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Exam 18: The Markets for the Factors of Production

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Question 271

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Scenario 18-1 Harry owns a snow-removal business. He hires workers to shovel driveways for him during the winter. The first worker he hires can shovel twelve driveways in one day. When Harry hires two workers, they can shovel a total of 22 driveways in one day. When Harry hires a third worker, he shovels an additional eight driveways in one day. -Refer to Scenario 18-1. Suppose that Harry pays each worker $80 per day and that he charges each customer $20 to have his driveway shoveled. What is the value of the marginal product of labor for the second worker?

A) $200
B) $240
C) $800
D) $960

E) A) and D)
F) None of the above

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Question 272

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Figure 18-4 The graph below illustrates the market for nurses who work in doctors' offices. -Refer to Figure 18-4. Each August many high school and college students visit a doctor's office to have a sports physical. If the price of sports physicals falls, what happens in the market for nurses?

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

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Question 273

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Figure 18-4 The graph below illustrates the market for nurses who work in doctors' offices. -Refer to Figure 18-4. Each August many students entering college for the first time visit a doctor's office to have an MMR booster vaccine. If a new labor-augmenting technology exists that allows nurses to administer the vaccine more quickly and accurately, what happens in the market for nurses?

Figure 18-1. The figure shows the relationship between the number of mechanics hired and the number of car repairs performed per day at a car-repair shop. -Refer to Figure 18-1. What is the marginal product of the second mechanic?

In order to study labor markets more easily, we make which of the following assumptions about firms? (i) Firms sell their products in competitive markets. (ii) Firms buy their inputs in competitive markets. (iii) Firms maximize profits. (iv) Firms maximize revenues.

Your college roommate receives a pay raise at her part-time job from $9 to $11 per hour. She used to work 10 hours per week, but now she decides to work 15 hours per week. For this price range, her labor supply curve is

Christopher owns and manages a small tea shop. We assume that Christopher (i) does not directly care about the quantity of tea that he sells. (ii) does not directly care about the number of workers that he hires. (iii) wants to maximize the quantity of tea that he sells. (iv) wants to minimize the number of workers that he hires. (v) wants to maximize profits.

When deciding whether to hire an additional worker, firms need only consider how the additional worker would affect

In order to calculate the value of the marginal product of labor, a manager must know the marginal product of labor and the wage rate of the worker.

Suppose the prices of agricultural products such as corn and soybeans increase. What is the effect of these price increases on the marginal product of the 1,000^th farm worker? What is the effect on the value of the marginal product of the 1,000^th farm worker?

Labor supply curves are always upward sloping.

Oil field workers' wages are directly tied to the world price of oil.

Figure 18-1 On the graph, L represents the quantity of labor and Q represents the quantity of output per week. -Refer to Figure 18-1. Suppose the firm sells its output for $10 per unit, and it pays each of its workers $400 per week. When the number of workers increases from 4 to 5, the

A profit-maximizing competitive firm will hire workers up to the point at which the wage equals the marginal product of labor.

Movements of workers from country to country can cause shifts in the labor supply curves for both countries.

If the demand curve for economics textbooks shifts to the left, then the value of the marginal product of labor for economics textbook authors will

If the value of the marginal product of labor exceeds the wage, then the firm could

A firm's demand for labor is derived from its decision to supply a good in another market.

Suppose that the labor market for life guards is initially in equilibrium. Whistles are an important safety tool that life guards use as a part of their jobs. A fire destroys the largest factory that produces whistles. What happens to the equilibrium wage and quantity of life guards?

Diminishing marginal product occurs when