.
B)   the price paid to use capital for a limited time period.
C)   the price paid for ownership of the capital.
D)   always more than the purchase price.E) A) and B)
F) None of the above

Question 10

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

Accepted Answer

A)   an increase in the wage paid to workers in a competing market
B)   labor-saving technology
C)   a change in worker tastes so that workers want to retire later
D)   an increase in immigrationE) All of the above
F) None of the above

Question 11

A competitive firm sells its output for $25 per unit.The marginal product of the 10th worker is 10 units of output per day;the marginal product of the 11th worker is 8 units of output per day.The firm pays its workers a wage of $160 per day.For the 10th worker,the value of the marginal product of labor is

Accepted Answer

A)   $50.
B)   $250.
C)   $300.
D)   $1,500.E) None of the above
F) A) and C)

Question 12

Table 18-8
The following table shows the production function for a particular business.The numbers represent the various labor and output combinations the firm may choose for its output on a daily basis.
 
-Refer to Table 18-8.What is the marginal product of the third unit of labor?

Accepted Answer

A)   40 units
B)   50 units
C)   60 units
D)   180 unitsE) A) and D)
F) B) and C)

Question 13

Table 18-1.The table displays data for a small,competitive,profit-maximizing firm that produces and sells envelopes.The time frame is one week.
 
-Refer to Table 18-1.Suppose the firm sells each box of envelopes that it produces for $6.What is the marginal profit of the fourth worker?

Accepted Answer

A)   $-132
B)   $-96
C)   $132
D)   $504E) All of the above
F) A) and C)

Question 14

Suppose a shift of the labor-demand curve results in an increase of $5 in the equilibrium wage.How does this shift affect the value of the marginal product of labor?

Accepted Answer

The shift must incre...

Question 15

Your best friend receives a pay raise at her part-time job from $8 to $10 per hour.She used to work 20 hours per week,but now she decides to work 16 hours per week in order to spend more time studying economics.For this price range,her labor supply curve is

Accepted Answer

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

Question 16

Figure 18-6 
-Refer to Figure 18-6.The graph above illustrates the market for bakers who make homemade breads and breakfast pastries in Northern Minnesota.If Northern Minnesota experiences an increase in immigration from Canada,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) A) and B)
F) None of the above

Question 17

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 18

An increase in a product's price will shift the labor demand curve for workers who produce that product to the left.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following could increase the supply of labor in the market for cranberry pickers? (i) 
A change in the preferences of women toward full-time work
(ii) 
An increase in the output price
(iii) 
An increase in the wages paid to apple pickers
(iv) 
A decrease in the wages paid to apple pickers

Accepted Answer

A)   (ii) only
B)   (i) , (ii) ,and (iv) only
C)   (i) and (iv) only
D)   (ii) and (iii) onlyE) A) and B)
F) C) and D)

Question 20

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) B) and D)
F) C) and D)

Exam 18: The Market for the Factors of Production

Your best friend receives a pay raise at her part-time job from $8 to $10 per hour.She used to work 20 hours per week,but now she decides to work 16 hours per week in order to spend more time studying economics.For this price range,her labor supply curve is

Correct Answer
verified

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
verified

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

Correct Answer
verified

The term "factor market" applies to the market for

Correct Answer
verified

Correct Answer
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The rental price of capital is

Correct Answer
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Which of the following events could increase the demand for labor?

Correct Answer
verified

Table 18-1.The table displays data for a small,competitive,profit-maximizing firm that produces and sells envelopes.The time frame is one week. -Refer to Table 18-1.Suppose the firm sells each box of envelopes that it produces for $6.What is the marginal profit of the fourth worker?

Correct Answer
verified

Changes in supply and demand in the labor market will cause changes in wages.

