Question 1

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 2

A monopsony pays a wage rate that is

Accepted Answer

A)  greater than value of marginal product. 
B)  equal to the marginal cost of labor. 
C)  less than value of marginal product. 
D)  unacceptable to the workers hired. 
A)  greater than value of marginal product. 
B)  equal to the marginal cost of labor. 
C)  less than value of marginal product. 
D)  unacceptable to the workers hired.

Question 3

For the past year, Teddy has had a part-time job at which he is willing to work 10 hours each week. During Teddy's annual review, his boss grants him an 8 percent increase in his wage. As a result of the wage increase, Teddy is now willing to work 15 hours each week. Teddy's opportunity cost of ________ has risen and because for Teddy the substitution effect of the wage hike is ________ than the income effect.

Accepted Answer

A)  work; greater 
B)  work; less 
C)  leisure; greater 
D)  leisure; less 
A)  work; greater 
B)  work; less 
C)  leisure; greater 
D)  leisure; less

Question 4

The present value of $100 to be received in a year is

Accepted Answer

A)  less than $100 and falls as the interest rate rises. 
B)  less than $100 and rises as the interest rate rises. 
C)  more than $100 and falls as the interest rate rises. 
D)  more than $100 and rises as the interest rate rises. 
A)  less than $100 and falls as the interest rate rises. 
B)  less than $100 and rises as the interest rate rises. 
C)  more than $100 and falls as the interest rate rises. 
D)  more than $100 and rises as the interest rate rises.

Question 5

The value of an additional baker to a bakery is equal to the

Accepted Answer

A)  price of bread. 
B)  value of marginal product of the baker. 
C)  baker's marginal productivity in terms of loaves of bread. 
D)  marginal cost of making an additional loaf of bread. 
A)  price of bread. 
B)  value of marginal product of the baker. 
C)  baker's marginal productivity in terms of loaves of bread. 
D)  marginal cost of making an additional loaf of bread.

Question 6

If a labor market that was previously competitive becomes controlled by a monopsony, the wage rate ________ and employment ________.

Accepted Answer

A)  rises; increases 
B)  falls; decreases 
C)  rises; decreases 
D)  falls; increase 
A)  rises; increases 
B)  falls; decreases 
C)  rises; decreases 
D)  falls; increase

Question 7

-The above table has the total product schedule for Joe's Barber Shop. Joe charges $6 per haircut. If the wage rate is $24 per worker, what quantity of labor will maximize profits?

Accepted Answer

A)  1 worker 
B)  2 workers 
C)  4 workers 
D)  5 workers 
A)  1 worker 
B)  2 workers 
C)  4 workers 
D)  5 workers

Question 8

The demand for labor is a derived demand because it is derived from

Accepted Answer

A)  the supply of labor. 
B)  union pressure. 
C)  the demand for the output the labor produces. 
D)  natural law. 
A)  the supply of labor. 
B)  union pressure. 
C)  the demand for the output the labor produces. 
D)  natural law.

Question 9

If the interest rate is 8 percent, the present value of $10,000 to be received 10 years from today is about

Accepted Answer

A)  $21,589. 
B)  $9,259. 
C)  $4,632. 
D)  $10,800. 
A)  $21,589. 
B)  $9,259. 
C)  $4,632. 
D)  $10,800.

Question 10

Meredith receives a wage hike. If Meredith decides to work an extra hour

Accepted Answer

A)  her reservation wage rate exceeds her value of marginal product. 
B)  her opportunity cost of leisure is high. 
C)  her substitution effect is greater than her income effect. 
D)  she operates on the backward-bending portion of her labor supply curve. 
A)  her reservation wage rate exceeds her value of marginal product. 
B)  her opportunity cost of leisure is high. 
C)  her substitution effect is greater than her income effect. 
D)  she operates on the backward-bending portion of her labor supply curve.

Question 11

Which of the following would explain why Josh's Limo Service might increase its demand for limo drivers?

Accepted Answer

A)  an increase in demand for limo rides, resulting in a rise in the price of a limo ride 
B)  a decrease in the demand for limo rides 
C)  a fall in the price of a taxi ride 
D)  a rise in the wage paid to limo drivers 
A)  an increase in demand for limo rides, resulting in a rise in the price of a limo ride 
B)  a decrease in the demand for limo rides 
C)  a fall in the price of a taxi ride 
D)  a rise in the wage paid to limo drivers

Question 12

A monopsony maximizes its profit by hiring the level of employment that sets

Accepted Answer

A)  labor supply equal to labor demand. 
B)  the value of marginal product equal to the wage. 
C)  the value of marginal product equal to the marginal cost of labor. 
D)  the value of marginal product equal to the demand for labor. 
A)  labor supply equal to labor demand. 
B)  the value of marginal product equal to the wage. 
C)  the value of marginal product equal to the marginal cost of labor. 
D)  the value of marginal product equal to the demand for labor.

Question 13

The value of marginal product equals marginal product

Accepted Answer

A)  multiplied by the quantity of labor. 
B)  divided by the quantity of labor. 
C)  multiplied by the good's market price. 
D)  divided by the good's market price. 
A)  multiplied by the quantity of labor. 
B)  divided by the quantity of labor. 
C)  multiplied by the good's market price. 
D)  divided by the good's market price.

Question 14

-City-Mart is the only employer of sales clerks in Panburg. In the figure above S is the labor supply curve faced by City-Mart, VMP is City-Mart's value of marginal product curve, and MCL is its marginal cost of labor curve. City-Mart maximizes its profit if it hires ________ hours of labor and pays ________ per hour.

