Question 1

Which of the following is not correct?

Accepted Answer

A)   In a labor market, the wage adjusts to balance the supply and demand for labor.
B)   A profit-maximizing firm hires workers so long as the wage rate exceeds the value of the marginal product of labor.
C)   Any event that changes the supply or demand for labor must change the equilibrium wage.
D)   Any event that changes the supply or demand for labor must change the value of the marginal product.E) A) and B)
F) None of the above

Question 2

Technological advances can cause the labor demand curve to shift.

Accepted Answer

A) True 
 B)False

Question 3

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 marginal profit of the fourth worker?

Accepted Answer

A)   $280
B)   $25
C)   -$5
D)   -$45E) B) and C)
F) A) and D)

Question 4

Suppose that the market for labor is initially in equilibrium. A decrease 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) C) and D)
F) A) and B)

Question 5

In 2012, the total income of all U.S. residents was about

Accepted Answer

A)   $10 billion.
B)   $15 billion.
C)   $10 trillion.
D)   $15 trillion.E) None of the above
F) B) and D)

Question 6

Table 18-2 
-Refer to Table 18-2. The table shows the number of bracelets that can be assembled per week by various numbers of workers. If the price per bracelet in a perfectly competitive product market is $10, how many workers would the firm employ if the weekly wage rate is $375?

Accepted Answer

A)   2
B)   3
C)   4
D)   5E) B) and C)
F) A) and B)

Question 7

Assume the market for handkerchiefs is competitive. A new invention leads to labor-augmenting technological progress in the production of handkerchiefs. This development

Accepted Answer

A)   decreases the demand for workers who make handkerchiefs and decreases their equilibrium wage.
B)   increases the demand for workers who make handkerchiefs and increases their equilibrium wage.
C)   increases the supply of workers who make handkerchiefs and decreases their equilibrium wage.
D)   increases the supply of workers who make handkerchiefs and increases their equilibrium wage.E) C) and D)
F) A) and B)

Question 8

Labor-augmenting technological advances increase the marginal productivity of labor.

Accepted Answer

A) True 
 B)False

Question 9

Scenario 18-5
Suppose that workers from northern Minnesota, North Dakota, and Montana decide to emigrate to southern Canada.
-Refer to Scenario 18-5. In the labor market in the northern United States, the equilibrium wage

Accepted Answer

A)   and the equilibrium quantity of labor will rise.
B)   and the equilibrium quantity of labor will fall.
C)   will rise, and the equilibrium quantity of labor will fall.
D)   will fall, and the equilibrium quantity of labor will rise.E) None of the above
F) All of the above

Question 10

Table 18-12
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 18-12. Let Q represent the number of boxes of envelopes produced per week. One point on this firm's production function is

Accepted Answer

A)   (L = 1, Q = 106) .
B)   (L = 2, Q = 92) .
C)   (L = 2, Q = 106) .
D)   (L = 2, Q = 240) .E) A) and B)
F) C) and D)

Question 11

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

Question 12

An increase in immigration will lower the equilibrium wage, all else held constant.

Accepted Answer

A) True 
 B)False

Question 13

The substantial increases in output per worker over the last 50 or so years are largely explained by .

Accepted Answer

technologi...

Question 14

Along the vertical axis of the production function we typically measure

Accepted Answer

A)   revenue.
B)   the marginal product of the input.
C)   the quantity of input.
D)   the quantity of output.E) None of the above
F) A) and B)

Question 15

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) B) and C)

Question 16

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) None of the above
F) C) and D)

Question 17

Figure 18-11 
-Refer to Figure 18-11. What is measured on the vertical axis of the graph?

Accepted Answer

A)   the rate of technological progress
B)   wages paid to workers in markets where capital goods are produced
C)   wages paid to workers in markets where capital goods are not produced
D)   the rental price of capitalE) B) and C)
F) A) and B)

Question 18

The equilibrium rental income paid to the owners of capital at any point in time equals the

Accepted Answer

A)   marginal product of capital.
B)   value of the marginal product of capital.
C)   percentage of profits paid out to stockholders in the form of dividends.
D)   equilibrium purchase price of capital.E) C) and D)
F) None of the above

Question 19

Which of the following is not an example of a factor of production?

Accepted Answer

A)   labor
B)   interest
C)   land
D)   capitalE) None of the above
F) A) and D)

Question 20

The U.S. economy experienced a significant slowdown in productivity growth that lasted from about 1973 to about __________.

Accepted Answer

The answer of The U.S. economy experienced a significant slowdown...

Exam 18: The Markets for the Factors of Production

Table 18-12 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 18-12. Let Q represent the number of boxes of envelopes produced per week. One point on this firm's production function is

Correct AnswerverifiedShow Answer

Table 18-2 -Refer to Table 18-2. The table shows the number of bracelets that can be assembled per week by various numbers of workers. If the price per bracelet in a perfectly competitive product market is $10, how many workers would the firm employ if the weekly wage rate is $375?

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

The U.S. economy experienced a significant slowdown in productivity growth that lasted from about 1973 to about __________.

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedShow Answer

The substantial increases in output per worker over the last 50 or so years are largely explained by .

Correct Answerverifiedtechnologi...View AnswerShow Answer

Scenario 18-5 Suppose that workers from northern Minnesota, North Dakota, and Montana decide to emigrate to southern Canada. -Refer to Scenario 18-5. In the labor market in the northern United States, the equilibrium wage

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

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

In 2012, the total income of all U.S. residents was about

Correct AnswerverifiedShow Answer

Assume the market for handkerchiefs is competitive. A new invention leads to labor-augmenting technological progress in the production of handkerchiefs. This development

Correct AnswerverifiedShow Answer

Labor-augmenting technological advances increase the marginal productivity of labor.

Correct AnswerverifiedShow Answer

The equilibrium rental income paid to the owners of capital at any point in time equals the

Correct AnswerverifiedShow Answer

Figure 18-11 -Refer to Figure 18-11. What is measured on the vertical axis of the graph?

Correct AnswerverifiedShow Answer

Which of the following is not an example of a factor of production?

Correct AnswerverifiedShow Answer

Along the vertical axis of the production function we typically measure

Correct AnswerverifiedShow Answer

An increase in immigration will lower the equilibrium wage, all else held constant.

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 marginal profit of the fourth worker?

Correct AnswerverifiedShow Answer

Technological advances can cause the labor demand curve to shift.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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