Question 1

Which of the following methods is used by unions to increase the demand for the labor of its members?

Accepted Answer

A)  Decrease the marginal product of union members. 
B)  Support minimum wage laws. 
C)  Oppose import restrictions. 
D)  Decrease demand for the good produced. 
A)  Decrease the marginal product of union members. 
B)  Support minimum wage laws. 
C)  Oppose import restrictions. 
D)  Decrease demand for the good produced.

Question 2

What is the relationship between a firm's value of marginal product curve for labor and its demand for labor curve? Explain why this relationship exists.

Accepted Answer

The value of marginal product curve for

Question 3

For a monopsony, the marginal cost of labor curve lies above the labor supply curve because

Accepted Answer

A)  to hire one more unit of labor requires that the wage be raised for all units of labor. 
B)  to hire one more unit of labor requires that the wage be raised for just the last unit of labor hired. 
C)  to hire one more unit of labor, the firm uses its monopsony power to not raise the wage it pays. 
D)  to hire one more unit of labor requires that the firm offer a lower wage. 
A)  to hire one more unit of labor requires that the wage be raised for all units of labor. 
B)  to hire one more unit of labor requires that the wage be raised for just the last unit of labor hired. 
C)  to hire one more unit of labor, the firm uses its monopsony power to not raise the wage it pays. 
D)  to hire one more unit of labor requires that the firm offer a lower wage.

Question 4

An increase in the interest rate

Accepted Answer

A)  lowers the present value of future revenue. 
B)  increases the present value of future revenue. 
C)  has no effect on the present value of future revenue. 
D)  shifts the demand curve for capital leftward. 
A)  lowers the present value of future revenue. 
B)  increases the present value of future revenue. 
C)  has no effect on the present value of future revenue. 
D)  shifts the demand curve for capital leftward.

Question 5

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 6

The land market is in equilibrium. If the demand for land decreases, the rental rate of land

Accepted Answer

A)  might rise or fall. 
B)  rises. 
C)  falls. 
D)  remains unchanged. 
A)  might rise or fall. 
B)  rises. 
C)  falls. 
D)  remains unchanged.

Question 7

-Winnie's Car Wash is a perfectly competitive firm. The table above shows Winnie's total product schedule. What is the marginal product of labor when the 5th worker is hired?

Accepted Answer

A)  72.5 car washes 
B)  75 car washes 
C)  5 car washes 
D)  3 car washes 
A)  72.5 car washes 
B)  75 car washes 
C)  5 car washes 
D)  3 car washes

Question 8

-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 value of marginal product from hiring the fourth worker?

Accepted Answer

A)  $2,400 
B)  $840 
C)  $120 
D)  $60 
A)  $2,400 
B)  $840 
C)  $120 
D)  $60

Question 9

-Based on the production and revenue data in the above table, if the wage rate is $20 per worker, how many workers will be hired?

Accepted Answer

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

Question 10

"The decision to employ an additional unit of labor depends on whether the value of marginal product is greater than or smaller than the wage rate." Is the previous statement correct or incorrect?

Accepted Answer

The statement is correct. If t

Question 11

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. What is the most likely reason companies are leasing this land?

Accepted Answer

A)  Increasing natural gas prices lead to an increased value of marginal product for an acre on the Roan Plateau. 
B)  Increasing natural gas prices lead to an increased supply of acres on the Roan Plateau. 
C)  The future price of natural gas is expected to increase leading to an increased supply of acres on the Roan Plateau, 
D)  The value of marginal product of natural gas is diminishing. 
A)  Increasing natural gas prices lead to an increased value of marginal product for an acre on the Roan Plateau. 
B)  Increasing natural gas prices lead to an increased supply of acres on the Roan Plateau. 
C)  The future price of natural gas is expected to increase leading to an increased supply of acres on the Roan Plateau, 
D)  The value of marginal product of natural gas is diminishing.

Question 12

Unions support minimum wage laws because an increase in the minimum wage

Accepted Answer

A)  increases the supply of union labor. 
B)  decreases the supply of union labor. 
C)  increases the demand for union labor. 
D)  decreases the demand for union labor. 
A)  increases the supply of union labor. 
B)  decreases the supply of union labor. 
C)  increases the demand for union labor. 
D)  decreases the demand for union labor.

Question 13

At high wage rates, the labor supply curve bends backward because the ________ effect dominates the ________ effect.

