Question 1

Grahame has a crocodile farm. He collects eggs from the wild which are hatched on the farm. Suppose flooding is very severe this year and eggs become much harder to find. As a result, Grahame should expect to see the marginal productivity of his capital:

Accepted Answer

A)   decrease
B)   increase
C)   remain unchanged
D)   turn negativeE) A) and D)
F) All of the above

Question 2

Profit-maximising competitive firms hire labour until marginal cost rises to equal:

Accepted Answer

A)   average wages
B)   marginal product
C)   the minimum wage
D)   the priceE) A) and C)
F) None of the above

Question 3

Table 18-1
 
-Refer to Table 18-1. What is the marginal product of the fourth worker?

Accepted Answer

A)   40
B)   80
C)   100
D)   280E) None of the above
F) A) and B)

Question 4

What happens to the demand for piano tuners and the wage paid to piano tuners when the price of pianos increases?

Accepted Answer

A)   demand for tuners increases, and so does their wage
B)   demand for tuners increases, and their wages fall
C)   demand for tuners falls, and so does their wage
D)   demand for tuners falls while their wage risesE) B) and D)
F) All of the above

Question 5

Graph 18-1
  This graph represents the value of marginal product for a firm that sells its product in a competitive market. Use the graph to answer the following question(s) .
-Refer to Graph 18-1. The value of the marginal product curve shown here is equivalent to which of the following?

Accepted Answer

A)   the demand curve for labour
B)   the supply curve for labour
C)   the labour production function
D)   the total revenue curveE) A) and D)
F) A) and C)

Question 6

Table 18-1
 
-Refer to Table 18-1. It is apparent from this table that increasing marginal product:

Accepted Answer

A)   never occurs
B)   occurs only after the first worker is hired
C)   occurs only after the second worker is hired
D)   occurs only after the third worker is hiredE) A) and B)
F) None of the above

Question 7

The term 'factor markets' is used to describe markets for:

Accepted Answer

A)   labour only
B)   all inputs into the production process
C)   all factors determining supply and demand
D)   fixed inputs onlyE) C) and D)
F) None of the above

Question 8

If the forestry sector decreases its demand for land, then the equilibrium land rental price will rise but the land made available for forestry will not change.

Accepted Answer

A) True 
 B)False

Question 9

Capital income does not include income paid to households for the use of their capital.

Accepted Answer

A) True 
 B)False

Question 10

A key determinant of labour productivity is:

Accepted Answer

A)   the market for final product demand
B)   the amount of physical capital available to workers
C)   the cultural value of work effort
D)   labour market supplyE) None of the above
F) A) and B)

Question 11

Graph 18-1
  This graph represents the value of marginal product for a firm that sells its product in a competitive market. Use the graph to answer the following question(s) .
-Refer to Graph 18-1. The shape of the curve suggests the presence of:

Accepted Answer

A)   increasing returns to scale
B)   increased productivity with increased labour
C)   decreased productivity with decreased labour
D)   diminishing marginal productE) A) and B)
F) A) and C)

Question 12

When a firm is a profit maximiser:

Accepted Answer

A)   it is driven to produce as much of its product as possible
B)   it does not care directly about the number of workers it hires
C)   it will measure its success by the number of employees it has
D)   its revenue will always be maximised as wellE) C) and D)
F) A) and B)

Question 13

When a profit-maximising firm makes a decision to employ a worker, that decision is based on:

Accepted Answer

A)   the familial relationship between the employer and the employee
B)   how much output the worker can produce
C)   the individual contribution that the worker makes to the profit of the firm
D)   the total output produced by the firmE) A) and B)
F) A) and C)

Question 14

An important determinant of labour productivity is the:

Accepted Answer

A)   amount of technological knowledge available to workers
B)   market for the final product produced by labour
C)   level of minimum wage
D)   elasticity of labour supplyE) A) and D)
F) A) and C)

Question 15

The change in supply of one factor:

Accepted Answer

A)   will not lower the price of other factors, but may alter their marginal productivity
B)   alters the earnings of all factors
C)   will not alter the marginal productivity of other factors, but may lower their price
D)   will not change the value of marginal product for other factorsE) A) and B)
F) B) and C)

Question 16

Which of the following statements is true of factor markets? (i)  when the supply of a factor falls, its equilibrium price falls
(ii)  when the supply of a factor rises, its equilibrium price falls
(iii)  when the supply of a factor falls, its equilibrium price rises

Accepted Answer

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

Question 17

Graph 18-2
 
-Refer to Graph 18-2. If the apple pickers start working fewer hours, the equilibrium wage will change due to changes in which of the following? (i)  the marginal product of labour
(ii)  the value of the marginal product of labour
(iii)  the price of the final good

Accepted Answer

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

Question 18

The Luddites were originally:

Accepted Answer

A)   descendants of General Ned Ludd
B)   workers who supported new technology
C)   Australian convicts
D)   workers who revolted against new technologyE) A) and D)
F) All of the above

Question 19

If Alpha Star is a competitive firm in the market for labour, it has great influence over the wage it pays its employees.

Accepted Answer

A) True 
 B)False

Question 20

If there is a change in the supply of labour there is no change to the earnings from capital and land.

Accepted Answer

A) True 
 B)False

Exam 19: The Markets for the Factors of Production

The Luddites were originally:

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Graph 18-2 -Refer to Graph 18-2. If the apple pickers start working fewer hours, the equilibrium wage will change due to changes in which of the following? (i) the marginal product of labour (ii) the value of the marginal product of labour (iii) the price of the final good

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When a firm is a profit maximiser:

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Table 18-1 -Refer to Table 18-1. It is apparent from this table that increasing marginal product:

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If there is a change in the supply of labour there is no change to the earnings from capital and land.

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The change in supply of one factor:

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An important determinant of labour productivity is the:

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Graph 18-1 This graph represents the value of marginal product for a firm that sells its product in a competitive market. Use the graph to answer the following question(s) . -Refer to Graph 18-1. The shape of the curve suggests the presence of:

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When a profit-maximising firm makes a decision to employ a worker, that decision is based on:

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Which of the following statements is true of factor markets? (i) when the supply of a factor falls, its equilibrium price falls (ii) when the supply of a factor rises, its equilibrium price falls (iii) when the supply of a factor falls, its equilibrium price rises

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The term 'factor markets' is used to describe markets for:

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Table 18-1 -Refer to Table 18-1. What is the marginal product of the fourth worker?

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What happens to the demand for piano tuners and the wage paid to piano tuners when the price of pianos increases?

Correct AnswerverifiedShow Answer

If Alpha Star is a competitive firm in the market for labour, it has great influence over the wage it pays its employees.

Correct AnswerverifiedShow Answer

Graph 18-1 This graph represents the value of marginal product for a firm that sells its product in a competitive market. Use the graph to answer the following question(s) . -Refer to Graph 18-1. The value of the marginal product curve shown here is equivalent to which of the following?

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Profit-maximising competitive firms hire labour until marginal cost rises to equal:

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Grahame has a crocodile farm. He collects eggs from the wild which are hatched on the farm. Suppose flooding is very severe this year and eggs become much harder to find. As a result, Grahame should expect to see the marginal productivity of his capital:

Correct AnswerverifiedShow Answer

Capital income does not include income paid to households for the use of their capital.

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If the forestry sector decreases its demand for land, then the equilibrium land rental price will rise but the land made available for forestry will not change.

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A key determinant of labour productivity is:

Correct AnswerverifiedShow Answer

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