Question 1

Unions support minimum wage laws, because

Accepted Answer

A)  union workers are typically paid the minimum wage. 
B)  an increase in the minimum wage paid to low-skilled labor increases the opportunity cost of employing high-skilled union labor and, hence, increases the demand for union labor. 
C)  an increase in the minimum wage paid to low-skilled labor increases the opportunity cost of employing low-skilled labor and, hence, increases the demand for union labor. 
D)  an increase in the minimum wage paid to low-skilled labor causes the supply curve of low-skilled labor to shift leftward and, hence, increases the demand for union labor. 
A)  union workers are typically paid the minimum wage. 
B)  an increase in the minimum wage paid to low-skilled labor increases the opportunity cost of employing high-skilled union labor and, hence, increases the demand for union labor. 
C)  an increase in the minimum wage paid to low-skilled labor increases the opportunity cost of employing low-skilled labor and, hence, increases the demand for union labor. 
D)  an increase in the minimum wage paid to low-skilled labor causes the supply curve of low-skilled labor to shift leftward and, hence, increases the demand for union labor.

Question 2

-The preceding table gives monthly production information for Peter's Peanuts, a firm in a perfectly competitive industry. The market price of peanuts is $2.00 per pound. What is the marginal product from employing the fourth worker?

Accepted Answer

A)  7 pounds of peanuts 
B)  100 pounds of peanuts 
C)  400 pounds of peanuts 
D)  2,800 pounds of peanuts 
A)  7 pounds of peanuts 
B)  100 pounds of peanuts 
C)  400 pounds of peanuts 
D)  2,800 pounds of peanuts

Question 3

According to the Hotelling Principle, the price of a nonrenewable resource is expected to

Accepted Answer

A)  rise at a rate higher than the interest rate. 
B)  rise at a rate lower than the interest rate. 
C)  rise at a rate equal to the interest rate. 
D)  fall at a rate equal to the interest rate. 
A)  rise at a rate higher than the interest rate. 
B)  rise at a rate lower than the interest rate. 
C)  rise at a rate equal to the interest rate. 
D)  fall at a rate equal to the interest rate.

Question 4

-The figure above shows the labor demand and labor supply curves for workers in local fast-food restaurants. The fast-food restaurant industry is competitive. A decrease in the supply of labor shifts the labor supply curve from LS0 to LS1. The wages of fast-food workers ________.

Accepted Answer

A)  decrease by $4 per hour 
B)  decrease by $10 per hour 
C)  increase by $4 per hour 
D)  remain the same 
A)  decrease by $4 per hour 
B)  decrease by $10 per hour 
C)  increase by $4 per hour 
D)  remain the same

Question 5

Land is an example of an nonrenewable resource.

Accepted Answer

A) True 
 B)False

Question 6

In a labor market, employment

Accepted Answer

A)  and the wage rate are higher when the market is a monopsony than when the market is competitive. 
B)  is higher and the wage rate is lower when the market is a monopsony than when the market is competitive. 
C)  is lower and the wage rate is higher when the market is a monopsony than when the market is competitive. 
D)  and the wage rate are lower when the market is a monopsony than when the market is competitive. 
A)  and the wage rate are higher when the market is a monopsony than when the market is competitive. 
B)  is higher and the wage rate is lower when the market is a monopsony than when the market is competitive. 
C)  is lower and the wage rate is higher when the market is a monopsony than when the market is competitive. 
D)  and the wage rate are lower when the market is a monopsony than when the market is competitive.

Question 7

Which of the following lowers the current price of an nonrenewable natural resource?

Accepted Answer

A)  an increase in the interest rate 
B)  a decrease in the stock of the resource 
C)  an increase in the marginal revenue product of the resource 
D)  an increase in the price of a substitute resource 
A)  an increase in the interest rate 
B)  a decrease in the stock of the resource 
C)  an increase in the marginal revenue product of the resource 
D)  an increase in the price of a substitute resource

Question 8

Why does a profit-maximizing firm hire labor up to the point where the value of marginal product equals the wage rate?

