Question 1

When a firm experiences diminishing marginal product,what is the shape of the curve that represents the value of the marginal product of labor?

Accepted Answer

A)   U-shaped
B)   flat
C)   downward sloping
D)   upward slopingE) A) and C)
F) A) and B)

Question 2

Movements of workers from country to country can cause shifts in the labor supply curves for both countries.

Accepted Answer

A) True 
 B)False

Question 3

For a retail gasoline station,which of the following would qualify as capital?

Accepted Answer

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

Question 4

Figure 18-3
The figure below shows the production function for a particular firm. 
-Refer to Figure 18-3.Suppose the firm pays a wage equal to $160 per unit of labor and sells its output at $10 per unit.What is the value of the marginal product of labor for the fourth worker?

Accepted Answer

A)   10 units
B)   $100
C)   $1,000
D)   $1,600E) A) and B)
F) B) and C)

Question 5

If Emma's individual labor supply curve is upward sloping,then Emma responds to an increase in

Accepted Answer

A)   the wage by working more hours per week.
B)   the opportunity cost of leisure by working fewer hours per week.
C)   the opportunity cost of leisure by taking more hours of leisure per week.
D)   Both a and b are correct.E) None of the above
F) B) and D)

Question 6

Table 18-4
Consider the following daily production data for Wills Golf Balls.Wills sells golf balls for $2.50 cents each and pays the workers a wage of $325 per day.
 
-Refer to Table 18-4.What is the value of the marginal product of the fifth worker?

Accepted Answer

A)   $120
B)   $300
C)   $2,000
D)   $2,300E) A) and B)
F) None of the above

Question 7

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

Accepted Answer

A)   The slope of the production function decreases as the quantity of input increases.
B)   The production function becomes steeper as the quantity of input increases.
C)   The production function slopes downward.
D)   The production function is horizontal beyond a certain quantity of input.E) None of the above
F) C) and D)

Question 8

Table 18-5
 
-Refer to Table 18-5.To maximize its profit,the firm will hire workers as long as the value of the marginal product of labor equals or exceeds

Accepted Answer

A)   $100.
B)   $200.
C)   $400.
D)   $500.E) A) and B)
F) A) and C)

Question 9

If a firm experiences diminishing marginal productivity of labor,the marginal product

Accepted Answer

A)   increases as total product increases.
B)   decreases as total product increases.
C)   increases as total product decreases.
D)   decreases as total product decreases.E) All of the above
F) B) and C)

Question 10

Capital,labor,and land

Accepted Answer

A)   have derived demands.
B)   are factors of production.
C)   are inputs used in the production of goods and services.
D)   All of the above are correct.E) A) and B)
F) All of the above

Question 11

The value of the marginal product of any input is equal to the marginal product of that input multiplied by the

Accepted Answer

A)   wage.
B)   marginal cost of the output.
C)   change in total profit.
D)   market price of the output.E) A) and C)
F) None of the above

Question 12

Bill is trying to convince the owner of a pizza shop to hire him.He argues that he could help the shop sell an additional five pizzas per day at the market price of $8 each.If the facts are not in dispute,but the owner does not hire him,then

Accepted Answer

A)   the wage rate must be less than $40 per day.
B)   hiring Bill would involve a negative marginal product.
C)   the wage rate must be more than $40 per day.
D)   the wage rate must be less than $8 per day.E) B) and D)
F) A) and B)

Question 13

As a result of a fire,a small business owner loses some of her computers and other equipment.If the property of diminishing returns applies to all factors of production,she should expect to see

Accepted Answer

A)   an increase in the marginal productivity of her remaining capital and an increase in the marginal productivity of her labor.
B)   an increase in the marginal productivity of her remaining capital and a decrease in the marginal productivity of her labor.
C)   a decrease in the marginal productivity of her remaining capital and an increase in the marginal productivity of her labor.
D)   a decrease in the marginal productivity of her remaining capital and a decrease in the marginal productivity of her labor.E) A) and D)
F) A) and C)

Question 14

An increase in the value of the marginal product of labor has the effect of increasing the

Accepted Answer

A)   demand for labor.
B)   wage.
C)   quantity of labor employed.
D)   All of the above are correct.E) B) and D)
F) B) and C)

Question 15

Which of the following best describes the economy's stock of equipment and structures?

