Question 1

Figure 18-4
 
-Refer to Figure 18-4.The shift of the labor demand curve from D₁ to D₂ could possibly be explained by

Accepted Answer

A)  technological progress.
B)  an increase in the price of firms' output.
C)  an increase in the supply of a relevant factor of production other than labor.
D)  All of the above are correct.E) A) and C)
F) All of the above

Question 2

The supply of labor in any one market depends on the opportunities available in other markets.

Accepted Answer

A) True 
 B)False

Question 3

The basic tools of supply and demand apply to

Accepted Answer

A)  markets for goods and services and to markets for labor services.
B)  markets for goods and services but not to markets for labor services.
C)  markets for goods and services but not to markets for factors of production.
D)  all markets except those in which demand is derived demand.E) All of the above
F) None of the above

Question 4

Typically,as a firm hires additional workers,the marginal product of labor

Accepted Answer

A)  and the value of the marginal product of labor both decrease.
B)  stays constant and the value of the marginal product of labor decreases.
C)  decreases and the value of the marginal product of labor stays constant.
D)  decreases and the value of the marginal product of labor increases.E) A) and C)
F) C) and D)

Question 5

Economists refer to the inputs that firms use to produce goods and services as

Accepted Answer

A)  derived factors.
B)  derived resources.
C)  factors of production.
D)  instruments of revenue.E) A) and D)
F) C) and D)

Question 6

If workers respond to an increase in the opportunity cost of leisure by taking more leisure,then their labor supply curve is

Accepted Answer

A)  upward sloping.
B)  downward sloping.
C)  horizontal.
D)  vertical.E) None of the above
F) B) and C)

Question 7

The labor supply curve reflects how workers' decisions about the labor-leisure tradeoff respond to changes in the opportunity cost of leisure.

Accepted Answer

A) True 
 B)False

Question 8

Consider the market for university economics professors.Because of the dot.com bust of 2000 and the recession in the U.S.economy,the opportunity cost of going to graduate school to get a Ph.D.in economics decreased for many individuals.It generally takes about five years to get a Ph.D.in economics.Thus,holding all else constant,what likely will happen to the equilibrium quantity of university economics professors in and around 2006?

Accepted Answer

A)  The equilibrium quantity will increase.
B)  The equilibrium quantity will decrease.
C)  The equilibrium quantity will not change.
D)  It is not possible to determine what will happen to the equilibrium quantity.E) B) and C)
F) A) and D)

Question 9

Figure 18-3
 
-Refer to Figure 18-3.When the relevant labor supply curve is S₁ and the labor market is in equilibrium,

Accepted Answer

A)  the wage is W₁.
B)  the opportunity cost of leisure to workers is W₁.
C)  the value of the marginal product of labor to firms is W₁.
D)  All of the above are correct.E) None of the above
F) C) and D)

Question 10

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

Question 11

Diminishing marginal product occurs when

Accepted Answer

A)  the increases to total output are declining.
B)  marginal product is decreasing.
C)  total output is decreasing.
D)  Both a and b are correct.E) A) and B)
F) C) and D)

Question 12

For a competitive firm that finds it worthwhile to operate rather than shut down,profit maximization requires that

Accepted Answer

A)  output price = marginal cost.
B)  wage = value of marginal product of labor.
C)  wage/marginal product of labor = P.
D)  All of the above are correct.E) None of the above
F) B) and C)

Question 13

Capital owners are compensated according to the value of the marginal product of that capital.

Accepted Answer

A) True 
 B)False

Question 14

As the rental price of capital increases,less capital is used in production.

Accepted Answer

A) True 
 B)False

Question 15

Scenario 18-1
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 18-1.Labor-market theory assumes that Gertrude's demand for crew members and her supply of fresh Pacific salmon result from her

Accepted Answer

A)  intrinsic desire to hire crew members.
B)  primary goal of maximizing profit.
C)  altruistic motives to provide fresh salmon to consumers.
D)  desire to strike a balance between environmental concerns and maximum profit.E) A) and B)
F) A) and C)

Question 16

The value of the marginal product of any input is equal to the marginal product of that input multiplied by the

Accepted Answer

A)  additional revenue.
B)  marginal cost of the output.
C)  change in total profit.
D)  market price of the output.E) A) and C)
F) All of the above

Question 17

Table 18-3
 
-Refer to Table 18-3.It is apparent from this table that increasing marginal product

Accepted Answer

A)  occurs only after the first worker is hired.
B)  occurs only after the second worker is hired.
C)  occurs only after the third worker is hired.
D)  never occurs.E) A) and B)
F) All of the above

Question 18

If workers respond to an increase in the opportunity cost of leisure by taking less leisure,then their labor supply curve is

Accepted Answer

A)  horizontal.
B)  vertical.
C)  downward sloping.
D)  upward sloping.E) A) and B)
F) All of the above

Question 19

Table 18-3
 
-Refer to Table 18-3.What is the marginal profit of the fourth worker?

