Question 1

For a monopsonist facing an upward-sloping supply curve of labour,the marginal cost of labour curve

Accepted Answer

A) intersects the value of marginal product curve of labour at the equilibrium wage rate. 
B) is below and parallel to the supply of labour curve. 
C) is identical to the supply of labour curve. 
D) is above and parallel to the supply of labour curve. 
E) is above the supply curve of labour. 
A) intersects the value of marginal product curve of labour at the equilibrium wage rate. 
B) is below and parallel to the supply of labour curve. 
C) is identical to the supply of labour curve. 
D) is above and parallel to the supply of labour curve. 
E) is above the supply curve of labour.

Question 2

A decrease in the price of a firm's output

Accepted Answer

A) decreases the supply of labour. 
B) increases the supply of labour. 
C) increases the value of marginal product of labour. 
D) decreases the quantity of labour demanded. 
E) decreases the value of marginal product of labour. 
A) decreases the supply of labour. 
B) increases the supply of labour. 
C) increases the value of marginal product of labour. 
D) decreases the quantity of labour demanded. 
E) decreases the value of marginal product of labour.

Question 3

A union is formed to restrict labour supply in a previously perfectly competitive labour market.If the union succeeds in raising the wage rate,everything else remaining the same,

Accepted Answer

A) employment will fall. 
B) employment will rise. 
C) employment will not change. 
D) firms will lock out the union workers. 
E) the demand β1 union labour will increase. 
A) employment will fall. 
B) employment will rise. 
C) employment will not change. 
D) firms will lock out the union workers. 
E) the demand β1 union labour will increase.

Question 4

Equilibrium occurs in the market for oil when the

Accepted Answer

A) price of the oil equals the interest rate. 
B) increase in the price of oil equals the expected increase in the interest rate. 
C) expected increase in the price of oil over time is equal to the interest rate. 
D) stock of oil is eventually depleted. 
E) price of oil today equals the expected future price. 
A) price of the oil equals the interest rate. 
B) increase in the price of oil equals the expected increase in the interest rate. 
C) expected increase in the price of oil over time is equal to the interest rate. 
D) stock of oil is eventually depleted. 
E) price of oil today equals the expected future price.

Question 5

The substitution effect on labour supply refers to the degree to which

Accepted Answer

A) the firm can substitute other factors of production for labour. 
B) buyers can substitute other products for the products that are made by organized labour. 
C) a firm is willing to substitute nonlabour income for wages. 
D) workers prefer to substitute nonmonetary payments for money wages. 
E) a worker is willing to substitute work for leisure. 
A) the firm can substitute other factors of production for labour. 
B) buyers can substitute other products for the products that are made by organized labour. 
C) a firm is willing to substitute nonlabour income for wages. 
D) workers prefer to substitute nonmonetary payments for money wages. 
E) a worker is willing to substitute work for leisure.

Question 6

Use the information below to answer the following questions.
Fact 17.2.1
Wanda's is a fish store that hires students to pack the fish.The fish market is competitive.Originally the price is 50¢ a kilogram.The market for packers is competitive and their market wage rate is $7.50 an hour.Then the market price of fish falls to 33.33¢ a kilogram but the wage rate of fish packers remains at $7.50 an hour.
-Refer to Fact 17.2.1.As a result,

Accepted Answer

A) Wanda's demand for labour curve shifts rightward and the firm hires more students. 
B) the value of marginal product decreases,but Wanda's still continues to hire the same number of students. 
C) Wanda's demand for labour curve shifts leftward and the firm hires fewer students. 
D) marginal product increases so Wanda's hires more students. 
E) Wanda's demand for labour curve shifts leftward and the students' supply of labour curve shifts leftward,and the firm hires fewer students. 
A) Wanda's demand for labour curve shifts rightward and the firm hires more students. 
B) the value of marginal product decreases,but Wanda's still continues to hire the same number of students. 
C) Wanda's demand for labour curve shifts leftward and the firm hires fewer students. 
D) marginal product increases so Wanda's hires more students. 
E) Wanda's demand for labour curve shifts leftward and the students' supply of labour curve shifts leftward,and the firm hires fewer students.

