Exam 18: Markets for Factors of Production

For the past year, Teddy has had a part-time job at which he is willing to work 30 hours each week. During Teddy's annual review, his boss grants him an 8 percent increase in his wage. As a result of the wage increase, Teddy is now willing to work 25 hours each week. Teddy's opportunity cost of ________ has risen and because for Teddy the substitution effect of the wage hike is ________ than the income effect.

If a union is unable to increase the demand for its workers, then success at raising the wage rate paid its members means that

-In the figure above, the substitution effect outweighs the income effect in all segments EXCEPT

-Consider the labor market depicted in the above figure. What wage rate must be paid to have the 200th hour of labor supplied?

Which of the following is a method used by unions to increase the demand for their members' labor?

To maximize profit, a firm hires the quantity of labor that makes the ________ of labor equal to the ________.

-Winnie's Car Wash is a perfectly competitive firm. The table above shows Winnie's total product schedule. If the price of a car wash is $4 and the wage rate is $50 per day, how many workers should Winnie employ to maximize his profit?

A technological change that raises the value of marginal product of capital ________ the rental rate of capital because the ________.

Meredith receives a wage hike. If Meredith decides to work an extra hour,

Sam's Scarves has 2 knitting machines and employs 2 people. They produce 15 scarves a day. If the firm hires an additional person, the 3 workers can produce 19 scarves a day other things remaining the same. The market for scarves is perfectly competitive and the price of a scarf is $20. The value of marginal product of the third worker is ________.

The marginal product of labor equals the value of marginal product of labor multiplied by the price of the output produced.

The income effect of a higher wage rate results in a I. higher income as people work more. II) person choosing to decrease work hours as income increases. III) backward-bending labor supply curve.

Lynn owns Dust Bunnies, a cleaning company. In one week, she is able to clean 9 houses. If she hires an employee, together they are able to clean 15 houses per week. If Lynn charges $100 to clean a house, what is the value of marginal product of her employee?

Which of the following is a recent trend in the labor market?

Why is the demand for labor a "derived demand?"

An increase in the price of a firm's output

-Sun's Gas Station is a firm operating in a perfectly competitive industry. Sun's Gas Station sells each gallon of gas for $3. What is the marginal product from hiring the fourth worker?

A rational individual would be indifferent between ________ today and ________ four years from today if the interest is 20 percent.

Because the value of marginal product diminishes as the quantity of labor employed increases, the ________ the wage rate, the ________ workers the firm hires.

The interest rate is 8 percent. The present value of $110 three years from now equals