Exam 18: Markets for Factors of Production

The value of marginal product equals

If the wage rate is ________ the value of marginal product, a firm can increase its profit by ________.

As a person's wage rate increases, the substitution effect motivates an increase in work and the income effect motivates a decrease in work.

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

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

Explain why a monopsony's marginal cost of labor is greater than the wage rate.

A firm's price rises. As a result, the

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. Is natural gas a renewable or non-renewable resource? Why?

-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

Starbucks is considering opening a new store on the Drexel University Campus in Philadelphia. To analyze this decision Starbucks must compare the costs of starting the new store, which will be incurred today, with the profit the store will create in the future. When making this decision, the higher is the interest rate, the ________ is the discounted present value of the profits and the ________ likely Starbucks will be to open the store.

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?

-Tom and Mary own a perfectly competitive tomato farm. They can hire different numbers of college students to help plant, cultivate, and harvest the tomatoes. The above table gives their marginal product schedule. a) If the price of a pound of tomatoes is $2 a pound, complete the first value of marginal product column in the table. If Tom and Mary must pay their workers $10 an hour, how many workers do they hire? b) If the price of a pound of tomatoes falls to $1 a pound, complete the second value of marginal product column in the table. If Tom and Mary still must pay their workers $10 an hour, how many workers do they hire? c) When the price of a pound of tomatoes falls, what happens to Tom and Mary's demand for labor curve?

A decrease in the wage rate

If the interest rate increases from 5 percent to 7 percent, the present value of a future payment

The present value of a future sum of money is the amount that, if invested today, will grow

-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. If a worker costs $800 per month, how many workers will Peter employ to maximize profit?

-The above figure shows the market for labor. The employer is a monopsony. If a minimum wage is set at $10 per hour, which of the following will occur?

-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 value of marginal product from employing the third worker?

Whenever you discount a future sum of money into its present value, you must know I. the interest rate. II) the number of years in the future in which the money will be received.

-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 Winnie maximizes his profit when he employs 3 workers, the wage rate is