Question 1

With respect to labor supply, the substitution effect means a

Accepted Answer

A)  person increases his or her hours of labor in response to a higher wage rate. 
B)  person decreases his or her hours of labor in response to a higher wage rate. 
C)  person substitutes high paying work for low paying work. 
D)  firm substitutes capital for labor. 
A)  person increases his or her hours of labor in response to a higher wage rate. 
B)  person decreases his or her hours of labor in response to a higher wage rate. 
C)  person substitutes high paying work for low paying work. 
D)  firm substitutes capital for labor.

Question 2

A monopsony will hire another worker if the

Accepted Answer

A)  marginal cost of labor exceeds the value of marginal product. 
B)  marginal cost of labor is less than the value of marginal product. 
C)  marginal cost of labor is less than the wage rate. 
D)  wage rate exceeds the value of marginal product. 
A)  marginal cost of labor exceeds the value of marginal product. 
B)  marginal cost of labor is less than the value of marginal product. 
C)  marginal cost of labor is less than the wage rate. 
D)  wage rate exceeds the value of marginal product.

Question 3

-In the above figure, the curve labeled MCL is the marginal cost of labor curve and is used in a

Accepted Answer

A)  competitive situation in which individual firms cannot influence the wage rate they must pay. 
B)  competitive situation in which skill differentials create a difference between what a firm must pay labor versus the wage at which households are willing to supply labor. 
C)  monopsony situation in which the firm can influence wages by how much labor it hires, so that the wage rate received by workers is less than the marginal cost of labor. 
D)  monopsony situation in which the firm can influence wages by how much labor it hires, so that the wage rate received by workers is greater than the marginal cost of labor. 
A)  competitive situation in which individual firms cannot influence the wage rate they must pay. 
B)  competitive situation in which skill differentials create a difference between what a firm must pay labor versus the wage at which households are willing to supply labor. 
C)  monopsony situation in which the firm can influence wages by how much labor it hires, so that the wage rate received by workers is less than the marginal cost of labor. 
D)  monopsony situation in which the firm can influence wages by how much labor it hires, so that the wage rate received by workers is greater than the marginal cost of labor.

Question 4

The present value of $50 to be received next year is $40. The interest rate is

Accepted Answer

A)  10 percent. 
B)  20 percent. 
C)  25 percent. 
D)  50 percent. 
A)  10 percent. 
B)  20 percent. 
C)  25 percent. 
D)  50 percent.

Question 5

The process of converting a future amount of money into its value today is called

Accepted Answer

A)  trending. 
B)  depreciation. 
C)  discounting. 
D)  compounding. 
A)  trending. 
B)  depreciation. 
C)  discounting. 
D)  compounding.

Question 6

-Hank's Propane Storage Company is a profit-maximizing monopsony in the local labor market for propane handling, delivery, and other associated services. The supply and marginal cost of labor curves are shown in the figure above. Hank's demand for labor curve is the curve labeled VMP = D. What is Hank's total cost of labor at the profit-maximizing quantity of labor employed?

Accepted Answer

A)  $1,200 
B)  $960 
C)  $800 
D)  $600 
A)  $1,200 
B)  $960 
C)  $800 
D)  $600

Question 7

Because a monopsony must raise the wage on all labor hired in order to hire more labor,

Accepted Answer

A)  the MCL curve is horizontal at the market wage. 
B)  the MCL curve is negatively sloped. 
C)  MCL = W. 
D)  MCL > W. 
A)  the MCL curve is horizontal at the market wage. 
B)  the MCL curve is negatively sloped. 
C)  MCL = W. 
D)  MCL > W.

Question 8

An increase in the price of a firm's good or service shifts its demand curve for labor leftward.

Accepted Answer

A) True 
 B)False

Question 9

-Pointy Stone State Park is the sole employer of naturalists in the area. The table above provides information about the supply of naturalists and the value of marginal product of labor for naturalists. How many naturalists will Pointy Stone State Park hire?

Accepted Answer

A)  2 
B)  3 
C)  4 
D)  5 
A)  2 
B)  3 
C)  4 
D)  5

Question 10

-Pointy Stone State Park is the sole employer of naturalists in the area. The table above provides information about the supply of naturalists and the value of marginal product of labor for naturalists. The marginal cost of labor for the third naturalist is

Accepted Answer

A)  $650. 
B)  $450. 
C)  $350. 
D)  $525. 
A)  $650. 
B)  $450. 
C)  $350. 
D)  $525.

Question 11

If the price of a firm's output rises, its

Accepted Answer

A)  marginal product of labor increases. 
B)  value of marginal product decreases. 
C)  demand for labor increases. 
D)  demand for labor decreases. 
A)  marginal product of labor increases. 
B)  value of marginal product decreases. 
C)  demand for labor increases. 
D)  demand for labor decreases.

