Question 1

Figure 18-5
The figure shows a particular profit­maximizing, competitive firm's value­of­marginal­product (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) A) and C)

Question 2

Fiona's hourly wage decreases from $10 to $8. Which of the following describes a consequence of the decrease in Fiona's wage?

Accepted Answer

A)   The opportunity cost of Fiona's leisure time has increased.
B)   Fiona may choose to work more hours due to the decrease in her wage.
C)   Fiona may choose to work fewer hours due to the decrease in her wage.
D)   Both b and c are correct.E) A) and D)
F) A) and B)

Question 3

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

Accepted Answer

A)   is horizontal.
B)   is vertical.
C)   is upward sloping.
D)   has a backward-sloping portion.E) A) and D)
F) A) and B)

Question 4

Diminishing marginal product is closely related to

Accepted Answer

A)   diminishing total cost.
B)   diminishing marginal cost.
C)   increasing price.
D)   increasing marginal cost.E) B) and D)
F) A) and B)

Question 5

Table 18-11
Consider the following daily production data for MadeFromScratch, Inc. MadeFromScratch sells cupcakes for $2 each and pays the workers a wage of $325 per day.
 
-Refer to Table 18-11. What is the value of the marginal product of the fifth worker?

Accepted Answer

A)   $120
B)   $240
C)   $300
D)   $1,600E) A) and D)
F) B) and C)

Question 6

Table 18-4
 
-Refer to Table 18-4. The price of output is

Accepted Answer

A)   $400.
B)   $3.
C)   $2.
D)   $1.E) A) and B)
F) All of the above

Question 7

To say that a firm is competitive in the labor market is to say that the firm can choose

Accepted Answer

A)   both the wage it pays its workers and the number of workers it hires.
B)   neither the wage it pays its workers nor the number of workers it hires.
C)   the wage it pays its workers, but it cannot choose how many workers to hire.
D)   the number of workers it hires, but it cannot choose the wage it pays its workers.E) A) and B)
F) A) and C)

Question 8

The negative slope of the value of marginal product curve is most easily explained by

Accepted Answer

A)   tight labor markets.
B)   a surplus of workers.
C)   diminishing marginal product.
D)   diminishing marginal cost.E) None of the above
F) B) and C)

Question 9

Stock dividends and interest payments are examples of factors of production.

Accepted Answer

A) True 
 B)False

Question 10

Profit maximization by firms ensures that the equilibrium wage always equals the value of the marginal product of capital.

Accepted Answer

A) True 
 B)False

Question 11

When we focus on labor as an input in the production process, we typically draw the production function by measuring the

Accepted Answer

A)   quantity of labor on the horizontal axis and the quantity of output on the vertical axis.
B)   quantity of labor on the horizontal axis and the marginal product of labor on the vertical axis.
C)   quantity of labor on the horizontal axis and the value of the marginal product of labor on the vertical axis.
D)   value of the marginal product of labor on the horizontal axis and the quantity of output on the vertical axis.E) B) and C)
F) B) and D)

Question 12

Competitive firms hire workers until the additional benefit they receive from the last worker hired is equal to (i)  the additional cost of that worker.
(ii)  the wage paid to that worker.
(iii)  the marginal product of that worker.

Accepted Answer

A)   (i)  only
B)   (iii)  only
C)   (i)  and (ii)  only
D)   (ii)  and (iii)  onlyE) A) and B)
F) All of the above

Question 13

As a result of a labeling mistake at the chemical factory, a farmer accidentally sprays weedkiller rather than fertilizer on half her land. As a result, she loses half of her productive farmland. If the property of diminishing returns applies to all factors of production, she should expect to see

Accepted Answer

A)   an increase in the marginal productivity of her remaining land and an increase in the marginal productivity of her labor.
B)   an increase in the marginal productivity of her remaining land and a decrease in the marginal productivity of her labor.
C)   a decrease in the marginal productivity of her remaining land and an increase in the marginal productivity of her labor.
D)   a decrease in the marginal productivity of her remaining land and a decrease in the marginal productivity of her labor.E) A) and B)
F) A) and C)

Question 14

Immigration of workers into the United States is often an important source of

Accepted Answer

A)   increases in the demand for labor in the United States.
B)   decreases in the demand for labor in the United States.
C)   increases in the supply of labor in the United States.
D)   decreases in the supply of labor in the United States.E) None of the above
F) A) and C)

Question 15

Which of the following is not correct?

Accepted Answer

A)   Earnings from capital may be paid to households in the form of dividends.
B)   Earnings from capital may be retained by firms to purchase additional capital.
C)   Firms may not pay out all of their earnings to households.
D)   Firms earn the highest profits when the owners of capital receive a value above the marginal product.E) A) and B)
F) All of the above

Question 16

The value of the marginal product is

Accepted Answer

A)   total revenue minus total cost.
B)   the change in total output divided by the change in an input.
C)   the marginal product of an input times the price of the output.
D)   total output divided by total inputs.E) A) and B)
F) C) and D)

Question 17

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 18

Suppose that a large rogue wave destroys the (thankfully unoccupied)  fleet of swordfish fishing boats docked in the Gloucester, Massachusetts harbor. What happens to the earnings of fishermen and women in Gloucester?