Accepted Answer

If a company stopped adding workers at t

Question 9

For a nonrenewable natural resource, such as oil, the equilibrium price ________ the market fundamentals price.

Accepted Answer

A)  is always the same as 
B)  can be greater than but not less than 
C)  can be less than but not greater than 
D)  can be less than, greater than, or equal to 
A)  is always the same as 
B)  can be greater than but not less than 
C)  can be less than but not greater than 
D)  can be less than, greater than, or equal to

Question 10

-The preceding table gives monthly production information for Peter's Peanuts, a firm in a perfectly competitive industry. The market price of peanuts is $2.00 per pound. A worker costs $1,200 per month. How many workers does Peter hire to maximize his profit?

Accepted Answer

A)  zero 
B)  one 
C)  three 
D)  four 
A)  zero 
B)  one 
C)  three 
D)  four

Question 11

A company finds that for the next worker hired, the worker's VMP is less than the cost of the worker. In this case, to maximize its profit the company should

Accepted Answer

A)  definitely hire the worker. 
B)  perhaps hire the worker, depending on the relationship between the company's MC and MR. 
C)  definitely not hire the worker. 
D)  None of the above answers is correct. 
A)  definitely hire the worker. 
B)  perhaps hire the worker, depending on the relationship between the company's MC and MR. 
C)  definitely not hire the worker. 
D)  None of the above answers is correct.

Question 12

Suppose the price of oranges rises. As a result, the

Accepted Answer

A)  supply of orange pickers increases. 
B)  supply of orange pickers decreases. 
C)  demand for orange pickers increases. 
D)  demand for orange pickers decreases. 
A)  supply of orange pickers increases. 
B)  supply of orange pickers decreases. 
C)  demand for orange pickers increases. 
D)  demand for orange pickers decreases.

Question 13

-You observe that more labor is employed and the wage rate increases. This set of events could have been the result of a

Accepted Answer

A)  rightward shift of the labor demand curve. 
B)  leftward shift of the labor supply curve. 
C)  rightward shift of the labor supply curve. 
D)  leftward shift of the labor demand curve. 
A)  rightward shift of the labor demand curve. 
B)  leftward shift of the labor supply curve. 
C)  rightward shift of the labor supply curve. 
D)  leftward shift of the labor demand curve.

Question 14

A fall in the price of a firm's output

Accepted Answer

A)  decreases the firm's demand for labor. 
B)  increases the firm's demand for labor. 
C)  decreases the firm's supply of labor. 
D)  increases the firm's supply of labor. 
A)  decreases the firm's demand for labor. 
B)  increases the firm's demand for labor. 
C)  decreases the firm's supply of labor. 
D)  increases the firm's supply of labor.

Question 15

Jose owns a local coffee shop. When Jose calculates how his total revenue changes in response to hiring an extra worker, Jose is calculating the

Accepted Answer

A)  marginal revenue. 
B)  value of marginal product of labor. 
C)  marginal product of labor. 
D)  total revenue. 
A)  marginal revenue. 
B)  value of marginal product of labor. 
C)  marginal product of labor. 
D)  total revenue.

Question 16

S & S Backhoe Service in Ozark, Arkansas rents backhoes and other heavy equipment to local construction companies. What determines the demand for backhoes in Arkansas?

Accepted Answer

A)  The rental rate for backhoes 
B)  The equilibrium quantity of backhoes 
C)  The value of marginal product of backhoes 
D)  The maximum number of backhoes available to rent 
A)  The rental rate for backhoes 
B)  The equilibrium quantity of backhoes 
C)  The value of marginal product of backhoes 
D)  The maximum number of backhoes available to rent

Question 17

A household's reservation wage is the ________.