Correct Answer
verified

A sandwich shop hires workers to make sandwiches and sell them to customers.If the firm is competitive in both the market for sandwiches and in the market for sandwich-makers,then it has

Correct Answer
verified

Table 18-8 The following table shows the production function for a particular business.The numbers represent the various labor and output combinations the firm may choose for its output on a daily basis. -Refer to Table 18-8.What is the marginal product of the third unit of labor?

Correct Answer
verified

Which of the following could increase the supply of labor in the market for cranberry pickers? (i) A change in the preferences of women toward full-time work (ii) An increase in the output price (iii) An increase in the wages paid to apple pickers (iv) A decrease in the wages paid to apple pickers

Correct Answer
verified

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

Correct Answer
verified

An increase in a product's price will shift the labor demand curve for workers who produce that product to the left.

Correct Answer
verified

Correct Answer
verified

Suppose that a toxic waste spill renders half of the land in New Jersey uninhabitable.Assuming that land and labor are complements in the production function,what would happen to the wages earned by workers and rents earned by landowners?

Correct Answer
verified

Figure 18-6 -Refer to Figure 18-6.The graph above illustrates the market for bakers who make homemade breads and breakfast pastries in Northern Minnesota.If Northern Minnesota experiences an increase in immigration from Canada,what happens in the market for bakers?

Correct Answer
verified

Suppose a shift of the labor-demand curve results in an increase of $5 in the equilibrium wage.How does this shift affect the value of the marginal product of labor?

Correct Answer
verified
The shift must incre...
View Answer

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

Correct Answer
verified

The purchase price of capital is

Correct Answer
verified

Exam 18: The Market for the Factors of Production

Your best friend receives a pay raise at her part-time job from $8 to $10 per hour.She used to work 20 hours per week,but now she decides to work 16 hours per week in order to spend more time studying economics.For this price range,her labor supply curve is

Correct AnswerverifiedShow Answer

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

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

Correct AnswerverifiedShow Answer

The term "factor market" applies to the market for

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The rental price of capital is

Correct AnswerverifiedShow Answer

Which of the following events could increase the demand for labor?

Correct AnswerverifiedShow Answer

Table 18-1.The table displays data for a small,competitive,profit-maximizing firm that produces and sells envelopes.The time frame is one week. -Refer to Table 18-1.Suppose the firm sells each box of envelopes that it produces for $6.What is the marginal profit of the fourth worker?

Correct AnswerverifiedShow Answer

Changes in supply and demand in the labor market will cause changes in wages.

Correct AnswerverifiedShow Answer

A sandwich shop hires workers to make sandwiches and sell them to customers.If the firm is competitive in both the market for sandwiches and in the market for sandwich-makers,then it has

Correct AnswerverifiedShow Answer

Table 18-8 The following table shows the production function for a particular business.The numbers represent the various labor and output combinations the firm may choose for its output on a daily basis. -Refer to Table 18-8.What is the marginal product of the third unit of labor?

Correct AnswerverifiedShow Answer

Which of the following could increase the supply of labor in the market for cranberry pickers? (i) A change in the preferences of women toward full-time work (ii) An increase in the output price (iii) An increase in the wages paid to apple pickers (iv) A decrease in the wages paid to apple pickers

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An increase in a product's price will shift the labor demand curve for workers who produce that product to the left.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that a toxic waste spill renders half of the land in New Jersey uninhabitable.Assuming that land and labor are complements in the production function,what would happen to the wages earned by workers and rents earned by landowners?

Correct AnswerverifiedShow Answer

Figure 18-6 -Refer to Figure 18-6.The graph above illustrates the market for bakers who make homemade breads and breakfast pastries in Northern Minnesota.If Northern Minnesota experiences an increase in immigration from Canada,what happens in the market for bakers?

Correct AnswerverifiedShow Answer

Suppose a shift of the labor-demand curve results in an increase of $5 in the equilibrium wage.How does this shift affect the value of the marginal product of labor?

Correct AnswerverifiedThe shift must incre...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

The purchase price of capital is

Correct AnswerverifiedShow Answer

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The shift must incre...
View Answer

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