Question 1

As a result of severe flooding,a farmer loses half of his productive farmland.If the property of diminishing returns applies to all factors of production,he should expect to see

Accepted Answer

A)   an increase in the marginal productivity of his remaining land and an increase in the marginal productivity of his labor.
B)   an increase in the marginal productivity of his remaining land and a decrease in the marginal productivity of his labor.
C)   a decrease in the marginal productivity of his remaining land and an increase in the marginal productivity of his labor.
D)   a decrease in the marginal productivity of his remaining land and a decrease in the marginal productivity of his labor.E) A) and D)
F) None of the above

Question 2

Assume the market for handkerchiefs is competitive.A new invention leads to labor-augmenting technological progress in the production of handkerchiefs.This development

Accepted Answer

A)   decreases the demand for workers who make handkerchiefs and decreases their equilibrium wage.
B)   increases the demand for workers who make handkerchiefs and increases their equilibrium wage.
C)   increases the supply of workers who make handkerchiefs and decreases their equilibrium wage.
D)   increases the supply of workers who make handkerchiefs and increases their equilibrium wage.E) None of the above
F) A) and B)

Question 3

Ellen receives a raise at her current part-time job from $8 to $10 per hour.If her labor supply curve is upward sloping,she will work fewer hours after receiving the pay raise.

Accepted Answer

A) True 
 B)False

Question 4

When a firm experiences diminishing marginal product,what is the shape of the curve that represents the value of the marginal product of labor?

Accepted Answer

A)   U-shaped
B)   flat
C)   downward sloping
D)   upward slopingE) B) and C)
F) A) and C)

Question 5

What happens to labor supply in the pear-picking market when the wage paid to apple pickers increases?

Accepted Answer

A)   The labor supply will stay unchanged until the wages paid to pear pickers change.
B)   The labor supply will decrease.
C)   The labor supply will increase.
D)   The labor supply may fall or rise,depending on the price of pears.E) None of the above
F) All of the above

Question 6

Suppose that the labor market for life guards is initially in equilibrium.Then the marginal productivity of life guards increases.What happens to the equilibrium wage and quantity of life guards?

Accepted Answer

A)   Both the equilibrium wage and quantity increase.
B)   Both the equilibrium wage and quantity decrease.
C)   The equilibrium wage increases,and the equilibrium quantity decreases.
D)   The equilibrium wage decreases,and the equilibrium quantity increases.E) A) and C)
F) None of the above

Question 7

Figure 18-3 
-Refer to Figure 18-3.What is the marginal product of the third worker?

Accepted Answer

A)   2 units
B)   4 units
C)   4.67 units
D)   14 unitsE) None of the above
F) A) and B)

Question 8

Table 18-8
The following table shows the production function for a particular business.The numbers represent the various labor and output combinations the firm may choose for its output on a daily basis.
 
-Refer to Table 18-8.Suppose this firm charges a price of $5 per unit of output and pays workers a wage equal to $160 per day.How many workers should this firm hire to maximize its profit?

Accepted Answer

A)   2 workers
B)   3 workers
C)   4 workers
D)   5 workersE) A) and D)
F) All of the above

Question 9

Does an upward-sloping labor-supply curve mean that people respond to a decrease in the wage by enjoying more leisure or less leisure?

Accepted Answer

An upward-sloping labor-supply...

Question 10

Which of the following statements is correct?

Accepted Answer

A)   Neither economic theory nor evidence from the U.S.economy suggests that there is a close link between productivity and real wages.
B)   Economic theory suggests that there is a close link between productivity and real wages,but evidence from the U.S.economy fails to confirm that link.
C)   Evidence from the U.S.economy suggests a close link between productivity and real wages,but economic theory provides no basis for such a link.
D)   Both economic theory and evidence from the U.S.economy suggest that there is a close link between productivity and real wages.E) A) and B)
F) A) and C)

Question 11

Figure 18-10 1 and the labor market is in equilibrium, A)  the value of the marginal product of labor to firms is less than W1. B)  the opportunity cost of leisure to workers is greater than W1. C)  the wage is W1. D)  All of the above are correct." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 18-10.When the relevant labor demand curve is D1 and the labor market is in equilibrium,

Accepted Answer

A)   the value of the marginal product of labor to firms is less than W1.
B)   the opportunity cost of leisure to workers is greater than W1.
C)   the wage is W1.
D)   All of the above are correct.E) A) and B)
F) B) and C)

Question 12

Let L represent the quantity of labor,and let Q represent the quantity of output.Suppose a certain production function includes the points (L = 7,Q = 27), (L = 8,Q = 35),and
(L = 9,Q = 45).Based on these three points,this production function exhibits diminishing marginal product.

