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Exam 18: The Markets for the Factors of Production

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Question 31

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Table 18-3 -Refer to Table 18-3.The fact that the production function exhibits diminishing marginal productivity implies that

A) total production decreases beyond a certain level of output.
B) labor markets are not always competitive.
C) the additions to total output get smaller as more workers are hired.
D) marginal profit is negative.

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

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Question 32

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When labor supply increases,

A) the marginal productivity of workers always increases.
B) profit-maximizing firms reduce employment.
C) wages increase as long as labor supply is upward sloping.
D) wages decrease as long as labor demand is downward sloping.

E) A) and D)
F) A) and C)

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Question 33

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Table 18-2 Consider the following daily production data for Davis Golf Balls, Inc. Davis Golf Balls, Inc. sells golf balls for 50 cents each and pays the workers a wage of $30 a day. -Refer to Table 18-2.Assume that Davis Golf Balls,Inc.is a competitive,profit-maximizing firm.If the market price of golf balls increases from 50 cents to 60 cents,how many workers would the firm then hire?

The demand curve for each factor of production reflects the marginal productivity of that factor.

The demand for computer programmers is inseparably tied to the supply of computer software.

The accumulation of machinery and buildings used in the production of new goods and services is referred to as

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.

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

Sally runs a hair styling salon.Sally is a profit-maximizing owner whose firm operates in a competitive market.The marginal cost of a haircut is $7.What is the maximum wage that Sally will pay her stylists?

Charles owns one of the many bakeries in New York City.Which of the following events will lead to a decrease in Charles's demand for the services of bakers?

If the wage exceeds the value of the marginal product of labor,then hiring another worker

Suppose that eight workers can manufacture 70 radios per day,and nine workers can manufacture 90 radios per day.If radios can be sold for $10 each,the value of marginal product of the ninth worker is

Figure 18-2 -Refer to Figure 18-2.If the price of apples increases,the

Consider the labor market for computer programmers,which is in equilibrium.During the late 1990s,the value of the marginal product of all computer programmers increased dramatically.Holding all else equal,what effect did this process have on the equilibrium wage in the labor market for computer programmers?

A decrease in population can be expected to

Table 18-3 -Refer to Table 18-3.To maximize its profit,how many workers will the firm hire?

Factor-market analysis could not be complete without some characterization of

Table 18-2 Consider the following daily production data for Davis Golf Balls, Inc. Davis Golf Balls, Inc. sells golf balls for 50 cents each and pays the workers a wage of $30 a day. -Refer to Table 18-2.What is the fourth worker's marginal product of labor?

Aurora Custom Cabinets produces and sells custom kitchen cabinets.The firm has determined that if it hires 10 workers,it can produce 4 sets of cabinets per day.If it hires 11 workers,it can produce 4.2 sets of cabinets per day.It sells each set of cabinets for $2,000,and it pays each of its workers $200 per day.

A market in which there is only one buyer is called a(n)