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Table 18-2 Table 18-2 -Refer to Table 18-2. The table shows the number of bracelets that can be assembled per week by various numbers of workers. If the price per bracelet in a perfectly competitive product market is $8, how many workers would the firm employ if the weekly wage rate is $800? A) 1 B) 2 C) 3 D) 4 -Refer to Table 18-2. The table shows the number of bracelets that can be assembled per week by various numbers of workers. If the price per bracelet in a perfectly competitive product market is $8, how many workers would the firm employ if the weekly wage rate is $800?


A) 1
B) 2
C) 3
D) 4

E) B) and D)
F) B) and C)

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Which of the following events could decrease the demand for labor?


A) An increase in the number of migrant workers
B) An increase in the marginal productivity of workers
C) A decrease in demand for the final product produced by labor
D) A decrease in the supply of labor

E) All of the above
F) B) and C)

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Table 18-11 Consider the following daily production data for MadeFromScratch, Inc. MadeFromScratch sells cupcakes for $2 each and pays the workers a wage of $325 per day. Table 18-11 Consider the following daily production data for MadeFromScratch, Inc. MadeFromScratch sells cupcakes for $2 each and pays the workers a wage of $325 per day. -Refer to Table 18-11. Suppose that there is a technological advance that allows MadeFromScratch employees to produce more cupcakes than they could before. Because of this change, the firm's A) demand for labor shifts right. B) demand for labor shifts left. C) supply of labor shifts right. D) supply of labor shifts left. -Refer to Table 18-11. Suppose that there is a technological advance that allows MadeFromScratch employees to produce more cupcakes than they could before. Because of this change, the firm's


A) demand for labor shifts right.
B) demand for labor shifts left.
C) supply of labor shifts right.
D) supply of labor shifts left.

E) A) and D)
F) C) and D)

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Figure 18-5 The figure shows a particular profit­maximizing, competitive firm's value­of­marginal­product (VMP) curve. On the horizontal axis, L represents the number of workers. The time frame is daily. Figure 18-5 The figure shows a particular profit­maximizing, competitive firm's value­of­marginal­product (VMP) curve. On the horizontal axis, L represents the number of workers. The time frame is daily. -Refer to Figure 18-5. Suppose one point on the firm's production function is (L = 3, Q = 180) , where L = number of workers and Q = quantity of output. If the firm sells its output for $5 per unit, then A) a second point on the firm's production function is (L = 4, Q = 216) . B) the firm's production function exhibits the property of diminishing marginal product of labor. C) the firm will maximize profit by hiring four workers if it pays workers $160 per day. D) All of the above are correct. -Refer to Figure 18-5. Suppose one point on the firm's production function is (L = 3, Q = 180) , where L = number of workers and Q = quantity of output. If the firm sells its output for $5 per unit, then


A) a second point on the firm's production function is (L = 4, Q = 216) .
B) the firm's production function exhibits the property of diminishing marginal product of labor.
C) the firm will maximize profit by hiring four workers if it pays workers $160 per day.
D) All of the above are correct.

E) All of the above
F) B) and C)

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Which of the following accurately describes how earnings from capital eventually get paid to households?


A) Households can own a stock of capital and rent it to firms.
B) Households lend money to firms, who then pay interest to the households.
C) Households that own stock in firms receive dividends.
D) All of the above are correct.

E) None of the above
F) B) and C)

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Figure 18-9 Figure 18-9 -Refer to Figure 18-9. If the price of apples increases, the equilibrium wage will A) increase, and more apple pickers will be hired. B) decrease, and more apple pickers will be hired. C) increase, and fewer apple pickers will be hired. D) decrease, and fewer apple pickers will be hired. -Refer to Figure 18-9. If the price of apples increases, the equilibrium wage will


A) increase, and more apple pickers will be hired.
B) decrease, and more apple pickers will be hired.
C) increase, and fewer apple pickers will be hired.
D) decrease, and fewer apple pickers will be hired.

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

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An increase in the wages paid to high-school student who detassle corn will increase the labor supply of high-school students who weed soybean fields, all else equal.