Question 7

All of the following statements are correct except

Accepted Answer

A) if the price of oil is expected to rise at a rate equal to the interest rate,demand increases and supply increases. 
B) the interest rate is the opportunity cost of holding an oil inventory. 
C) if the price of oil is expected to rise at a rate that exceeds the interest rate,demand increases and supply decreases. 
D) according to the Hotelling Principle,the price of a nonrenewable natural resource is expected to rise at a rate equal to the interest rate. 
E) the marginal cost of extraction of oil is the fundamental determinant of supply. 
A) if the price of oil is expected to rise at a rate equal to the interest rate,demand increases and supply increases. 
B) the interest rate is the opportunity cost of holding an oil inventory. 
C) if the price of oil is expected to rise at a rate that exceeds the interest rate,demand increases and supply decreases. 
D) according to the Hotelling Principle,the price of a nonrenewable natural resource is expected to rise at a rate equal to the interest rate. 
E) the marginal cost of extraction of oil is the fundamental determinant of supply.

Question 8

Use the table below to answer the following questions.
Table 17.2.1
  
-Refer to Table 17.2.1.If the firm can sell all the output it wants for the price of $10 a unit,what is the profit-maximizing number of workers if the wage rate is $30?

Accepted Answer

A) 1 
B) 5 
C) 6 
D) 8 
E) 9 
A) 1 
B) 5 
C) 6 
D) 8 
E) 9

Question 9

If a union and the monopsonist in Figure 17.3.2 agree to bargaining,the outcome is an hourly wage rate

Accepted Answer

A) of $14. 
B) between $11 and $14. 
C) between $11 and $17. 
D) between $14 and $17. 
E) of $17. 
A) of $14. 
B) between $11 and $14. 
C) between $11 and $17. 
D) between $14 and $17. 
E) of $17.

Question 10

Use the figure below to answer the following questions.   Figure 17.3.3
-Refer to Figure 17.3.3.For the monopsonist employer illustrated in this figure,the profit-maximizing wage rate is ________ and the quantity of labour hired is ________.

Accepted Answer

A) $18 per hour;300 hours 
B) $16 per hour;350 hours 
C) $16 per hour;500 hours 
D) $14 per hour;400 hours 
E) $12 per hour;300 hours 
A) $18 per hour;300 hours 
B) $16 per hour;350 hours 
C) $16 per hour;500 hours 
D) $14 per hour;400 hours 
E) $12 per hour;300 hours

Question 11

Mr.Smith's firm competes in a perfectly competitive market.The firm is currently hiring 30 workers.The value of marginal product of the last worker is $7.00 per hour.The wage rate is $8.00 per hour.To increase profit,Mr.Smith

Accepted Answer

A) continues hiring 30 workers because the firm earns a surplus of $1.00 on each worker hired. 
B) increases the price of the firm's product so that the value of marginal product of the last worker hired increases to $8.00 per hour. 
C) decreases the price of the firm's product so that the value of marginal product of the last worker hired increases to $8.00 per hour. 
D) decreases the number of workers until the value of marginal product of labour of the last worker hired equals $8.00. 
E) increases the number of workers until the value of marginal product of labour of the last worker hired equals $8.00. 
A) continues hiring 30 workers because the firm earns a surplus of $1.00 on each worker hired. 
B) increases the price of the firm's product so that the value of marginal product of the last worker hired increases to $8.00 per hour. 
C) decreases the price of the firm's product so that the value of marginal product of the last worker hired increases to $8.00 per hour. 
D) decreases the number of workers until the value of marginal product of labour of the last worker hired equals $8.00. 
E) increases the number of workers until the value of marginal product of labour of the last worker hired equals $8.00.

Question 12

Use the information below to answer the following questions.
Fact 17.4.1
Water is a natural resource that is plentiful in Canada but not plentiful in Arizona and southern California.Suppose Canadians start to export bulk water to Arizona and southern California.
-Refer to Fact 17.4.1.The Hotelling Principle ________ apply to Canada's water because the Hotelling Principle ________.

