Question 1

Consider the market for university economics professors.Consider the following events. Event 1: Because of the dot.com bust of 2000 and the recession in the U.S.economy,the opportunity cost of going to graduate school to get a Ph.D.in economics - which one needs to become a professor of economics - decreased for many individuals.It generally takes about five years to get a Ph.D.in economics.
Event 2: There is an increasing number of students in primary and secondary U.S.schools.In 2005,the number of students entering college will have increased dramatically.Because of this,the output price of university economics professors' services will increase.
Holding all else constant,because of these two events,what likely will happen to the equilibrium wage of university economics professors in 2006?

Accepted Answer

A)  The equilibrium wage will increase.
B)  The equilibrium wage will decrease.
C)  The equilibrium wage will not change.
D)  It is not possible to determine what will happen to the equilibrium wage.E) B) and D)
F) A) and B)

Question 2

What causes the labor demand curve to shift? (i) 	changes in productivity
(ii) 	changes in wages
(iii) 	changes in output prices

Accepted Answer

A)  (i)  and (ii) 
B)  (ii)  and (iii) 
C)  (i)  and (iii) 
D)  All of the above are correct.E) A) and B)
F) A) and C)

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements is correct?

Accepted Answer

A)  The term "monopoly" refers to either a market with one buyer or to a market with one seller.
B)  The term "monopoly" refers to a market with one buyer, while the term "monopsony" refers to a market with one seller.
C)  The term "monopsony" refers to a market with one buyer, while the term "monopoly" refers to a market with one seller.
D)  The term "monopsony" refers to a market with either one buyer or one seller.E) A) and B)
F) None of the above

Question 5

Suppose that the wage paid to workers who detassel corn rises.What happens in the market for workers who weed soybean fields,given that workers who detassel corn can easily work weeding soybean fields?

Accepted Answer

A)  The demand curve for soybean workers increases.
B)  The demand curve for soybean workers decreases.
C)  The supply curve for soybean workers increases.
D)  The supply curve for soybean workers decreases.E) C) and D)
F) None of the above

Question 6

Suppose that workers who sort outgoing mail for a company use rubber bands to group mail.If there were an increase in the supply of rubber bands,which of the following would happen in the market for labor?

Accepted Answer

A)  Demand would decrease.
B)  Demand would increase.
C)  Supply would decrease.
D)  Supply would increase.E) B) and C)
F) A) and B)

Question 7

A profit-maximizing,competitive firm for which the marginal product of labor is diminishing also experiences

Accepted Answer

A)  a perfectly inelastic supply of labor.
B)  a perfectly elastic supply of labor.
C)  a downward-sloping demand for labor.
D)  an upward-sloping demand for labor.E) All of the above
F) A) and B)

Question 8

Capital income does not include income paid to households for the use of their capital.

Accepted Answer

A) True 
 B)False

Question 9

Because of diminishing returns,a factor in abundant supply has

Accepted Answer

A)  a high marginal product and a high rental price.
B)  a high marginal product and a low rental price.
C)  a low marginal product and a high rental price.
D)  a low marginal product and a low rental price.E) None of the above
F) A) and B)

Question 10

Suppose that due to flooding in Louisiana,100,000 farmers relocate from Louisiana to Texas.Assuming that land and labor are complements in a farming production function,what would happen to the wages earned by workers and the rents earned by landowners in Texas?

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) B) and D)
F) All of the above

Question 11

In the United States,technological advances help explain persistently rising employment in the face of rising wages.

Accepted Answer

A) True 
 B)False

Question 12

Owners of land are compensated according to the

Accepted Answer

A)  absolute level of production from the land.
B)  number of laborers the land can support.
C)  purchase price of the land stock.
D)  value of the marginal product of land.E) A) and D)
F) A) and C)

Question 13

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

Accepted Answer

A)  an increase in migrant workers
B)  an increase in the marginal productivity of workers
C)  a decrease in demand for the final product produced by labor
D)  a decrease in the labor supplyE) None of the above
F) A) and D)

Question 14

Explain how a firm values the contribution of workers to its profitability.Would a profit-maximizing competitive firm ever stop increasing employment as long as marginal product is rising? Explain your answer.

Accepted Answer

A firm values the contribution of a work...

Question 15

Because a firm's demand for a factor of production is derived from its decision to supply a good in the market,it is called a

Accepted Answer

A)  differentiated demand.
B)  secondary demand.
C)  derived demand.
D)  hybrid demand-supply.E) A) and D)
F) A) and C)

Question 16

Table 18-5
 
-Refer to Table 18-5.What is the value for the cell labeled BB?

Accepted Answer

A)  $300
B)  $200
C)  $100
D)  -$100E) A) and B)
F) None of the above

Question 17

Consider the market for university economics professors.Because of the dot.com bust of 2000 and the recession in the U.S.economy,the opportunity cost of going to graduate school to get a Ph.D.in economics decreased for many individuals.It generally takes about five years to get a Ph.D.in economics.Thus,holding all else constant,what likely will happen to the equilibrium wage for university economics professors in and around 2006?