A) True
B) False

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If the demand curve for wedding cakes shifts to the right, then the value of the marginal product of labor for bakers will


A) rise.
B) fall.
C) remain unchanged.
D) rise or fall; either is possible.

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

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Figure 18-1 On the graph, L represents the quantity of labor and Q represents the quantity of output per week. 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 hires each unit of labor for $700 per week, and each unit of output sells for $9. How many workers will the firm hire to maximize its profit? A) 2 B) 3 C) 4 D) 5 -Refer to Figure 18-1. Suppose the firm hires each unit of labor for $700 per week, and each unit of output sells for $9. How many workers will the firm hire to maximize its profit?


A) 2
B) 3
C) 4
D) 5

E) B) and D)
F) B) and C)

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Table 18-4 Table 18-4 -Refer to Table 18-4. How many workers should the firm hire? A) 1 B) 2 C) 3 D) 4 -Refer to Table 18-4. How many workers should the firm hire?


A) 1
B) 2
C) 3
D) 4

E) B) and C)
F) C) and D)

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When a competitive firm maximizes profit, it will hire workers up to the point where the


A) marginal product of labor is equal to the product price.
B) marginal product of labor is equal to the wage.
C) value of the marginal product of labor is equal to the product price.
D) value of the marginal product of labor is equal to the wage.

E) B) and D)
F) B) and C)

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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


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

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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?

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Yes. Jen responded to the lowe...

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'Chuckie's Pizza Palace produces gourmet pizzas that sell for $20 each. Assume that labor is the only input that varies for the firm. If Chuckie hires 10 workers, he can produce and sell 600 pizzas per week. If he hires 11 workers, he can produce and sell 650 pizzas per week. Chuckie pays each of his workers $400 per week. Which of the following is correct?


A) For the 11th worker, the marginal profit is $1,000.
B) For the 11th worker, the marginal revenue product is $1,000.
C) The firm is maximizing its profit.
D) If the firm is employing 11 workers, then its profit would increase if it cut back to 10 workers.

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

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An upward-sloping labor-supply curve implies that an increase in the wage induces


A) firms to increase the quantity of labor they hire.
B) firms to increase the quantity of output they produce.
C) workers to decrease the quantity of leisure they enjoy.
D) All of the above are correct.

E) None of the above
F) A) and B)

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Figure 18-9 Figure 18-9 -Refer to Figure 18-9. If the apple pickers start working fewer hours because they are taking more vacation time, the equilibrium wage will A) fall below w1 due to a shift in demand. B) fall below w1 due to a shift in supply. C) rise above w1 due to a shift in demand. D) rise above w1 due to a shift in supply. -Refer to Figure 18-9. If the apple pickers start working fewer hours because they are taking more vacation time, the equilibrium wage will


A) fall below w1 due to a shift in demand.
B) fall below w1 due to a shift in supply.
C) rise above w1 due to a shift in demand.
D) rise above w1 due to a shift in supply.

E) B) and D)
F) All of the above

Correct Answer

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Table 18-7 Table 18-7 -Refer to Table 18-7. The fact that the production function exhibits diminishing marginal productivity implies that A) total production decreases beyond a certain level of output. B) labor markets are not always competitive. C) the additions to total output get smaller as more workers are hired. D) marginal profit is negative. -Refer to Table 18-7. The fact that the production function exhibits diminishing marginal productivity implies that


A) total production decreases beyond a certain level of output.
B) labor markets are not always competitive.
C) the additions to total output get smaller as more workers are hired.
D) marginal profit is negative.

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

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The value of the marginal product of capital can be calculated as the market price of the good multiplied by the marginal product of capital.

A) True
B) False

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Juanita is trying to convince the owner of a jewelry store to hire her. She argues that she could help the shop sell an additional three rings per day for a profit of $20 each. If the facts are not in dispute, but the owner does not hire her, then


A) the wage rate must be less than $60 per day.
B) hiring Juanita would involve a negative marginal product.
C) the wage rate must be more than $60 per day.
D) the wage rate must be less than $20 per day.

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

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Economic theory predicts a close relationship between productivity and real wages. Does history confirm this relationship?

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Yes. Data ...

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