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Exam 18: The Markets for the Factors of Production

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Question 71

Multiple Choice

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The rental price of capital is

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

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Question 72

Multiple Choice

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Consider the market for capital equipment. Suppose the price of firms' output increases. Holding all else constant, the equilibrium rental price of capital equipment will

A) increase.
B) decrease.
C) not change.
D) It is not possible to determine what will happen to the equilibrium rental price of capital equipment.

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

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Question 73

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Figure 18-9 -Refer to Figure 18-9. If the apple pickers start working fewer hours because they are taking more vacation time, the equilibrium wage will

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. If the shop charges $150 per repair, then what is the value of the marginal product of the second mechanic?

Does the movement of workers from other countries to the U.S. affect the demand for labor in the U.S., or does it affect the supply of labor in the U.S.?

Carolyn's Pottery Shop produces vases that sell for $15 each. Assume that labor is the only input that varies for the firm. If Carolyn hires 10 workers, she can produce and sell 500 vases per week. If she hires 11 workers, she can produce and sell 560 vases per week. Carolyn pays each of her workers $400 per week. Which of the following is correct?

Table 18-7 -Refer to Table 18-7. The fact that the production function exhibits diminishing marginal productivity implies that

Scenario 18-2 Gertrude Kelp owns three boats that participate in commercial fishing for fresh Pacific salmon off the coast of Alaska. As part of her business she hires a captain and several crew members for each boat. In the market for fresh Pacific salmon, there are thousands of firms like Gertrude's. While Gertrude usually catches a significant number of fish each year, her contribution to the entire harvest of salmon is negligible relative to the size of the market. -Refer to Scenario 18-2. When Gertrude participates in the labor market to hire crew members for her boats, she is most likely considered a

The basic tools of supply and demand apply to

Which of the following events would lead to an increase in the supply of labor?

The Black Death in fourteenth-century Europe resulted in

In 2015, the total income of all U.S. residents was approximately $16 trillion.

Most of the total income earned in the U.S. economy is ultimately paid to

Restaurants' demand for cooks and waiters is inseparably linked to the supply of __________.

Table 18-3 -Refer to Table 18-3. Which firm's production function exhibits negative marginal product?

Which of the following would decrease the demand for labor? (i) a decrease in the output price (ii) an increase in the output price (iii) a labor-saving technological advance (iv) a labor-augmenting technological advance

The quantity available of one factor of production can affect the marginal product of other factors.

Figure 18-10 -Refer to Figure 18-10. Which of the following would shift of the labor demand curve from D₁ to D₂?

Angie was the last worker hired by a firm that is competitive in the labor market. The labor market always is in equilibrium. The firm sells its output for $24 per unit. When Angie was hired, the firm's output increased by 2 units per hour as a result. What is Angie's hourly wage?

Table 18-A -Refer to Table 18-4. How many workers should the firm hire?