Accepted Answer

A)  $400
B)  $100
C)  $0
D)  $-100E) A) and D)
F) B) and C)

Question 20

If a disease,like the Black Death,were to significantly decrease the population of a country,we would predict a decrease in the marginal product of land.

Accepted Answer

A) True 
 B)False

Exam 18: The Markets for the Factors of Production

Capital owners are compensated according to the value of the marginal product of that capital.

Correct Answer
verified

Figure 18-4 -Refer to Figure 18-4.The shift of the labor demand curve from D₁ to D₂ could possibly be explained by

Correct Answer
verified

If a disease,like the Black Death,were to significantly decrease the population of a country,we would predict a decrease in the marginal product of land.

Correct Answer
verified

The labor supply curve reflects how workers' decisions about the labor-leisure tradeoff respond to changes in the opportunity cost of leisure.

Correct Answer
verified

If workers respond to an increase in the opportunity cost of leisure by taking less leisure,then their labor supply curve is

Correct Answer
verified

Economists refer to the inputs that firms use to produce goods and services as

Correct Answer
verified

If workers respond to an increase in the opportunity cost of leisure by taking more leisure,then their labor supply curve is

Correct Answer
verified

Table 18-3 -Refer to Table 18-3.It is apparent from this table that increasing marginal product

Correct Answer
verified

For a competitive firm that finds it worthwhile to operate rather than shut down,profit maximization requires that

Correct Answer
verified

The supply of labor in any one market depends on the opportunities available in other markets.

Correct Answer
verified

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

Correct Answer
verified

Diminishing marginal product occurs when

Correct Answer
verified

The basic tools of supply and demand apply to

Correct Answer
verified

As the rental price of capital increases,less capital is used in production.

Correct Answer
verified

Typically,as a firm hires additional workers,the marginal product of labor

Correct Answer
verified

Correct Answer
verified

Figure 18-3 -Refer to Figure 18-3.When the relevant labor supply curve is S₁ and the labor market is in equilibrium,

Correct Answer
verified

The value of the marginal product of any input is equal to the marginal product of that input multiplied by the

Correct Answer
verified

Correct Answer
verified

Table 18-3 -Refer to Table 18-3.What is the marginal profit of the fourth worker?

Correct Answer
verified

Exam 18: The Markets for the Factors of Production

Capital owners are compensated according to the value of the marginal product of that capital.

Correct AnswerverifiedShow Answer

Figure 18-4 -Refer to Figure 18-4.The shift of the labor demand curve from D₁ to D₂ could possibly be explained by

Correct AnswerverifiedShow Answer

If a disease,like the Black Death,were to significantly decrease the population of a country,we would predict a decrease in the marginal product of land.

Correct AnswerverifiedShow Answer

The labor supply curve reflects how workers' decisions about the labor-leisure tradeoff respond to changes in the opportunity cost of leisure.

Correct AnswerverifiedShow Answer

If workers respond to an increase in the opportunity cost of leisure by taking less leisure,then their labor supply curve is

Correct AnswerverifiedShow Answer

Economists refer to the inputs that firms use to produce goods and services as

Correct AnswerverifiedShow Answer

If workers respond to an increase in the opportunity cost of leisure by taking more leisure,then their labor supply curve is

Correct AnswerverifiedShow Answer

Table 18-3 -Refer to Table 18-3.It is apparent from this table that increasing marginal product

Correct AnswerverifiedShow Answer

For a competitive firm that finds it worthwhile to operate rather than shut down,profit maximization requires that

Correct AnswerverifiedShow Answer

The supply of labor in any one market depends on the opportunities available in other markets.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Diminishing marginal product occurs when

Correct AnswerverifiedShow Answer

The basic tools of supply and demand apply to

Correct AnswerverifiedShow Answer

As the rental price of capital increases,less capital is used in production.

Correct AnswerverifiedShow Answer

Typically,as a firm hires additional workers,the marginal product of labor

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 18-3 -Refer to Figure 18-3.When the relevant labor supply curve is S₁ and the labor market is in equilibrium,

Correct AnswerverifiedShow Answer

The value of the marginal product of any input is equal to the marginal product of that input multiplied by the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 18-3 -Refer to Table 18-3.What is the marginal profit of the fourth worker?

Correct AnswerverifiedShow Answer

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