Accepted Answer

A)  90; $9 
B)  60; $12 
C)  90; $6 
D)  60; $6 
A)  90; $9 
B)  60; $12 
C)  90; $6 
D)  60; $6

Question 15

Sam's Scarves has 2 knitting machines and employs 2 people. They produce 15 scarves a day. If the firm hires an additional person, the 3 workers can produce 19 scarves a day other things remaining the same. The market for scarves is perfectly competitive and the price of a scarf is $20. The value of marginal product of the third worker is

Accepted Answer

A)  $80. 
B)  $300. 
C)  $380. 
D)  4 scarves. 
A)  $80. 
B)  $300. 
C)  $380. 
D)  4 scarves.

Question 16

A situation where a union bargains with a monopsony employer is termed a

Accepted Answer

A)  bilateral monopsony. 
B)  bilateral monopoly. 
C)  bilateral agreement. 
D)  unilateral agreement. 
A)  bilateral monopsony. 
B)  bilateral monopoly. 
C)  bilateral agreement. 
D)  unilateral agreement.

Question 17

If the price of a barrel of oil is $100 this year and the interest rate is 10 percent, then according to the Hotelling Principle the price next year is expected to be ________ per barrel.

Accepted Answer

A)  $90 
B)  $110 
C)  $100 
D)  Need more information to answer this question. 
A)  $90 
B)  $110 
C)  $100 
D)  Need more information to answer this question.

Question 18

The demand for factor is driven by the demand for goods and services produced by that factor of production. This phenomenon is referred to as

Accepted Answer

A)  elastic demand. 
B)  joint demand. 
C)  inverse demand. 
D)  derived demand. 
A)  elastic demand. 
B)  joint demand. 
C)  inverse demand. 
D)  derived demand.

Question 19

-The figure above shows a local lawn cutting service's demand for labor curve when the price of cutting an acre of lawn is $50 per acre. If the market wage is $300 per day, the firm will NOT hire a fourth worker because the fourth worker would create

Accepted Answer

A)  an economic loss and the firm would shut down. 
B)  additional revenue that exceeds the worker's wage. 
C)  additional revenue that exceeds the worker's value of marginal product. 
D)  additional revenue that falls short of the worker's wage. 
A)  an economic loss and the firm would shut down. 
B)  additional revenue that exceeds the worker's wage. 
C)  additional revenue that exceeds the worker's value of marginal product. 
D)  additional revenue that falls short of the worker's wage.

Question 20

What is the Hotelling Principle? Have resource prices behaved as the principle predicts?

Accepted Answer

The Hotelling Principle states that the

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

A monopsony pays a wage rate that is

The present value of $100 to be received in a year is

The value of an additional baker to a bakery is equal to the

If a labor market that was previously competitive becomes controlled by a monopsony, the wage rate and employment .

-The above table has the total product schedule for Joe's Barber Shop. Joe charges $6 per haircut. If the wage rate is $24 per worker, what quantity of labor will maximize profits?

The demand for labor is a derived demand because it is derived from

If the interest rate is 8 percent, the present value of $10,000 to be received 10 years from today is about

Meredith receives a wage hike. If Meredith decides to work an extra hour

Which of the following would explain why Josh's Limo Service might increase its demand for limo drivers?

A monopsony maximizes its profit by hiring the level of employment that sets

The value of marginal product equals marginal product

A situation where a union bargains with a monopsony employer is termed a

If the price of a barrel of oil is $100 this year and the interest rate is 10 percent, then according to the Hotelling Principle the price next year is expected to be ________ per barrel.

The demand for factor is driven by the demand for goods and services produced by that factor of production. This phenomenon is referred to as

-The figure above shows a local lawn cutting service's demand for labor curve when the price of cutting an acre of lawn is $50 per acre. If the market wage is $300 per day, the firm will NOT hire a fourth worker because the fourth worker would create

What is the Hotelling Principle? Have resource prices behaved as the principle predicts?

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

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

A monopsony pays a wage rate that is

The present value of $100 to be received in a year is

The value of an additional baker to a bakery is equal to the

If a labor market that was previously competitive becomes controlled by a monopsony, the wage rate ________ and employment ________.

-The above table has the total product schedule for Joe's Barber Shop. Joe charges $6 per haircut. If the wage rate is $24 per worker, what quantity of labor will maximize profits?

The demand for labor is a derived demand because it is derived from

If the interest rate is 8 percent, the present value of $10,000 to be received 10 years from today is about

Meredith receives a wage hike. If Meredith decides to work an extra hour

Which of the following would explain why Josh's Limo Service might increase its demand for limo drivers?

A monopsony maximizes its profit by hiring the level of employment that sets

The value of marginal product equals marginal product

A situation where a union bargains with a monopsony employer is termed a

If the price of a barrel of oil is $100 this year and the interest rate is 10 percent, then according to the Hotelling Principle the price next year is expected to be ________ per barrel.

The demand for factor is driven by the demand for goods and services produced by that factor of production. This phenomenon is referred to as

-The figure above shows a local lawn cutting service's demand for labor curve when the price of cutting an acre of lawn is $50 per acre. If the market wage is $300 per day, the firm will NOT hire a fourth worker because the fourth worker would create

What is the Hotelling Principle? Have resource prices behaved as the principle predicts?

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

If a labor market that was previously competitive becomes controlled by a monopsony, the wage rate and employment .