Question 12

At an interest rate of 5 percent, the present value of $1,000 to be received two years from today is

Accepted Answer

A)  less than $875. 
B)  between $875 and $925. 
C)  between $925 and $975. 
D)  more than $975. 
A)  less than $875. 
B)  between $875 and $925. 
C)  between $925 and $975. 
D)  more than $975.

Question 13

The quantity of labor demanded by the firm is such that the

Accepted Answer

A)  wage rate equals the marginal cost. 
B)  wage rate equals the value of marginal product of labor. 
C)  wage rate equals the marginal product of labor. 
D)  marginal revenue equals the marginal product. 
A)  wage rate equals the marginal cost. 
B)  wage rate equals the value of marginal product of labor. 
C)  wage rate equals the marginal product of labor. 
D)  marginal revenue equals the marginal product.

Question 14

If the interest rate is 20 percent, the present value of $10,000 to be received 20 years from today is about

Accepted Answer

A)  $6,944. 
B)  $14,400. 
C)  $383,376. 
D)  $261. 
A)  $6,944. 
B)  $14,400. 
C)  $383,376. 
D)  $261.

Question 15

Linda Evangelista, a supermodel, once said that she "won't get out of bed for less than $10,000 a day." This fee is an example of

Accepted Answer

A)  a reservation wage. 
B)  the demand for Linda's labor. 
C)  a competitive labor market. 
D)  the substitution effect. 
A)  a reservation wage. 
B)  the demand for Linda's labor. 
C)  a competitive labor market. 
D)  the substitution effect.

Question 16

If the value of marginal product of a factor of production exceeds the price of the factor, the

Accepted Answer

A)  firm should hire more of that factor. 
B)  firm should hire less of that factor. 
C)  firm is maximizing profits. 
D)  firm should shut down. 
A)  firm should hire more of that factor. 
B)  firm should hire less of that factor. 
C)  firm is maximizing profits. 
D)  firm should shut down.

Question 17

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 car wash returns to $5 but the wage rate increases to $80 per day.
a) What happens to the marginal product of labor? What happens to the value of marginal product? What happens to Sandy's demand for labor curve?
b) What happens to the number of workers Sandy employs? How does this number compare with the number Sandy employs when the wage rate is $60 per day?

Accepted Answer

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

Question 18

Which of the following activities increases the demand for union labor?

Accepted Answer

A)  a decrease in the minimum wage 
B)  a decrease in immigration 
C)  an increase in the union wage 
D)  an increased desire by consumers to buy imports 
A)  a decrease in the minimum wage 
B)  a decrease in immigration 
C)  an increase in the union wage 
D)  an increased desire by consumers to buy imports

Question 19

________ natural resources are natural resources that can be used repeatedly, and ________ natural resources are natural resources that can be used only once.

Accepted Answer

A)  Nonrenewable; renewable 
B)  Renewable; hydrocarbon 
C)  Renewable; nonrenewable 
D)  Non-fossil; fossil 
A)  Nonrenewable; renewable 
B)  Renewable; hydrocarbon 
C)  Renewable; nonrenewable 
D)  Non-fossil; fossil

Question 20

-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, what is the value of marginal product of the second worker?

Accepted Answer

A)  $80 
B)  $20 
C)  $30 
D)  $180 
A)  $80 
B)  $20 
C)  $30 
D)  $180

Exam 18: Markets for Factors of Production

With respect to labor supply, the substitution effect means a

A monopsony will hire another worker if the

-In the above figure, the curve labeled MCL is the marginal cost of labor curve and is used in a

The present value of $50 to be received next year is $40. The interest rate is

The process of converting a future amount of money into its value today is called

Because a monopsony must raise the wage on all labor hired in order to hire more labor,

An increase in the price of a firm's good or service shifts its demand curve for labor leftward.

-Pointy Stone State Park is the sole employer of naturalists in the area. The table above provides information about the supply of naturalists and the value of marginal product of labor for naturalists. How many naturalists will Pointy Stone State Park hire?

-Pointy Stone State Park is the sole employer of naturalists in the area. The table above provides information about the supply of naturalists and the value of marginal product of labor for naturalists. The marginal cost of labor for the third naturalist is

If the price of a firm's output rises, its

At an interest rate of 5 percent, the present value of $1,000 to be received two years from today is

The quantity of labor demanded by the firm is such that the

If the interest rate is 20 percent, the present value of $10,000 to be received 20 years from today is about

Linda Evangelista, a supermodel, once said that she "won't get out of bed for less than $10,000 a day." This fee is an example of

If the value of marginal product of a factor of production exceeds the price of the factor, the

Which of the following activities increases the demand for union labor?

________ natural resources are natural resources that can be used repeatedly, and ________ natural resources are natural resources that can be used only once.

-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, what is the value of marginal product of the second worker?

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

natural resources are natural resources that can be used repeatedly, and natural resources are natural resources that can be used only once.