Question 1

A monopsony pays a wage rate that is

Accepted Answer

A)  greater than value of marginal product. 
B)  equal to the marginal cost of labor. 
C)  less than value of marginal product. 
D)  unacceptable to the workers hired. 
A)  greater than value of marginal product. 
B)  equal to the marginal cost of labor. 
C)  less than value of marginal product. 
D)  unacceptable to the workers hired.

Question 2

-In the table above, the marginal product of the third unit of labor is ________ units of output.

Accepted Answer

A)  3 
B)  4 
C)  12 
D)  16 
A)  3 
B)  4 
C)  12 
D)  16

Question 3

When the price of the good or service it produces rises, the firm's

Accepted Answer

A)  demand for labor curve shifts rightward. 
B)  demand for labor curve shifts leftward. 
C)  demand for labor curve remains unchanged. 
D)  output decreases. 
A)  demand for labor curve shifts rightward. 
B)  demand for labor curve shifts leftward. 
C)  demand for labor curve remains unchanged. 
D)  output decreases.

Question 4

Sandy's Shiny Car is a perfectly competitive car wash service. The table above shows Sandy's total product schedule. Sandy can sell as many washes as she chooses at $5, and the wage rate of her workers is $60 a day.
-a) Draw Sandy's workers' marginal product of labor curve.
b) Draw Sandy's workers' value of marginal product curve.
c) Find Sandy's demand for labor curve.
d) How many workers does Sandy employ?

Accepted Answer

@#IMG-DLM& a) See the figure above. The marginal p

Question 5

The demand for labor depends on I. technology.
II) the prices of other factors of production.
III) the price of the product.

Accepted Answer

A)  I and II 
B)  II and III 
C)  I and III 
D)  I, II and III 
A)  I and II 
B)  II and III 
C)  I and III 
D)  I, II and III

Question 6

If Joe receives an increase in his wage rate and decides to decrease his hours worked, the

Accepted Answer

A)  substitution effect and the income effect must be equal. 
B)  substitution effect must exceed the income effect. 
C)  income effect must exceed the substitution effect. 
D)  substitution effect must be zero. 
A)  substitution effect and the income effect must be equal. 
B)  substitution effect must exceed the income effect. 
C)  income effect must exceed the substitution effect. 
D)  substitution effect must be zero.

Question 7

"The decision to employ an additional unit of labor depends on whether the value of marginal product is greater than or smaller than the wage rate." Is the previous statement correct or incorrect?

Accepted Answer

The statement is correct. If t

Question 8

An auction of the leases to drill for natural gas on about 55,000 acres on the Roan Plateau in western Colorado in August 2008 generated nearly $114 million, a record for onshore energy lease sales in the lower 48 states. What is the most likely reason companies are leasing this land?

Accepted Answer

A)  Increasing natural gas prices lead to an increased value of marginal product for an acre on the Roan Plateau. 
B)  Increasing natural gas prices lead to an increased supply of acres on the Roan Plateau. 
C)  The future price of natural gas is expected to increase leading to an increased supply of acres on the Roan Plateau, 
D)  The value of marginal product of natural gas is diminishing. 
A)  Increasing natural gas prices lead to an increased value of marginal product for an acre on the Roan Plateau. 
B)  Increasing natural gas prices lead to an increased supply of acres on the Roan Plateau. 
C)  The future price of natural gas is expected to increase leading to an increased supply of acres on the Roan Plateau, 
D)  The value of marginal product of natural gas is diminishing.

Question 9

An individual's labor supply curve will have a

Accepted Answer

A)  positive slope if the income effect exceeds the substitution effect. 
B)  negative slope if the substitution effect exceeds the income effect. 
C)  positive slope if the substitution effect exceeds the income effect. 
D)  negative slope regardless of whether the substitution effect or income effect is larger. 
A)  positive slope if the income effect exceeds the substitution effect. 
B)  negative slope if the substitution effect exceeds the income effect. 
C)  positive slope if the substitution effect exceeds the income effect. 
D)  negative slope regardless of whether the substitution effect or income effect is larger.

Question 10

The present value of a $5,000 cash gift to be received four years in the future, given an annual interest rate of 6 percent, is (to the nearest dollar)

Accepted Answer

A)  $4700. 
B)  $4717. 
C)  $6312. 
D)  $3960. 
A)  $4700. 
B)  $4717. 
C)  $6312. 
D)  $3960.

Question 11

If the income effect is larger than the substitution effect, then a wage hike will be accompanied by an increase in the quantity of labor supplied.

Accepted Answer

A) True 
 B)False

Question 12

The demand for factor is driven by the demand for goods and services produced by that factor of production. This phenomenon is referred to as

Accepted Answer

A)  elastic demand. 
B)  joint demand. 
C)  inverse demand. 
D)  derived demand. 
A)  elastic demand. 
B)  joint demand. 
C)  inverse demand. 
D)  derived demand.

Question 13

Unions tend to ________ import restrictions and ________ a higher minimum wage.

Accepted Answer

A)  favor; favor 
B)  favor; oppose 
C)  oppose; favor 
D)  oppose; oppose 
A)  favor; favor 
B)  favor; oppose 
C)  oppose; favor 
D)  oppose; oppose

Question 14

What is the Hotelling Principle? Have resource prices behaved as the principle predicts?

