Question 1

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 2

Competitive firms that maximize profits will hire workers until the value of the marginal product of labor

Accepted Answer

A)   equals the wage.
B)   equals the price of the final good.
C)   begins to fall.
D)   begins to rise.E) C) and D)
F) A) and B)

Question 3

Suppose the supply of capital decreases.As a result,the quantity of capital used in production and the rental price of capital will both fall.

Accepted Answer

A) True 
 B)False

Question 4

Harold owns a cranberry bog in which he grows cranberries.Harold's farm is a competitive,profit-maximizing firm.As such,Harold much decide
(i) how many cranberries to sell.
(ii) what price to charge for his cranberries.
(iii) what wages to pay his workers.
(iv) how many workers to hire.

Accepted Answer

A)   (i)  only
B)   (ii)  and (iii)  only
C)   (i)  and (iv)  only
D)   (i) , (ii) , (iii) , and (iv) E) None of the above
F) All of the above

Question 5

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 second worker?

Accepted Answer

A)   $180
B)   $450
C)   $950
D)   $1,080E) A) and B)
F) A) and D)

Question 6

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.What is the value of the marginal product of labor for the fourth worker?

Accepted Answer

A)   $200
B)   $1,000
C)   $6,400
D)   $32,000E) A) and C)
F) None of the above

Question 7

Owners of land are compensated according to the

Accepted Answer

A)   absolute level of production from the land.
B)   number of laborers the land can support.
C)   purchase price of the land stock.
D)   value of the marginal product of land.E) B) and D)
F) A) and B)

Question 8

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 sells its output for $12 per unit,and it pays each of its workers $700 per week.How many workers will the firm hire to maximize its profit?

Accepted Answer

A)   2
B)   3
C)   4
D)   5E) None of the above
F) A) and B)

Question 9

Suppose that a college physics experiment goes horribly wrong and releases an electronic pulse that renders all electronic equipment in the city of San Francisco,California permanently useless.No people are hurt,and no buildings are damaged.After the accident,the wages earned by California workers will

Accepted Answer

A)   increase because the marginal productivities of workers will increase.
B)   decrease because the marginal productivities of workers will decrease.
C)   decrease because the marginal productivities of workers will increase.
D)   increase because the marginal productivities of workers will decrease.E) All of the above
F) C) and D)

Question 10

Suppose that technological progress increases the productivity of teachers.Which of the following accurately describes the labor market for teachers after the technological change? Equilibrium wages will

Accepted Answer

A)   rise, and the equilibrium quantity of teachers employed will fall.
B)   rise, and the equilibrium quantity of teachers employed will rise.
C)   fall, and the equilibrium quantity of teachers employed will fall.
D)   fall, and the equilibrium quantity of teachers employed will rise.E) A) and D)
F) B) and C)

Question 11

Table 18-7
Harold owns a cranberry bog in which he grows cranberries. Harold's farm is a competitive, profit-maximizing firm. Harold's production function is detailed in the table below.
 
-Refer to Table 18-7.What is the marginal product of the fourth worker?

Accepted Answer

A)   250 bushels
B)   62.5 bushels
C)   50 bushels
D)   30 bushelsE) B) and D)
F) All of the above

Question 12

If the value of the marginal product of labor is less than the wage,then the firm could

Accepted Answer

A)   increase profit by hiring additional labor.
B)   increase profit by reducing the amount of labor hired.
C)   increase revenue by lowering output.
D)   reduce total cost by hiring additional workers.E) B) and D)
F) B) and C)

Question 13

The marginal product of labor is defined as the change in

Accepted Answer

A)   output per additional unit of revenue.
B)   output per additional unit of labor.
C)   revenue per additional unit of labor.
D)   revenue per additional unit of output.E) None of the above
F) A) and B)

Question 14

For a competitive firm experiencing diminishing marginal productivity,the value of the marginal product
(i) increases when the price of output decreases.
(ii) changes when marginal product changes.
(iii) diminishes as the number of workers rises.

Accepted Answer

A)   (i)  and (ii) 
B)   (i)  and (iii) 
C)   (ii)  and (iii) 
D)   All of the above are correct.E) C) and D)
F) All of the above

Question 15

Figure 18-3
 
-Refer to Figure 18-3.Suppose that the price of the output is $20.What is the value of the marginal product of the third worker?

Accepted Answer

A)   $2
B)   $10
C)   $40
D)   $280E) B) and C)
F) A) and D)

Question 16

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.What is the marginal product of the fifth unit of labor?