Accepted Answer

A)   The reduction in the supply of fishing boats increases the marginal productivities of Gloucester fishermen and women, which causes the equilibrium wage to fall.
B)   The reduction in the supply of fishing boats reduces the marginal productivities of Gloucester fishermen and women, which causes the equilibrium wage to fall.
C)   The reduction in the supply of fishing boats increases the marginal productivities of Gloucester fishermen and women, which causes the equilibrium wage to rise.
D)   The reduction in the supply of fishing boats reduces the marginal productivities of Gloucester fishermen and women, which causes the equilibrium wage to rise.E) A) and B)
F) A) and C)

Question 19

Capital is paid according to the value of its marginal product

Accepted Answer

A)   only if earnings from capital are paid to households in the form of dividends.
B)   only if earnings from capital are kept within firms as retained earnings.
C)   regardless of whether earnings from capital are paid to households in the form of dividends or whether those earnings are kept within firms as retained earnings.
D)   None of the above is correct; unlike labor, capital is a factor of production for which earnings are unrelated to the value of marginal product.E) B) and D)
F) C) and D)

Question 20

Over the last 60 or so years, the percentage of women with paid jobs has increased significantly. Is this increase in female employment associated with an increase in the demand for labor, or is it associated with an increase in the supply of labor?

Accepted Answer

The increase in fema...

Exam 18: The Markets for the Factors of Production

As a result of a labeling mistake at the chemical factory, a farmer accidentally sprays weedkiller rather than fertilizer on half her land. As a result, she loses half of her productive farmland. If the property of diminishing returns applies to all factors of production, she should expect to see

Correct Answer
verified

Fiona's hourly wage decreases from $10 to $8. Which of the following describes a consequence of the decrease in Fiona's wage?

Correct Answer
verified

Stock dividends and interest payments are examples of factors of production.

Correct Answer
verified

Immigration of workers into the United States is often an important source of

Correct Answer
verified

Capital is paid according to the value of its marginal product

Correct Answer
verified

Competitive firms hire workers until the additional benefit they receive from the last worker hired is equal to (i) the additional cost of that worker. (ii) the wage paid to that worker. (iii) the marginal product of that worker.

Correct Answer
verified

To say that a firm is competitive in the labor market is to say that the firm can choose

Correct Answer
verified

Correct Answer
verified

Suppose that a large rogue wave destroys the (thankfully unoccupied) fleet of swordfish fishing boats docked in the Gloucester, Massachusetts harbor. What happens to the earnings of fishermen and women in Gloucester?

Correct Answer
verified

The value of the marginal product is

Correct Answer
verified

When we focus on labor as an input in the production process, we typically draw the production function by measuring the

Correct Answer
verified

Table 18-11 Consider the following daily production data for MadeFromScratch, Inc. MadeFromScratch sells cupcakes for $2 each and pays the workers a wage of $325 per day. -Refer to Table 18-11. What is the value of the marginal product of the fifth worker?

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

The negative slope of the value of marginal product curve is most easily explained by

Correct Answer
verified

Over the last 60 or so years, the percentage of women with paid jobs has increased significantly. Is this increase in female employment associated with an increase in the demand for labor, or is it associated with an increase in the supply of labor?

Correct Answer
verified
The increase in fema...
View Answer

Diminishing marginal product is closely related to

Correct Answer
verified

Which of the following is not correct?

Correct Answer
verified

Profit maximization by firms ensures that the equilibrium wage always equals the value of the marginal product of capital.

Correct Answer
verified

Table 18-4 -Refer to Table 18-4. The price of output is

Correct Answer
verified

Correct Answer
verified

Exam 18: The Markets for the Factors of Production

As a result of a labeling mistake at the chemical factory, a farmer accidentally sprays weedkiller rather than fertilizer on half her land. As a result, she loses half of her productive farmland. If the property of diminishing returns applies to all factors of production, she should expect to see

Correct AnswerverifiedShow Answer

Fiona's hourly wage decreases from $10 to $8. Which of the following describes a consequence of the decrease in Fiona's wage?

Correct AnswerverifiedShow Answer

Stock dividends and interest payments are examples of factors of production.

Correct AnswerverifiedShow Answer

Immigration of workers into the United States is often an important source of

Correct AnswerverifiedShow Answer

Capital is paid according to the value of its marginal product

Correct AnswerverifiedShow Answer

Competitive firms hire workers until the additional benefit they receive from the last worker hired is equal to (i) the additional cost of that worker. (ii) the wage paid to that worker. (iii) the marginal product of that worker.

Correct AnswerverifiedShow Answer

To say that a firm is competitive in the labor market is to say that the firm can choose

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that a large rogue wave destroys the (thankfully unoccupied) fleet of swordfish fishing boats docked in the Gloucester, Massachusetts harbor. What happens to the earnings of fishermen and women in Gloucester?

Correct AnswerverifiedShow Answer

The value of the marginal product is

Correct AnswerverifiedShow Answer

When we focus on labor as an input in the production process, we typically draw the production function by measuring the

Correct AnswerverifiedShow Answer

Table 18-11 Consider the following daily production data for MadeFromScratch, Inc. MadeFromScratch sells cupcakes for $2 each and pays the workers a wage of $325 per day. -Refer to Table 18-11. What is the value of the marginal product of the fifth worker?

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

The negative slope of the value of marginal product curve is most easily explained by

Correct AnswerverifiedShow Answer

Over the last 60 or so years, the percentage of women with paid jobs has increased significantly. Is this increase in female employment associated with an increase in the demand for labor, or is it associated with an increase in the supply of labor?

Correct AnswerverifiedThe increase in fema...View AnswerShow Answer

Diminishing marginal product is closely related to

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedShow Answer

Profit maximization by firms ensures that the equilibrium wage always equals the value of the marginal product of capital.

Correct AnswerverifiedShow Answer

Table 18-4 -Refer to Table 18-4. The price of output is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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The increase in fema...
View Answer

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