Accepted Answer

A) does;applies to renewable resources and water is a renewable resource 
B) does;only applies when the interest rate is falling 
C) does not;applies to nonrenewable resources but water is a renewable resource 
D) does not;only applies when the interest rate is rising 
E) does;applies when interest rates are relatively low 
A) does;applies to renewable resources and water is a renewable resource 
B) does;only applies when the interest rate is falling 
C) does not;applies to nonrenewable resources but water is a renewable resource 
D) does not;only applies when the interest rate is rising 
E) does;applies when interest rates are relatively low

Question 13

The present value of a future payment of money will be higher the

Accepted Answer

A) higher the interest rate or the further in the future the payment. 
B) lower the interest rate or the further in the future the payment. 
C) higher the interest rate or the nearer the date of the future payment. 
D) lower the interest rate or the nearer the date of the future payment. 
E) lower the interest rate,independent of the date of the future payment. 
A) higher the interest rate or the further in the future the payment. 
B) lower the interest rate or the further in the future the payment. 
C) higher the interest rate or the nearer the date of the future payment. 
D) lower the interest rate or the nearer the date of the future payment. 
E) lower the interest rate,independent of the date of the future payment.

Question 14

The value of marginal product is

Accepted Answer

A) the value to the firm of hiring one more unit of a factor of production. 
B) the maximum marginal product of the factor of production. 
C) calculated as total revenue divided by the total quantity employed. 
D) calculated as marginal product divided by marginal benefit. 
E) calculated as marginal product divided by the price of a unit of output . 
A) the value to the firm of hiring one more unit of a factor of production. 
B) the maximum marginal product of the factor of production. 
C) calculated as total revenue divided by the total quantity employed. 
D) calculated as marginal product divided by marginal benefit. 
E) calculated as marginal product divided by the price of a unit of output .

Question 15

A monopsony exists when there is

Accepted Answer

A) a single buyer in a market. 
B) a single seller in a market. 
C) a small number of large buyers in a market. 
D) a small number of large sellers in a market. 
E) an agreement among sellers in a market to set prices. 
A) a single buyer in a market. 
B) a single seller in a market. 
C) a small number of large buyers in a market. 
D) a small number of large sellers in a market. 
E) an agreement among sellers in a market to set prices.

Question 16

The demand for a factor of production is

Accepted Answer

A) a determined demand. 
B) a derived demand. 
C) a kinked demand. 
D) an insatiable demand. 
E) a desperate demand. 
A) a determined demand. 
B) a derived demand. 
C) a kinked demand. 
D) an insatiable demand. 
E) a desperate demand.

Question 17

The reservation wage rate is the wage rate

Accepted Answer

A) below which the labourer will be willing to work. 
B) above which the worker would be willing to retire. 
C) at which the firm would find it profitable to hire labour. 
D) that makes it necessary for the firm to shut down rather than pay this wage to labour. 
E) above which the worker would be willing to supply labour to the market. 
A) below which the labourer will be willing to work. 
B) above which the worker would be willing to retire. 
C) at which the firm would find it profitable to hire labour. 
D) that makes it necessary for the firm to shut down rather than pay this wage to labour. 
E) above which the worker would be willing to supply labour to the market.

Question 18

Use the information below to answer the following questions.
Fact 17.5.1
The Burning Belly Taco Stand is considering buying some new special ovens.Each oven will cost $1,000,and will last for 2 years before it wears out.The ovens will be used to make the Taco Stands famous "Burning Ring of Fire" tacos,and will generate a value of marginal product of $600 for the first oven,$570 for the second oven,and $530 for the third oven.(Assume all revenues are earned at the end of the year. )
-Consider Fact 17.5.1.If the rate of interest is 10 percent,how many ovens will the Burning Belly Taco Stand buy?