Accepted Answer

A)   30 units
B)   40 units
C)   50 units
D)   250 unitsE) B) and C)
F) A) and D)

Question 17

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 figure illustrates the

Accepted Answer

A)   demand for labor.
B)   supply of labor.
C)   production function.
D)   wage function.E) None of the above
F) A) and B)

Question 18

If a firm is able to charge a higher price for its output,all else equal,the value of the marginal product of labor will decrease to offset the higher price.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

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

Question 20

For a competitive,profit-maximizing firm,the demand curve for labor will shift in response to a change in the

Accepted Answer

A)   wage rate.
B)   quantity of labor demanded.
C)   price of the product that the firm sells.
D)   an increase in the supply of labor.E) A) and B)
F) B) and C)

Exam 18: The Market For the Factors of Production.

Harold owns a cranberry bog in which he grows cranberries.Harold's farm is a competitive,profit-maximizing firm.As such,Harold much decide (i) how many cranberries to sell. (ii) what price to charge for his cranberries. (iii) what wages to pay his workers. (iv) how many workers to hire.

Correct Answer
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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
verified

Competitive firms that maximize profits will hire workers until the value of the marginal product of labor

Correct Answer
verified

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

Correct Answer
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Correct Answer
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The marginal product of labor is defined as the change in

Correct Answer
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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.What is the marginal product of the fifth unit of labor?

Correct Answer
verified

Suppose that technological progress increases the productivity of teachers.Which of the following accurately describes the labor market for teachers after the technological change? Equilibrium wages will

Correct Answer
verified

Suppose the supply of capital decreases.As a result,the quantity of capital used in production and the rental price of capital will both fall.

Correct Answer
verified

For a competitive firm experiencing diminishing marginal productivity,the value of the marginal product (i) increases when the price of output decreases. (ii) changes when marginal product changes. (iii) diminishes as the number of workers rises.

Correct Answer
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Figure 18-3 -Refer to Figure 18-3.Suppose that the price of the output is $20.What is the value of the marginal product of the third worker?

Correct Answer
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If the value of the marginal product of labor is less than the wage,then the firm could

Correct Answer
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Table 18-7 Harold owns a cranberry bog in which he grows cranberries. Harold's farm is a competitive, profit-maximizing firm. Harold's production function is detailed in the table below. -Refer to Table 18-7.What is the marginal product of the fourth worker?

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.What is the value of the marginal product of the second worker?

Correct Answer
verified

Owners of land are compensated according to the

Correct Answer
verified

Correct Answer
verified

For a competitive,profit-maximizing firm,the demand curve for labor will shift in response to a change in the

Correct Answer
verified

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 figure illustrates the

Correct Answer
verified

If a firm is able to charge a higher price for its output,all else equal,the value of the marginal product of labor will decrease to offset the higher price.

Correct Answer
verified

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 sells its output for $12 per unit,and it pays each of its workers $700 per week.How many workers will the firm hire to maximize its profit?

Correct Answer
verified

Exam 18: The Market For the Factors of Production.

Harold owns a cranberry bog in which he grows cranberries.Harold's farm is a competitive,profit-maximizing firm.As such,Harold much decide (i) how many cranberries to sell. (ii) what price to charge for his cranberries. (iii) what wages to pay his workers. (iv) how many workers to hire.

Correct AnswerverifiedShow 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

Competitive firms that maximize profits will hire workers until the value of the marginal product of labor

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The marginal product of labor is defined as the change in

Correct AnswerverifiedShow Answer

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.What is the marginal product of the fifth unit of labor?

Correct AnswerverifiedShow Answer

Suppose that technological progress increases the productivity of teachers.Which of the following accurately describes the labor market for teachers after the technological change? Equilibrium wages will

Correct AnswerverifiedShow Answer

Suppose the supply of capital decreases.As a result,the quantity of capital used in production and the rental price of capital will both fall.

Correct AnswerverifiedShow Answer

For a competitive firm experiencing diminishing marginal productivity,the value of the marginal product (i) increases when the price of output decreases. (ii) changes when marginal product changes. (iii) diminishes as the number of workers rises.

Correct AnswerverifiedShow Answer

Figure 18-3 -Refer to Figure 18-3.Suppose that the price of the output is $20.What is the value of the marginal product of the third worker?

Correct AnswerverifiedShow Answer

If the value of the marginal product of labor is less than the wage,then the firm could

Correct AnswerverifiedShow Answer

Table 18-7 Harold owns a cranberry bog in which he grows cranberries. Harold's farm is a competitive, profit-maximizing firm. Harold's production function is detailed in the table below. -Refer to Table 18-7.What is the marginal product of the fourth worker?

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 second worker?

Correct AnswerverifiedShow Answer

Owners of land are compensated according to the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

For a competitive,profit-maximizing firm,the demand curve for labor will shift in response to a change in the

Correct AnswerverifiedShow Answer

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 figure illustrates the

Correct AnswerverifiedShow Answer

If a firm is able to charge a higher price for its output,all else equal,the value of the marginal product of labor will decrease to offset the higher price.

Correct AnswerverifiedShow Answer

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 sells its output for $12 per unit,and it pays each of its workers $700 per week.How many workers will the firm hire to maximize its profit?

Correct AnswerverifiedShow Answer

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