Accepted Answer

A)  lowest wage rate at which the household will supply labor 
B)  wage at which the household's labor supply curve bends backward 
C)  wage rate at which the household's income is largest 
D)  highest wage rate at which the household will supply labor 
A)  lowest wage rate at which the household will supply labor 
B)  wage at which the household's labor supply curve bends backward 
C)  wage rate at which the household's income is largest 
D)  highest wage rate at which the household will supply labor

Question 18

The value of marginal product of labor is the increase in

Accepted Answer

A)  revenue created by producing one more unit of output. 
B)  revenue created by hiring one more unit of labor. 
C)  total product necessary to make revenue increase by one dollar. 
D)  total product generated by hiring one more unit of labor. 
A)  revenue created by producing one more unit of output. 
B)  revenue created by hiring one more unit of labor. 
C)  total product necessary to make revenue increase by one dollar. 
D)  total product generated by hiring one more unit of labor.

Question 19

A minimum wage might increase employment by a monopsony if it makes the supply of labor curve to that firm

Accepted Answer

A)  steeper, that is, makes supply more elastic. 
B)  steeper, that is, makes supply less elastic. 
C)  flatter, that is, makes supply more elastic. 
D)  flatter, that is, makes supply less elastic. 
A)  steeper, that is, makes supply more elastic. 
B)  steeper, that is, makes supply less elastic. 
C)  flatter, that is, makes supply more elastic. 
D)  flatter, that is, makes supply less elastic.

Question 20

Compared to a monopsony, a perfectly competitive labor market results in a

Accepted Answer

A)  higher wage rate and more workers hired. 
B)  higher wage rate and fewer workers hired. 
C)  lower wage rate and more workers hired. 
D)  lower wage rate and fewer workers hired. 
A)  higher wage rate and more workers hired. 
B)  higher wage rate and fewer workers hired. 
C)  lower wage rate and more workers hired. 
D)  lower wage rate and fewer workers hired.

Exam 18: Markets for Factors of Production

Unions support minimum wage laws, because

-The preceding table gives monthly production information for Peter's Peanuts, a firm in a perfectly competitive industry. The market price of peanuts is $2.00 per pound. What is the marginal product from employing the fourth worker?

According to the Hotelling Principle, the price of a nonrenewable resource is expected to

-The figure above shows the labor demand and labor supply curves for workers in local fast-food restaurants. The fast-food restaurant industry is competitive. A decrease in the supply of labor shifts the labor supply curve from LS0 to LS1. The wages of fast-food workers ________.

Land is an example of an nonrenewable resource.

In a labor market, employment

Which of the following lowers the current price of an nonrenewable natural resource?

Why does a profit-maximizing firm hire labor up to the point where the value of marginal product equals the wage rate?

For a nonrenewable natural resource, such as oil, the equilibrium price ________ the market fundamentals price.

-The preceding table gives monthly production information for Peter's Peanuts, a firm in a perfectly competitive industry. The market price of peanuts is $2.00 per pound. A worker costs $1,200 per month. How many workers does Peter hire to maximize his profit?

A company finds that for the next worker hired, the worker's VMP is less than the cost of the worker. In this case, to maximize its profit the company should

Suppose the price of oranges rises. As a result, the

-You observe that more labor is employed and the wage rate increases. This set of events could have been the result of a

A fall in the price of a firm's output

Jose owns a local coffee shop. When Jose calculates how his total revenue changes in response to hiring an extra worker, Jose is calculating the

S & S Backhoe Service in Ozark, Arkansas rents backhoes and other heavy equipment to local construction companies. What determines the demand for backhoes in Arkansas?

A household's reservation wage is the ________.

The value of marginal product of labor is the increase in

A minimum wage might increase employment by a monopsony if it makes the supply of labor curve to that firm

Compared to a monopsony, a perfectly competitive labor market results in a

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

-The figure above shows the labor demand and labor supply curves for workers in local fast-food restaurants. The fast-food restaurant industry is competitive. A decrease in the supply of labor shifts the labor supply curve from LS₀ to LS₁. The wages of fast-food workers ________.