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Exam 18: The Markets for the Factors of Production

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Question 51

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Figure 18-8 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 18-8. If the shop charges $150 per repair and pays each of its mechanics a wage of $700 per day, then what is the marginal profit of the second mechanic?

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The marginal product of the second mecha...

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Question 52

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What happens to the labor supply curves in both countries when Mexican workers leave Mexico and move to the United States?

A) Labor supply decreases in Mexico and decreases in the United States.
B) Labor supply increases in the United States and increases in Mexico.
C) Labor supply increases in the United States and decreases in Mexico.
D) Labor supply increases in Mexico and decreases in United States.

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

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Question 53

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Figure 18-8 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 18-8. The relationship depicted on the graph is called a _______ function.

Your college roommate receives a pay raise at her part-time job from $9 to $11 per hour. She used to work 25 hours per week, but now she decides to work 20 hours per week in order to spend more time studying economics. For this price range, her labor supply curve is

When you receive interest on your bank account, that income is part of the economy's __________ income.

Consider the market for land. Suppose the value of the marginal product of land decreases. Holding all else constant, the equilibrium quantity of land will

Table 18-6 Consider the following daily production data for MadeFromScratch, Inc. MadeFromScratch sells cupcakes for $3 each and pays the workers a wage of $325 per day. ​ ​ $\begin{array} { | c | c | c | c | c | c | } \hline \begin{array} { c } \text { Labor } \\\text { (Number of } \\\text { workers) }\end{array} & \begin{array} { c } \text { Output } \\\text { (Cupcakes per } \\\text { day) }\end{array} & \begin{array} { c } \text { Marginal } \\\text { Product } \\\text { of Labor } \\\text { (Cupcakes per } \\\text { day) }\end{array} & \begin{array} { c } \text { Value of the } \\\text { Marginal } \\\text { Product of Labor } \\\text { (Cupcakes) }\end{array} & \begin{array} { c } \text { Wage } \\\text { (Dollarsper } \\\text { worker per } \\\text { day) }\end{array} & \begin{array} { c } \text { Margin } \\\text { Profit } \\\text { (Dollar }\end{array} \\\hline 0 & 0 & & & 325 & \\\hline 1 & 200 & & & 325 & \\\hline 2 & 350 & & & 325 & \\\hline 3 & 475 & & & 325 & \\\hline 4 & 575 & & &325 & \\\hline\end{array}$ ​ -Refer to Table 18-6. Assume that MadeFromScratch is a competitive, profit-maximizing firm. If the market price of cupcakes increases from $2.00 to $2.50, how many workers would the firm then hire?

The rental price of capital is the price a person pays to own the capital indefinitely.

The labor-supply curve is affected by the trade-off between labor and leisure.

Jen's wage decreased, and she responded by enjoying more hours of leisure per day. Is Jen's behavior consistent with an upward-sloping labor-supply curve?

Figure 18-4 -Refer to Figure 18-4. This graph illustrates the market for bakers who make homemade breads and breakfast pastries. If the bakery profession becomes more attractive to young women and men because of a new reality television show, what happens in the market for bakers?

Who has a greater opportunity cost of leisure - a president of a major corporation or a babysitter?

If the output price of a product rises, the demand for capital will increase, raising the rental price of capital.

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

Labor-augmenting technological advances decrease the marginal productivity of labor.

Diminishing marginal product affects the shape of the production function in what way?

Explain how a firm values the contribution of workers to its profitability. Would a profit-maximizing competitive firm ever stop increasing employment as long as marginal product is rising? Explain your answer.

Suppose Cassie's Candles is a profit-maximizing competitive firm. Cassie sells hand-made candles for $10 each. She will pay an hourly wage of $20 so long as the marginal productivity of a worker equals or exceeds two candles per hour.

Labor-saving technological advances decrease the marginal productivity of labor.

Figure 18-1 -Refer to Figure 18-1. Suppose the firm sells its output for $13 per unit, and it pays each of its workers $165 per day. When the number of workers increases from 2 to 3, the