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Exam 18: The Markets for the Factors of Production

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Question 121

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Which of the following statements is correct?

A) An increase in the supply of other factors,such as capital,will increase the demand for labor.
B) Labor-saving technology will increase the demand for labor.
C) Labor-augmenting technology will decrease the demand for labor.
D) A decrease in the price of output will increase the demand for labor.

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

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Question 122

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A profit-maximizing,competitive firm will always hire an additional worker when the additional worker makes a positive contribution to

A) total revenue.
B) total profit.
C) the value of the marginal product of labor.
D) marginal revenue.

E) B) and C)
F) All of the above

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Question 123

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The following table shows the number of calculators that can be assembled per week by various numbers of workers.If the price per calculator in a perfectly competitive product market is $8,how many workers would the firm employ if the weekly wage rate is $800?

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.The marginal product of the fourth worker is

Table 18-4 Consider the following daily production data for Wills Golf Balls.Wills sells golf balls for $2.50 cents each and pays the workers a wage of $325 per day. -Refer to Table 18-4.Suppose that there is a technological advance that allows Wills employees to produce more golf balls than they could before.Because of this change,

Suppose medical research provides evidence that eating bananas provides far greater health benefits than was previously thought.The resulting increase in the demand for bananas

Figure 18-7 -Refer to Figure 18-7.When the relevant labor supply curve is S₁ and the labor market is in equilibrium,

A competitive,profit-maximizing firm hires workers up to the point where the

In the 1980s,the dangerous Ebola virus entered the United States through contaminated monkeys that were imported for use in medical experiments.Suppose this virus had not been contained but had spread to the general population.Assume that the virus is lethal in half of the people who are exposed to it.Describe the resulting effect on labor productivity.

Figure 18-6 -Refer to Figure 18-6.If the relevant labor demand curve is D₂ and the current wage is W₁,

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.If the price of fresh Pacific salmon were to decrease significantly,it is most likely that Gertrude would

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

The negative slope of the value of marginal product curve is most easily explained by

Scenario 18-5 Rocchetta Industries manufactures and supplies bottled water in Mexico.As a result of a contamination of water supplies at many of Mexico's resort communities,the demand for bottled water has increased. -Refer to Scenario 18-5.We would expect that,as a result of the contamination,the value of the marginal product for Rocchetta Industries' workers would

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

Suppose that a competitive firm hires labor up to the point at which the value of the marginal product equals the wage.If the firm pays a wage of $700 per week and the marginal product of labor equals 100 units per week,then the marginal cost of producing an additional unit of output is

Scenario 18-3 Jerry has two jobs,one for the winter and one for the summer.In the winter,he works as a lift attendant at a ski resort where he earns $10 per hour.During the summer,he drives a tour bus around the ski resort,earning $12 per hour. -Refer to Scenario 18-3.During the winter months,what is Jerry's opportunity cost of taking an hour off work to go skiing?

Suppose a labor-augmenting technology were developed for a product that increased the marginal product of labor for all workers.Which of the following would happen in the labor market for this product?

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 hires each unit of labor for $600 per week,and each unit of output sells for $9.What is the value of the marginal product of the third worker?

Suppose that a large tornado destroys the fleet of fire trucks for the city of Omaha,Nebraska.What happens to the earnings of firefighters in Omaha?