Question 1

Suppose that a change to early retirement laws leads to a decrease in labour supply. This means that:

Accepted Answer

A)   the marginal productivity of workers always decreases
B)   profit-maximising firms increase employment
C)   wages decrease as long as labour demand is downward-sloping
D)   wages increase as long as supply is downward-slopingE) C) and D)
F) B) and C)

Question 2

Competitive firms hire an additional worker only if the additional profit created by the newly hired worker exceeds:

Accepted Answer

A)   the revenue collected
B)   the wage she is paid
C)   her marginal product
D)   the value of her marginal productE) All of the above
F) A) and B)

Question 3

What happens to the profit earned by apple producers and the wage earned by apple pickers when the price of apples falls?

Accepted Answer

A)   both profit and wage will rise
B)   profit will rise and wage will fall
C)   profit will fall and wage will rise
D)   both profit and wage will fallE) A) and C)
F) A) and B)

Question 4

Who receives income from capital in Australia?

Accepted Answer

A)   bank depositors
B)   bondholders
C)   households
D)   all of the aboveE) A) and B)
F) C) and D)

Question 5

Which of the following events would cause an increase in the labour supply curve?

Accepted Answer

A)   a lower retirement age
B)   more married women deciding to work
C)   fewer married men deciding to work
D)   tighter restrictions on immigration policyE) A) and D)
F) A) and B)

Question 6

The decision on whether a firm should hire an additional worker is based on the impact of this on:

Accepted Answer

A)   productivity
B)   wages
C)   tax liabilities
D)   total profitE) All of the above
F) C) and D)

Question 7

The hiring decision of a profit-maximising firm is directly linked to the:

Accepted Answer

A)   relationship between labour inputs and output described by the production function
B)   value of leisure time to a worker
C)   number of workers available for work
D)   marginal satisfaction that a worker receives from labourE) B) and C)
F) A) and B)

Question 8

The value of the marginal product of labour curve is:

Accepted Answer

A)   S-shaped
B)   upward-sloping
C)   downward-sloping at the start, then upward-sloping at the middle
D)   downward-slopingE) A) and B)
F) B) and C)

Question 9

A key determinant of labour productivity is:

Accepted Answer

A)   family size
B)   the wage rate
C)   the amount of human capital workers acquire through education and training
D)   the demand for the final product produced by labourE) B) and C)
F) A) and B)

Question 10

Amy has two jobs, one for the winter and one for the summer. In the winter, she works as a tour guide at a crocodile zoo and earns $15 an hour. During the summer, Amy works as an English tutor and earns $18 an hour.
-Refer to the information provided. Assume that Amy has an upward-sloping labour supply curve. If the opportunity cost of Amy's leisure time increases, she will respond by:

Accepted Answer

A)   working fewer hours
B)   working more hours
C)   working an equal number of hours
D)   all of the above are possibleE) A) and B)
F) B) and C)

Question 11

Using the theory of wage determination, explain why wages in developing countries are typically quite low.

Accepted Answer

Wages are determined by the value of wor...

Question 12

What is the best example of the diminishing product of labour on an orchard?

Accepted Answer

A)   when only a few workers are hired, they pick from only the best (most productive and accessible)  trees in the orchard
B)   as more workers are hired, the orchard might become crowded with fruit pickers
C)   as more workers are hired, workers are required to pick from trees that have fewer fruit
D)   all of the above are good explanationsE) B) and D)
F) B) and C)

Question 13

The labour supply curve shifts when:

Accepted Answer

A)   employers need to hire more people
B)   employers develop new technology
C)   workers become more productive
D)   workers change the amount they want to work at any given wageE) A) and D)
F) A) and C)

Question 14

In general, less productive workers are paid less than more productive workers.

Accepted Answer

A) True 
 B)False

Question 15

When a petrol station sells petrol, which of the following would qualify as capital? (i)  the service attendants' time
(ii)  the physical space on which the station exists
(iii)  the petrol tanks and pumps

Accepted Answer

A)   (i)  only
B)   (iii)  only
C)   (i)  and (iii) 
D)   (ii)  and (iii) E) A) and D)
F) A) and C)

Question 16

When workers are in an industry that is experiencing rapid improvements in technology, they can expect to:

Accepted Answer

A)   see their wages decline
B)   experience wage increases, as their productivity is enhanced
C)   see a reduction in the need for physical capital
D)   see a reduction in demand for final productsE) A) and D)
F) A) and C)

Question 17

In a competitive labour market, the wage does which of the following? (i)  it adjusts to the balance of supply and demand for labour
(ii)  it equals the price of the final good
(iii)  it equals the value of the marginal product of labour

Accepted Answer

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

Question 18

Amy has two jobs, one for the winter and one for the summer. In the winter, she works as a tour guide at a crocodile zoo and earns $15 an hour. During the summer, Amy works as an English tutor and earns $18 an hour.
-According to the information provided, if Amy takes more hours of leisure in the summer than in the winter we can assume that the:

Accepted Answer

A)   income effect dominates the substitution effect
B)   substitution effect dominates the income effect
C)   leisure effect dominates the work effect
D)   income effect equals the substitution effectE) A) and B)
F) B) and D)

Question 19

Which of the following events would shift the labour supply curve?