Accepted Answer

A) zero 
B) 1 
C) 2 
D) 3 
E) as many as it can afford 
A) zero 
B) 1 
C) 2 
D) 3 
E) as many as it can afford

Question 19

If marginal product of a restaurant employee is 10 customers per hour,and the price of a meal is $15,the restaurant employee's value of marginal product is

Accepted Answer

A) $15. 
B) $7.5. 
C) $12.5. 
D) $10. 
E) $150. 
A) $15. 
B) $7.5. 
C) $12.5. 
D) $10. 
E) $150.

Question 20

When the price of a firm's output increases,

Accepted Answer

A) the supply of labour increases. 
B) the firm hires less labour. 
C) the marginal product of labour increases. 
D) the firm's demand for labour curve shifts leftward. 
E) the value of marginal product of labour increases. 
A) the supply of labour increases. 
B) the firm hires less labour. 
C) the marginal product of labour increases. 
D) the firm's demand for labour curve shifts leftward. 
E) the value of marginal product of labour increases.

For a monopsonist facing an upward-sloping supply curve of labour,the marginal cost of labour curve

A decrease in the price of a firm's output

A union is formed to restrict labour supply in a previously perfectly competitive labour market.If the union succeeds in raising the wage rate,everything else remaining the same,

Equilibrium occurs in the market for oil when the

The substitution effect on labour supply refers to the degree to which

All of the following statements are correct except

Use the table below to answer the following questions. Table 17.2.1 -Refer to Table 17.2.1.If the firm can sell all the output it wants for the price of $10 a unit,what is the profit-maximizing number of workers if the wage rate is $30?

If a union and the monopsonist in Figure 17.3.2 agree to bargaining,the outcome is an hourly wage rate

Use the figure below to answer the following questions. Figure 17.3.3 -Refer to Figure 17.3.3.For the monopsonist employer illustrated in this figure,the profit-maximizing wage rate is and the quantity of labour hired is .

Mr.Smith's firm competes in a perfectly competitive market.The firm is currently hiring 30 workers.The value of marginal product of the last worker is $7.00 per hour.The wage rate is $8.00 per hour.To increase profit,Mr.Smith

The present value of a future payment of money will be higher the

The value of marginal product is

A monopsony exists when there is

The demand for a factor of production is

The reservation wage rate is the wage rate

If marginal product of a restaurant employee is 10 customers per hour,and the price of a meal is $15,the restaurant employee's value of marginal product is

When the price of a firm's output increases,

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, preferences, and Choices

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Economic Inequality

Filters

Exam 17: Markets for Factors of Production

For a monopsonist facing an upward-sloping supply curve of labour,the marginal cost of labour curve

A decrease in the price of a firm's output

A union is formed to restrict labour supply in a previously perfectly competitive labour market.If the union succeeds in raising the wage rate,everything else remaining the same,

Equilibrium occurs in the market for oil when the

The substitution effect on labour supply refers to the degree to which

All of the following statements are correct except

Use the table below to answer the following questions. Table 17.2.1 -Refer to Table 17.2.1.If the firm can sell all the output it wants for the price of $10 a unit,what is the profit-maximizing number of workers if the wage rate is $30?

If a union and the monopsonist in Figure 17.3.2 agree to bargaining,the outcome is an hourly wage rate

Use the figure below to answer the following questions. Figure 17.3.3 -Refer to Figure 17.3.3.For the monopsonist employer illustrated in this figure,the profit-maximizing wage rate is ________ and the quantity of labour hired is ________.

Mr.Smith's firm competes in a perfectly competitive market.The firm is currently hiring 30 workers.The value of marginal product of the last worker is $7.00 per hour.The wage rate is $8.00 per hour.To increase profit,Mr.Smith

The present value of a future payment of money will be higher the

The value of marginal product is

A monopsony exists when there is

The demand for a factor of production is

The reservation wage rate is the wage rate

If marginal product of a restaurant employee is 10 customers per hour,and the price of a meal is $15,the restaurant employee's value of marginal product is

When the price of a firm's output increases,

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, preferences, and Choices

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Economic Inequality

Filters

Use the figure below to answer the following questions. Figure 17.3.3 -Refer to Figure 17.3.3.For the monopsonist employer illustrated in this figure,the profit-maximizing wage rate is and the quantity of labour hired is .