Accepted Answer

The Hotelling Principle states that the

Question 15

The labor supply curve is backward bending because

Accepted Answer

A)  as the wage rate rises, the substitution effect becomes larger than the income effect. 
B)  as the wage rate rises, the income effect becomes larger than the substitution effect. 
C)  an increase in the wage rate shifts the supply of labor curve leftward at higher wages. 
D)  an increase in the wage rate shifts the supply of labor curve rightward at higher wages. 
A)  as the wage rate rises, the substitution effect becomes larger than the income effect. 
B)  as the wage rate rises, the income effect becomes larger than the substitution effect. 
C)  an increase in the wage rate shifts the supply of labor curve leftward at higher wages. 
D)  an increase in the wage rate shifts the supply of labor curve rightward at higher wages.

Question 16

Sandy's Shiny Car is a perfectly competitive car wash service. The table above shows Sandy's total product schedule. Sandy can sell as many washes as she chooses at $5, and the wage rate of her workers is $60 a day.
-Suppose the price of a car wash falls to $3. The wage rate remains $60 per day.
a) What happens to the marginal product of labor? To the value of marginal product? To Sandy's demand for labor curve?
b) When the price of a car wash falls to $3, how many workers does Sandy employ?

Accepted Answer

@#IMG-DLM& a) The marginal product of labor depend

Question 17

If your labor supply increases when you get a raise, which of the following is true?

Accepted Answer

A)  Your substitution effect is greater than your income effect. 
B)  Your substitution effect is less than your income effect. 
C)  Your substitution effect equals your income effect. 
D)  None of the above answers is correct. 
A)  Your substitution effect is greater than your income effect. 
B)  Your substitution effect is less than your income effect. 
C)  Your substitution effect equals your income effect. 
D)  None of the above answers is correct.

Question 18

At high wage rates, the labor supply curve bends backward because the ________ effect dominates the ________ effect.

Accepted Answer

A)  income; price 
B)  substitution; income 
C)  substitution; price 
D)  income; substitution 
A)  income; price 
B)  substitution; income 
C)  substitution; price 
D)  income; substitution

Question 19

-The table above gives information about the labor market in Lantis, a community in which the labor market is perfectly competitive. If the demand for labor decreases by 200 hours per day, the equilibrium wage rate falls to ________ an hour and the quantity of labor employed ________ hours per day.

Accepted Answer

A)  $10; remains at 400 
B)  $10; decreases to 300 
C)  $20; increases to 400 
D)  $5; remains at 200 
A)  $10; remains at 400 
B)  $10; decreases to 300 
C)  $20; increases to 400 
D)  $5; remains at 200

Question 20

If the price of dog grooming increased, then number of workers hired by Doug's Dog Grooming would

Accepted Answer

A)  decrease. 
B)  increase. 
C)  remain unchanged. 
D)  Any of the above answers are possible. 
A)  decrease. 
B)  increase. 
C)  remain unchanged. 
D)  Any of the above answers are possible.

Exam 18: Markets for Factors of Production

A monopsony pays a wage rate that is

-In the table above, the marginal product of the third unit of labor is ________ units of output.

When the price of the good or service it produces rises, the firm's

The demand for labor depends on I. technology. II) the prices of other factors of production. III) the price of the product.

If Joe receives an increase in his wage rate and decides to decrease his hours worked, the

"The decision to employ an additional unit of labor depends on whether the value of marginal product is greater than or smaller than the wage rate." Is the previous statement correct or incorrect?

An auction of the leases to drill for natural gas on about 55,000 acres on the Roan Plateau in western Colorado in August 2008 generated nearly $114 million, a record for onshore energy lease sales in the lower 48 states. What is the most likely reason companies are leasing this land?

An individual's labor supply curve will have a

The present value of a $5,000 cash gift to be received four years in the future, given an annual interest rate of 6 percent, is (to the nearest dollar)

If the income effect is larger than the substitution effect, then a wage hike will be accompanied by an increase in the quantity of labor supplied.

The demand for factor is driven by the demand for goods and services produced by that factor of production. This phenomenon is referred to as

Unions tend to ________ import restrictions and ________ a higher minimum wage.

What is the Hotelling Principle? Have resource prices behaved as the principle predicts?

The labor supply curve is backward bending because

If your labor supply increases when you get a raise, which of the following is true?

At high wage rates, the labor supply curve bends backward because the ________ effect dominates the ________ effect.

-The table above gives information about the labor market in Lantis, a community in which the labor market is perfectly competitive. If the demand for labor decreases by 200 hours per day, the equilibrium wage rate falls to ________ an hour and the quantity of labor employed ________ hours per day.

If the price of dog grooming increased, then number of workers hired by Doug's Dog Grooming would

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

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices and Public Goods

Externalities and the Environment

Economic Inequality

Uncertainty and Information

Extension A: Review

Extension B: Review

Extension C: Review

Extension D: Review

Extension E: Review

Extension F: Review

Filters

Unions tend to import restrictions and a higher minimum wage.

At high wage rates, the labor supply curve bends backward because the effect dominates the effect.

-The table above gives information about the labor market in Lantis, a community in which the labor market is perfectly competitive. If the demand for labor decreases by 200 hours per day, the equilibrium wage rate falls to an hour and the quantity of labor employed hours per day.