Accepted Answer

A) True 
 B)False

Question 13

Suppose that the market for labor is initially in equilibrium.An increase in the price of output will cause the equilibrium wage

Accepted Answer

A)   and the equilibrium quantity of labor to rise.
B)   and the equilibrium quantity of labor to fall.
C)   to rise and the equilibrium quantity of labor to fall.
D)   to fall and the equilibrium quantity of labor to rise.E) A) and B)
F) B) and C)

Question 14

Table 18-10
Consider the following daily production data for Caroline's Cookies,Inc.Caroline's sells cookies for $2.50 each and pays the workers a wage of $325 per day.
 
-Refer to Table 18-10.What is the value of the marginal product of the first worker?

Accepted Answer

A)   $200
B)   $400
C)   $500
D)   $700E) All of the above
F) A) and C)

Question 15

Increases in productivity are not responsible for increased standards of living in the United States.

Accepted Answer

A) True 
 B)False

Question 16

Figure 18-7 1 to S2? A)  a change in workers' attitudes toward the work-leisure tradeoff B)  decreases in wages in other labor markets C)  immigration of workers into the region or country D)  All of the above are correct." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 18-7.Which of the following would shift the labor supply curve from S1 to S2?

Accepted Answer

A)   a change in workers' attitudes toward the work-leisure tradeoff
B)   decreases in wages in other labor markets
C)   immigration of workers into the region or country
D)   All of the above are correct.E) A) and D)
F) None of the above

Question 17

Table 18-10
Consider the following daily production data for Caroline's Cookies,Inc.Caroline's sells cookies for $2.50 each and pays the workers a wage of $325 per day.
 
-Refer to Table 18-10.Assuming Caroline's Cookies is a competitive,profit-maximizing firm,how many workers will the firm hire?

Accepted Answer

A)   3 workers
B)   4 workers
C)   5 workers
D)   6 workersE) B) and D)
F) B) and C)

Exam 18: The Market for the Factors of Production

Correct Answer
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Table 18-10 Consider the following daily production data for Caroline's Cookies,Inc.Caroline's sells cookies for $2.50 each and pays the workers a wage of $325 per day. -Refer to Table 18-10.Assuming Caroline's Cookies is a competitive,profit-maximizing firm,how many workers will the firm hire?

Correct Answer
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Figure 18-3 -Refer to Figure 18-3.What is the marginal product of the third worker?

Correct Answer
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When a firm experiences diminishing marginal product,what is the shape of the curve that represents the value of the marginal product of labor?

Correct Answer
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Suppose that the labor market for life guards is initially in equilibrium.Then the marginal productivity of life guards increases.What happens to the equilibrium wage and quantity of life guards?

Correct Answer
verified

Assume the market for handkerchiefs is competitive.A new invention leads to labor-augmenting technological progress in the production of handkerchiefs.This development

Correct Answer
verified

Increases in productivity are not responsible for increased standards of living in the United States.

Correct Answer
verified

Table 18-10 Consider the following daily production data for Caroline's Cookies,Inc.Caroline's sells cookies for $2.50 each and pays the workers a wage of $325 per day. -Refer to Table 18-10.What is the value of the marginal product of the first worker?

Correct Answer
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Does an upward-sloping labor-supply curve mean that people respond to a decrease in the wage by enjoying more leisure or less leisure?

Correct Answer
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An upward-sloping labor-supply...
View Answer

Let L represent the quantity of labor,and let Q represent the quantity of output.Suppose a certain production function includes the points (L = 7,Q = 27), (L = 8,Q = 35),and (L = 9,Q = 45).Based on these three points,this production function exhibits diminishing marginal product.