Accepted Answer

A)   changes in tastes
B)   changes in the number of women willing to work
C)   changing attitudes towards work
D)   all of the aboveE) A) and C)
F) A) and D)

Question 20

Suppose that labour is the only input used by a perfectly competitive firm. The firm can hire workers for $100 per day. Each unit sells for $25. The firm's production function is as follows:
Labour Output
0 0
1 7
2 13
3 18
4 22
5 25
6 27
Calculate the value of the marginal product of labour at each input level, then determine how much labour the firm will employ.

Accepted Answer

The value of the marginal prod...

Exam 19: The Markets for the Factors of Production

What is the best example of the diminishing product of labour on an orchard?

Correct Answer
verified

What happens to the profit earned by apple producers and the wage earned by apple pickers when the price of apples falls?

Correct Answer
verified

The decision on whether a firm should hire an additional worker is based on the impact of this on:

Correct Answer
verified

A key determinant of labour productivity is:

Correct Answer
verified

Competitive firms hire an additional worker only if the additional profit created by the newly hired worker exceeds:

Correct Answer
verified

Which of the following events would cause an increase in the labour supply curve?

Correct Answer
verified

The hiring decision of a profit-maximising firm is directly linked to the:

Correct Answer
verified

In general, less productive workers are paid less than more productive workers.

Correct Answer
verified

Suppose that a change to early retirement laws leads to a decrease in labour supply. This means that:

Correct Answer
verified

Which of the following events would shift the labour supply curve?

Correct Answer
verified

When a petrol station sells petrol, which of the following would qualify as capital? (i) the service attendants' time (ii) the physical space on which the station exists (iii) the petrol tanks and pumps

Correct Answer
verified

When workers are in an industry that is experiencing rapid improvements in technology, they can expect to:

Correct Answer
verified

Using the theory of wage determination, explain why wages in developing countries are typically quite low.

Correct Answer
verified
Wages are determined by the value of wor...
View Answer

The labour supply curve shifts when:

Correct Answer
verified

Correct Answer
verified

Who receives income from capital in Australia?

Correct Answer
verified

Correct Answer
verified
The value of the marginal prod...
View Answer

The value of the marginal product of labour curve is:

Correct Answer
verified

Correct Answer
verified

In a competitive labour market, the wage does which of the following? (i) it adjusts to the balance of supply and demand for labour (ii) it equals the price of the final good (iii) it equals the value of the marginal product of labour

Correct Answer
verified

Exam 19: The Markets for the Factors of Production

What is the best example of the diminishing product of labour on an orchard?

Correct AnswerverifiedShow Answer

What happens to the profit earned by apple producers and the wage earned by apple pickers when the price of apples falls?

Correct AnswerverifiedShow Answer

The decision on whether a firm should hire an additional worker is based on the impact of this on:

Correct AnswerverifiedShow Answer

A key determinant of labour productivity is:

Correct AnswerverifiedShow Answer

Competitive firms hire an additional worker only if the additional profit created by the newly hired worker exceeds:

Correct AnswerverifiedShow Answer

Which of the following events would cause an increase in the labour supply curve?

Correct AnswerverifiedShow Answer

The hiring decision of a profit-maximising firm is directly linked to the:

Correct AnswerverifiedShow Answer

In general, less productive workers are paid less than more productive workers.

Correct AnswerverifiedShow Answer

Suppose that a change to early retirement laws leads to a decrease in labour supply. This means that:

Correct AnswerverifiedShow Answer

Which of the following events would shift the labour supply curve?

Correct AnswerverifiedShow Answer

When a petrol station sells petrol, which of the following would qualify as capital? (i) the service attendants' time (ii) the physical space on which the station exists (iii) the petrol tanks and pumps

Correct AnswerverifiedShow Answer

When workers are in an industry that is experiencing rapid improvements in technology, they can expect to:

Correct AnswerverifiedShow Answer

Using the theory of wage determination, explain why wages in developing countries are typically quite low.

Correct AnswerverifiedWages are determined by the value of wor...View AnswerShow Answer

The labour supply curve shifts when:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Who receives income from capital in Australia?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe value of the marginal prod...View AnswerShow Answer

The value of the marginal product of labour curve is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In a competitive labour market, the wage does which of the following? (i) it adjusts to the balance of supply and demand for labour (ii) it equals the price of the final good (iii) it equals the value of the marginal product of labour

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Wages are determined by the value of wor...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The value of the marginal prod...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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