Question 1

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

Accepted Answer

A)  $100, $100 
B)  $48, $100 
C)  $30, $100 
D)  $100, $48 
A)  $100, $100 
B)  $48, $100 
C)  $30, $100 
D)  $100, $48

Question 2

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 3

Next year's expected price of oil is $90 per barrel. If the interest rate climbs from 5 percent to 20 percent per year and nothing else changes, then according to the Hotelling Principle the price of oil this year

Accepted Answer

A)  will rise. 
B)  will fall. 
C)  will not change. 
D)  could rise, fall, or stay the same. 
A)  will rise. 
B)  will fall. 
C)  will not change. 
D)  could rise, fall, or stay the same.

Question 4

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 5

Discounting is the process whereby

Accepted Answer

A)  present values are adjusted to their future value, using the interest rate. 
B)  future values are converted to their value today, using the interest rate. 
C)  product prices are reduced (discounted) to increase sales and profits today. 
D)  future values are adjusted for inflation. 
A)  present values are adjusted to their future value, using the interest rate. 
B)  future values are converted to their value today, using the interest rate. 
C)  product prices are reduced (discounted) to increase sales and profits today. 
D)  future values are adjusted for inflation.

Question 6

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

Accepted Answer

A)  value of marginal product; wage rate 
B)  total revenue; total cost of labor 
C)  marginal product; total cost of labor 
D)  marginal product; marginal revenue 
A)  value of marginal product; wage rate 
B)  total revenue; total cost of labor 
C)  marginal product; total cost of labor 
D)  marginal product; marginal revenue

Question 7

Starbucks sells coffee in both New York City and in rural upstate New York. The price of coffee is higher in New York City. This fact means that the value of marginal product of land is ________ in New York City and so Starbucks is willing to pay a ________ rent in New York City.

Accepted Answer

A)  lower; lower 
B)  higher; lower 
C)  lower; higher 
D)  higher; higher 
A)  lower; lower 
B)  higher; lower 
C)  lower; higher 
D)  higher; higher

Question 8

-In the above figure, the competitive wage rate is ________ and the quantity of labor is ________.

Accepted Answer

A)  $7.00; 150 hours 
B)  $8.00; 200 hours 
C)  $6.00; 100 hours 
D)  $8.00; 100 hours 
A)  $7.00; 150 hours 
B)  $8.00; 200 hours 
C)  $6.00; 100 hours 
D)  $8.00; 100 hours

Question 9

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 10

-In the figure above, the segment of the curve showing where the income effect outweighs the substitution effect is

Accepted Answer

A)  0a. 
B)  bd. 
C)  0c. 
D)  cd. 
A)  0a. 
B)  bd. 
C)  0c. 
D)  cd.

Question 11

-If there is a monopsony operating in the labor market illustrated in the figure above and the federal government decides to institute a minimum wage of $8 an hour then the wage paid will ________ and the quantity of labor hired will ________.

Accepted Answer

A)  increase; decrease 
B)  increase; increase 
C)  decrease; increase 
D)  decrease; decrease 
A)  increase; decrease 
B)  increase; increase 
C)  decrease; increase 
D)  decrease; decrease

Question 12

Due to a recession, Hostess Bakeries found that the demand for its products decreased. The demand for products ________ the demand for bakers and ________ the equilibrium wage rate paid to bakers.

Accepted Answer

A)  increased; raised 
B)  decreased; raised 
C)  increased; lowered 
D)  decreased; lowered 
A)  increased; raised 
B)  decreased; raised 
C)  increased; lowered 
D)  decreased; lowered

Question 13

If the wage rate paid in the fast-food outlets in a small town is greater than the reservation wage of all the teenagers in the town and less than the reservation wage of all the adults, then the fast-food outlets will hire

Accepted Answer

A)  mostly adults and a few teenagers. 
B)  some adults and some teenagers. 
C)  only adults. 
D)  only teenagers. 
A)  mostly adults and a few teenagers. 
B)  some adults and some teenagers. 
C)  only adults. 
D)  only teenagers.

Question 14

-In the above figure, which curve depicts the supply of land for Chicago's "Magnificent Mile"?

Accepted Answer

A)  curve F 
B)  curve G 
C)  curve H 
D)  curve I 
A)  curve F 
B)  curve G 
C)  curve H 
D)  curve I

Question 15

If the value of marginal product of the last worker hired is $24 and the wage rate is $25, then

Accepted Answer

A)  more workers should be hired. 
B)  the worker should be fired. 
C)  the firm has hired the profit maximizing number of workers. 
D)  the firm is earning $1 of profit from this worker. 
A)  more workers should be hired. 
B)  the worker should be fired. 
C)  the firm has hired the profit maximizing number of workers. 
D)  the firm is earning $1 of profit from this worker.

Question 16

The labor supply curve has a positive slope if the

Accepted Answer

A)  substitution effect outweighs the income effect. 
B)  income effect outweighs the substitution effect. 
C)  demand for labor is elastic. 
D)  demand for labor is inelastic. 
A)  substitution effect outweighs the income effect. 
B)  income effect outweighs the substitution effect. 
C)  demand for labor is elastic. 
D)  demand for labor is inelastic.