Correct Answer
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Which of the following statements is correct?

Correct Answer
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Figure 18-10 -Refer to Figure 18-10.When the relevant labor demand curve is D₁ and the labor market is in equilibrium,

Correct Answer
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Figure 18-7 -Refer to Figure 18-7.Which of the following would shift the labor supply curve from S₁ to S₂?

Correct Answer
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As a result of severe flooding,a farmer loses half of his productive farmland.If the property of diminishing returns applies to all factors of production,he should expect to see

Correct Answer
verified

What happens to labor supply in the pear-picking market when the wage paid to apple pickers increases?

Correct Answer
verified

Suppose that the market for labor is initially in equilibrium.An increase in the price of output will cause the equilibrium wage

Correct Answer
verified

Ellen receives a raise at her current part-time job from $8 to $10 per hour.If her labor supply curve is upward sloping,she will work fewer hours after receiving the pay raise.

Correct Answer
verified

Exam 18: The Market for the Factors of Production

Correct AnswerverifiedShow Answer

Table 18-10 Consider the following daily production data for Caroline's Cookies,Inc.Caroline's sells cookies for $2.50 each and pays the workers a wage of $325 per day. -Refer to Table 18-10.Assuming Caroline's Cookies is a competitive,profit-maximizing firm,how many workers will the firm hire?

Correct AnswerverifiedShow Answer

Figure 18-3 -Refer to Figure 18-3.What is the marginal product of the third worker?

Correct AnswerverifiedShow Answer

When a firm experiences diminishing marginal product,what is the shape of the curve that represents the value of the marginal product of labor?

Correct AnswerverifiedShow Answer

Suppose that the labor market for life guards is initially in equilibrium.Then the marginal productivity of life guards increases.What happens to the equilibrium wage and quantity of life guards?

Correct AnswerverifiedShow Answer

Assume the market for handkerchiefs is competitive.A new invention leads to labor-augmenting technological progress in the production of handkerchiefs.This development

Correct AnswerverifiedShow Answer

Increases in productivity are not responsible for increased standards of living in the United States.

Correct AnswerverifiedShow Answer

Table 18-10 Consider the following daily production data for Caroline's Cookies,Inc.Caroline's sells cookies for $2.50 each and pays the workers a wage of $325 per day. -Refer to Table 18-10.What is the value of the marginal product of the first worker?

Correct AnswerverifiedShow Answer

Does an upward-sloping labor-supply curve mean that people respond to a decrease in the wage by enjoying more leisure or less leisure?

Correct AnswerverifiedAn upward-sloping labor-supply...View AnswerShow Answer

Let L represent the quantity of labor,and let Q represent the quantity of output.Suppose a certain production function includes the points (L = 7,Q = 27), (L = 8,Q = 35),and (L = 9,Q = 45).Based on these three points,this production function exhibits diminishing marginal product.

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

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Figure 18-10 -Refer to Figure 18-10.When the relevant labor demand curve is D1 and the labor market is in equilibrium,

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Figure 18-7 -Refer to Figure 18-7.Which of the following would shift the labor supply curve from S1 to S2?

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As a result of severe flooding,a farmer loses half of his productive farmland.If the property of diminishing returns applies to all factors of production,he should expect to see

Correct AnswerverifiedShow Answer

What happens to labor supply in the pear-picking market when the wage paid to apple pickers increases?

Correct AnswerverifiedShow Answer

Suppose that the market for labor is initially in equilibrium.An increase in the price of output will cause the equilibrium wage

Correct AnswerverifiedShow Answer

Ellen receives a raise at her current part-time job from $8 to $10 per hour.If her labor supply curve is upward sloping,she will work fewer hours after receiving the pay raise.

Correct AnswerverifiedShow Answer

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An upward-sloping labor-supply...
View Answer

Correct Answer
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Correct Answer
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Figure 18-10 -Refer to Figure 18-10.When the relevant labor demand curve is D₁ and the labor market is in equilibrium,

Correct Answer
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Figure 18-7 -Refer to Figure 18-7.Which of the following would shift the labor supply curve from S₁ to S₂?

Correct Answer
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