Accepted Answer

A)  The equilibrium wage will increase.
B)  The equilibrium wage will decrease.
C)  The equilibrium wage will not change.
D)  It is not possible to determine what will happen to the equilibrium wage.E) None of the above
F) A) and D)

Question 18

Figure 18-3
 
-Refer to Figure 18-3.The shift of the labor supply curve from S₁ to S₂ could possibly be explained by

Accepted Answer

A)  technological progress.
B)  a change in the price of firms' output.
C)  a change in workers' attitudes toward the work-leisure tradeoff.
D)  All of the above are correct.E) All of the above
F) A) and D)

Question 19

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) A) and C)
F) B) and C)

Question 20

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

Exam 18: The Markets for the Factors of Production

Suppose that workers who sort outgoing mail for a company use rubber bands to group mail.If there were an increase in the supply of rubber bands,which of the following would happen in the market for labor?

Correct Answer
verified

Capital income does not include income paid to households for the use of their capital.

Correct Answer
verified

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

Correct Answer
verified

Because of diminishing returns,a factor in abundant supply has

Correct Answer
verified

In the United States,technological advances help explain persistently rising employment in the face of rising wages.

Correct Answer
verified

Explain how a firm values the contribution of workers to its profitability.Would a profit-maximizing competitive firm ever stop increasing employment as long as marginal product is rising? Explain your answer.

Correct Answer
verified
A firm values the contribution of a work...
View Answer

Because a firm's demand for a factor of production is derived from its decision to supply a good in the market,it is called a

Correct Answer
verified

Suppose that due to flooding in Louisiana,100,000 farmers relocate from Louisiana to Texas.Assuming that land and labor are complements in a farming production function,what would happen to the wages earned by workers and the rents earned by landowners in Texas?

Correct Answer
verified

What causes the labor demand curve to shift? (i) changes in productivity (ii) changes in wages (iii) changes in output prices

Correct Answer
verified

The marginal product of any factor of production depends on

Correct Answer
verified

Suppose that the wage paid to workers who detassel corn rises.What happens in the market for workers who weed soybean fields,given that workers who detassel corn can easily work weeding soybean fields?

Correct Answer
verified

A profit-maximizing,competitive firm for which the marginal product of labor is diminishing also experiences

Correct Answer
verified

Correct Answer
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Figure 18-3 -Refer to Figure 18-3.The shift of the labor supply curve from S₁ to S₂ could possibly be explained by

Correct Answer
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Which of the following statements is correct?

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

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Table 18-5 -Refer to Table 18-5.What is the value for the cell labeled BB?

Correct Answer
verified

Owners of land are compensated according to the

Correct Answer
verified

Exam 18: The Markets for the Factors of Production

Suppose that workers who sort outgoing mail for a company use rubber bands to group mail.If there were an increase in the supply of rubber bands,which of the following would happen in the market for labor?

Correct AnswerverifiedShow Answer

Capital income does not include income paid to households for the use of their capital.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Because of diminishing returns,a factor in abundant supply has

Correct AnswerverifiedShow Answer

In the United States,technological advances help explain persistently rising employment in the face of rising wages.

Correct AnswerverifiedShow Answer

Explain how a firm values the contribution of workers to its profitability.Would a profit-maximizing competitive firm ever stop increasing employment as long as marginal product is rising? Explain your answer.

Correct AnswerverifiedA firm values the contribution of a work...View AnswerShow Answer

Because a firm's demand for a factor of production is derived from its decision to supply a good in the market,it is called a

Correct AnswerverifiedShow Answer

Suppose that due to flooding in Louisiana,100,000 farmers relocate from Louisiana to Texas.Assuming that land and labor are complements in a farming production function,what would happen to the wages earned by workers and the rents earned by landowners in Texas?

Correct AnswerverifiedShow Answer

What causes the labor demand curve to shift? (i) changes in productivity (ii) changes in wages (iii) changes in output prices

Correct AnswerverifiedShow Answer

The marginal product of any factor of production depends on

Correct AnswerverifiedShow Answer

Suppose that the wage paid to workers who detassel corn rises.What happens in the market for workers who weed soybean fields,given that workers who detassel corn can easily work weeding soybean fields?

Correct AnswerverifiedShow Answer

A profit-maximizing,competitive firm for which the marginal product of labor is diminishing also experiences

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 18-3 -Refer to Figure 18-3.The shift of the labor supply curve from S₁ to S₂ could possibly be explained by

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 18-5 -Refer to Table 18-5.What is the value for the cell labeled BB?

Correct AnswerverifiedShow Answer

Owners of land are compensated according to the

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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A firm values the contribution of a work...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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