Question 17

A firm that can sell its output for $40 per unit. When it increases its labor force from 4 workers to 5 workers its output increases from 15 to 17 units. The value of marginal product of the 5th worker is

Accepted Answer

A)  $680. 
B)  $340. 
C)  $80. 
D)  $40. 
A)  $680. 
B)  $340. 
C)  $80. 
D)  $40.

Question 18

The labor supply curve has a

Accepted Answer

A)  positive slope always. 
B)  negative slope if the income effect is greater than the substitution effect. 
C)  positive slope if the income effect is greater than the substitution effect. 
D)  negative slope always. 
A)  positive slope always. 
B)  negative slope if the income effect is greater than the substitution effect. 
C)  positive slope if the income effect is greater than the substitution effect. 
D)  negative slope always.

Question 19

Which of the following increases the demand for U.S. union labor?

Accepted Answer

A)  an increase in the minimum wage 
B)  an increase in the demand for imported goods 
C)  new laws that ease immigration restrictions 
D)  All of the above cause an increase in the demand for union labor. 
A)  an increase in the minimum wage 
B)  an increase in the demand for imported goods 
C)  new laws that ease immigration restrictions 
D)  All of the above cause an increase in the demand for union labor.

Question 20

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.

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

A fall in the price of a firm's output

Next year's expected price of oil is $90 per barrel. If the interest rate climbs from 5 percent to 20 percent per year and nothing else changes, then according to the Hotelling Principle the price of oil this year

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

Discounting is the process whereby

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

Starbucks sells coffee in both New York City and in rural upstate New York. The price of coffee is higher in New York City. This fact means that the value of marginal product of land is in New York City and so Starbucks is willing to pay a rent in New York City.

-In the above figure, the competitive wage rate is and the quantity of labor is .

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

-In the figure above, the segment of the curve showing where the income effect outweighs the substitution effect is

-If there is a monopsony operating in the labor market illustrated in the figure above and the federal government decides to institute a minimum wage of $8 an hour then the wage paid will and the quantity of labor hired will .

Due to a recession, Hostess Bakeries found that the demand for its products decreased. The demand for products the demand for bakers and the equilibrium wage rate paid to bakers.

If the wage rate paid in the fast-food outlets in a small town is greater than the reservation wage of all the teenagers in the town and less than the reservation wage of all the adults, then the fast-food outlets will hire

-In the above figure, which curve depicts the supply of land for Chicago's "Magnificent Mile"?

If the value of marginal product of the last worker hired is $24 and the wage rate is $25, then

The labor supply curve has a positive slope if the

A firm that can sell its output for $40 per unit. When it increases its labor force from 4 workers to 5 workers its output increases from 15 to 17 units. The value of marginal product of the 5th worker is

The labor supply curve has a

Which of the following increases the demand for U.S. union labor?

The value of marginal product of labor is the increase in

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Economic Inequality

Uncertainty and Information

Filters

Exam 18: Markets for Factors of Production

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

A fall in the price of a firm's output

Next year's expected price of oil is $90 per barrel. If the interest rate climbs from 5 percent to 20 percent per year and nothing else changes, then according to the Hotelling Principle the price of oil this year

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

Discounting is the process whereby

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

Starbucks sells coffee in both New York City and in rural upstate New York. The price of coffee is higher in New York City. This fact means that the value of marginal product of land is ________ in New York City and so Starbucks is willing to pay a ________ rent in New York City.

-In the above figure, the competitive wage rate is ________ and the quantity of labor is ________.

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

-In the figure above, the segment of the curve showing where the income effect outweighs the substitution effect is

-If there is a monopsony operating in the labor market illustrated in the figure above and the federal government decides to institute a minimum wage of $8 an hour then the wage paid will ________ and the quantity of labor hired will ________.

Due to a recession, Hostess Bakeries found that the demand for its products decreased. The demand for products ________ the demand for bakers and ________ the equilibrium wage rate paid to bakers.

If the wage rate paid in the fast-food outlets in a small town is greater than the reservation wage of all the teenagers in the town and less than the reservation wage of all the adults, then the fast-food outlets will hire

-In the above figure, which curve depicts the supply of land for Chicago's "Magnificent Mile"?

If the value of marginal product of the last worker hired is $24 and the wage rate is $25, then

The labor supply curve has a positive slope if the

A firm that can sell its output for $40 per unit. When it increases its labor force from 4 workers to 5 workers its output increases from 15 to 17 units. The value of marginal product of the 5th worker is

The labor supply curve has a

Which of the following increases the demand for U.S. union labor?

The value of marginal product of labor is the increase in

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Economic Inequality

Uncertainty and Information

Filters

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

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

Starbucks sells coffee in both New York City and in rural upstate New York. The price of coffee is higher in New York City. This fact means that the value of marginal product of land is in New York City and so Starbucks is willing to pay a rent in New York City.

-In the above figure, the competitive wage rate is and the quantity of labor is .

-If there is a monopsony operating in the labor market illustrated in the figure above and the federal government decides to institute a minimum wage of $8 an hour then the wage paid will and the quantity of labor hired will .

Due to a recession, Hostess Bakeries found that the demand for its products decreased. The demand for products the demand for bakers and the equilibrium wage rate paid to bakers.