Accepted Answer

A)  income; price 
B)  substitution; income 
C)  substitution; price 
D)  income; substitution 
A)  income; price 
B)  substitution; income 
C)  substitution; price 
D)  income; substitution

Question 14

A market structure in which there is only one buyer is

Accepted Answer

A)  a monopoly. 
B)  a monopsony. 
C)  an oligopoly. 
D)  a competitive market. 
A)  a monopoly. 
B)  a monopsony. 
C)  an oligopoly. 
D)  a competitive market.

Question 15

An increase in the price of a firm's product

Accepted Answer

A)  decreases its value of marginal product of labor. 
B)  increases its demand for labor. 
C)  increases its supply of labor. 
D)  None of the above answers is correct. 
A)  decreases its value of marginal product of labor. 
B)  increases its demand for labor. 
C)  increases its supply of labor. 
D)  None of the above answers is correct.

Question 16

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.

Question 17

-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 18

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

Accepted Answer

A)  lower; more 
B)  higher; more 
C)  lower; fewer 
D)  None of the above answers is correct because there is no relationship between the wage rate and the number of workers hired. 
A)  lower; more 
B)  higher; more 
C)  lower; fewer 
D)  None of the above answers is correct because there is no relationship between the wage rate and the number of workers hired.

Question 19

The hourly wage rate is the opportunity cost of one hour of leisure because

Accepted Answer

A)  the person's substitution effect exceeds his or her income effect. 
B)  that is what a person gives up to enjoy the hour of leisure time. 
C)  the person must work for a living. 
D)  the person prefers leisure to work regardless of the wage. 
A)  the person's substitution effect exceeds his or her income effect. 
B)  that is what a person gives up to enjoy the hour of leisure time. 
C)  the person must work for a living. 
D)  the person prefers leisure to work regardless of the wage.

Question 20

The value of marginal product (VMP) of labor is the extra revenue generated by

Accepted Answer

A)  selling one additional unit of output. 
B)  raising the price of the good by one dollar. 
C)  hiring one additional unit of labor. 
D)  price discrimination. 
A)  selling one additional unit of output. 
B)  raising the price of the good by one dollar. 
C)  hiring one additional unit of labor. 
D)  price discrimination.

Which of the following methods is used by unions to increase the demand for the labor of its members?

What is the relationship between a firm's value of marginal product curve for labor and its demand for labor curve? Explain why this relationship exists.

For a monopsony, the marginal cost of labor curve lies above the labor supply curve because

An increase in the interest rate

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

The land market is in equilibrium. If the demand for land decreases, the rental rate of land

-Winnie's Car Wash is a perfectly competitive firm. The table above shows Winnie's total product schedule. What is the marginal product of labor when the 5th worker is hired?

-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 value of marginal product from hiring the fourth worker?

-Based on the production and revenue data in the above table, if the wage rate is $20 per worker, how many workers will be hired?

"The decision to employ an additional unit of labor depends on whether the value of marginal product is greater than or smaller than the wage rate." Is the previous statement correct or incorrect?

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. What is the most likely reason companies are leasing this land?

Unions support minimum wage laws because an increase in the minimum wage

At high wage rates, the labor supply curve bends backward because the effect dominates the effect.

A market structure in which there is only one buyer is

An increase in the price of a firm's product

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

-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?

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

The hourly wage rate is the opportunity cost of one hour of leisure because

The value of marginal product (VMP) of labor is the extra revenue generated by

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

Which of the following methods is used by unions to increase the demand for the labor of its members?

What is the relationship between a firm's value of marginal product curve for labor and its demand for labor curve? Explain why this relationship exists.

For a monopsony, the marginal cost of labor curve lies above the labor supply curve because

An increase in the interest rate

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

The land market is in equilibrium. If the demand for land decreases, the rental rate of land

-Winnie's Car Wash is a perfectly competitive firm. The table above shows Winnie's total product schedule. What is the marginal product of labor when the 5th worker is hired?

-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 value of marginal product from hiring the fourth worker?

-Based on the production and revenue data in the above table, if the wage rate is $20 per worker, how many workers will be hired?

"The decision to employ an additional unit of labor depends on whether the value of marginal product is greater than or smaller than the wage rate." Is the previous statement correct or incorrect?

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. What is the most likely reason companies are leasing this land?

Unions support minimum wage laws because an increase in the minimum wage

At high wage rates, the labor supply curve bends backward because the ________ effect dominates the ________ effect.

A market structure in which there is only one buyer is

An increase in the price of a firm's product

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

-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?

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

The hourly wage rate is the opportunity cost of one hour of leisure because

The value of marginal product (VMP) of labor is the extra revenue generated by

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

At high wage rates, the labor supply curve bends backward because the effect dominates the effect.

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