Accepted Answer

A)   Capital
B)   Aggregate demand
C)   Long-term inventory
D)   Aggregate stockE) B) and C)
F) A) and B)

Question 16

Sally runs a hair styling salon.Sally is a profit-maximizing owner whose firm operates in a competitive market.The marginal cost of a haircut is $7.What is the maximum wage that Sally will pay her stylists?

Accepted Answer

A)   less than $7 per haircut
B)   $7 per haircut
C)   more than $7 haircut
D)   There is insufficient information to answer this question.E) B) and C)
F) A) and B)

Question 17

Table 18-3
 
-Refer to Table 18-3.This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor.Each baseball sells for $5 in a competitive market.For which level of employment is the marginal product of labor greatest?

Accepted Answer

A)   1 worker
B)   2 workers
C)   3 workers
D)   4 workersE) A) and B)
F) None of the above

Question 18

When labor supply increases,

Accepted Answer

A)   the marginal productivity of workers always increases.
B)   profit-maximizing firms reduce employment.
C)   wages increase as long as labor supply is upward sloping.
D)   wages decrease as long as labor demand is downward sloping.E) C) and D)
F) All of the above

Question 19

Suppose that the wage paid to workers who detassel corn rises.What happens in the market for workers who weed soybean fields,given that workers who detassel corn can easily work weeding soybean fields?

Accepted Answer

A)   The demand curve for soybean workers increases.
B)   The demand curve for soybean workers decreases.
C)   The supply curve for soybean workers increases.
D)   The supply curve for soybean workers decreases.E) All of the above
F) C) and D)

Question 20

Typically,as a firm hires additional workers,the marginal product of labor

Accepted Answer

A)   decreases and the value of the marginal product of labor decreases.
B)   stays constant and the value of the marginal product of labor decreases.
C)   decreases and the value of the marginal product of labor stays constant.
D)   decreases and the value of the marginal product of labor increases.E) A) and B)
F) C) and D)

Exam 18: The Markets for the Factors of Production

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

Correct AnswerverifiedShow Answer

Figure 18-3 The figure below shows the production function for a particular firm. -Refer to Figure 18-3.Suppose the firm pays a wage equal to $160 per unit of labor and sells its output at $10 per unit.What is the value of the marginal product of labor for the fourth worker?

Correct AnswerverifiedShow Answer

If a firm experiences diminishing marginal productivity of labor,the marginal product

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Sally runs a hair styling salon.Sally is a profit-maximizing owner whose firm operates in a competitive market.The marginal cost of a haircut is $7.What is the maximum wage that Sally will pay her stylists?

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Capital,labor,and land

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For a retail gasoline station,which of the following would qualify as capital?

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If Emma's individual labor supply curve is upward sloping,then Emma responds to an increase in

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The value of the marginal product of any input is equal to the marginal product of that input multiplied by the

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Table 18-5 -Refer to Table 18-5.To maximize its profit,the firm will hire workers as long as the value of the marginal product of labor equals or exceeds

Correct AnswerverifiedShow Answer

Which of the following best describes the economy's stock of equipment and structures?

Correct AnswerverifiedShow Answer

As a result of a fire,a small business owner loses some of her computers and other equipment.If the property of diminishing returns applies to all factors of production,she should expect to see

Correct AnswerverifiedShow Answer

Movements of workers from country to country can cause shifts in the labor supply curves for both countries.

Correct AnswerverifiedShow Answer

An increase in the value of the marginal product of labor has the effect of increasing the

Correct AnswerverifiedShow Answer

Bill is trying to convince the owner of a pizza shop to hire him.He argues that he could help the shop sell an additional five pizzas per day at the market price of $8 each.If the facts are not in dispute,but the owner does not hire him,then

Correct AnswerverifiedShow Answer

Typically,as a firm hires additional workers,the marginal product of labor

Correct AnswerverifiedShow Answer

Table 18-3 -Refer to Table 18-3.This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor.Each baseball sells for $5 in a competitive market.For which level of employment is the marginal product of labor greatest?

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Table 18-4 Consider the following daily production data for Wills Golf Balls.Wills sells golf balls for $2.50 cents each and pays the workers a wage of $325 per day. -Refer to Table 18-4.What is the value of the marginal product of the fifth worker?

Correct AnswerverifiedShow Answer

When labor supply increases,

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When a firm experiences diminishing marginal product,what is the shape of the curve that represents the value of the marginal product of labor?

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Suppose that the wage paid to workers who detassel corn rises.What happens in the market for workers who weed soybean fields,given that workers who detassel corn can easily work weeding soybean fields?

Correct AnswerverifiedShow Answer

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