Question 1

Factor market analysis could not be complete without some characterisation of:

Accepted Answer

A) the marginal productivities of the different factors 
B) market prices for final goods and services 
C) product market demand 
D) all of the above 
A) the marginal productivities of the different factors 
B) market prices for final goods and services 
C) product market demand 
D) all of the above D

Question 2

Technological progress has led to a decrease in the demand for labour.

Accepted Answer

A) True 
 B)False  False

Question 3

The marginal product of a worker is equivalent to:

Accepted Answer

A) the total amount of output produced by all workers combined 
B) the amount of output produced by the average worker 
C) the amount of output an individual worker contributes to the total output of a firm 
D) none of the above 
A) the total amount of output produced by all workers combined 
B) the amount of output produced by the average worker 
C) the amount of output an individual worker contributes to the total output of a firm 
D) none of the above C

Question 4

What happens to the profit earned by apple producers and the wage earned by apple pickers when the price of apples falls?

Accepted Answer

A) both profit and wage will rise 
B) profit will rise and wage will fall 
C) profit will fall and wage will rise 
D) both profit and wage will fall 
A) both profit and wage will rise 
B) profit will rise and wage will fall 
C) profit will fall and wage will rise 
D) both profit and wage will fall

Question 5

If an increase in the number of workers leads to all workers becoming less productive, this situation is called:

Accepted Answer

A) diminishing profitability 
B) diminishing marginal product 
C) increasing marginal product 
D) lessening production 
A) diminishing profitability 
B) diminishing marginal product 
C) increasing marginal product 
D) lessening production

Question 6

The value of the marginal product of labour curve is:

Accepted Answer

A) S-shaped 
B) upward-sloping 
C) downward-sloping at the start, then upward-sloping at the middle 
D) downward-sloping 
A) S-shaped 
B) upward-sloping 
C) downward-sloping at the start, then upward-sloping at the middle 
D) downward-sloping

Question 7

Refer to the information provided.Assume that Amy has an upward-sloping labour supply curve.Amy's crocodile zoo employer is considering decreasing her wage.If Amy is offered $22 per hour, it is likely that she will:

Accepted Answer

A) work more hours 
B) demand more benefits 
C) work fewer hours 
D) quit her winter job 
A) work more hours 
B) demand more benefits 
C) work fewer hours 
D) quit her winter job

Question 8

Bob has been a private school caretaker for 30 years.For practical purposes, assume that Bob's productivity never changes.What then, if anything, will decrease the value of the labour that Bob performs?

Accepted Answer

A) a decrease in the productivity of the other janitors 
B) a decrease in janitorial unemployment rates 
C) a decrease in the tuition fees 
D) all of the above 
A) a decrease in the productivity of the other janitors 
B) a decrease in janitorial unemployment rates 
C) a decrease in the tuition fees 
D) all of the above

Question 9

What happens to the demand for piano tuners and the wage paid to piano tuners when the price of pianos increases?

Accepted Answer

A) demand for tuners increases, and so does their wage 
B) demand for tuners increases, and their wages fall 
C) demand for tuners falls, and so does their wage 
D) demand for tuners falls while their wage rises 
A) demand for tuners increases, and so does their wage 
B) demand for tuners increases, and their wages fall 
C) demand for tuners falls, and so does their wage 
D) demand for tuners falls while their wage rises

Question 10

When deciding how much labour to hire, a profit-maximising firm should hire workers until:

Accepted Answer

A) marginal profit equals the wage rate 
B) marginal revenue equals marginal profit 
C) marginal product equals the wage rate 
D) marginal profit is zero 
A) marginal profit equals the wage rate 
B) marginal revenue equals marginal profit 
C) marginal product equals the wage rate 
D) marginal profit is zero

Question 11

The market for apples is competitive, as is the market for apples pickers.An increase in price of apples will cause:

Accepted Answer

A) the labour demand curve to shift and the quantity of labour to increase 
B) the labour demand curve to stay constant and the quantity of labour to increase 
C) the labour demand curve to shift and the quantity of labour to stay constant 
D) the labour demand curve to stay constant and the quantity of labour to stay constant 
A) the labour demand curve to shift and the quantity of labour to increase 
B) the labour demand curve to stay constant and the quantity of labour to increase 
C) the labour demand curve to shift and the quantity of labour to stay constant 
D) the labour demand curve to stay constant and the quantity of labour to stay constant

Question 12

What happens to the profit earned by apple producers and the wage earned by apple pickers when the price of apples rises?

Accepted Answer

A) both profit and wage will rise 
B) profit will rise and wage will fall 
C) profit will fall and wage will rise 
D) both profit and wage will fall 
A) both profit and wage will rise 
B) profit will rise and wage will fall 
C) profit will fall and wage will rise 
D) both profit and wage will fall

Question 13

A competitive profit-maximising firm hires workers up to the point where the wage equals the price of the final good.

Accepted Answer

A) True 
 B)False

Question 14

The value of the marginal product of labour is equal to the change in:

Accepted Answer

A) total revenue with the addition of the last worker 
B) total cost with the addition of the last worker 
C) total profit with the addition of the last worker 
D) marginal cost with the addition of the last worker 
A) total revenue with the addition of the last worker 
B) total cost with the addition of the last worker 
C) total profit with the addition of the last worker 
D) marginal cost with the addition of the last worker

Question 15

The hiring decision of a profit-maximising firm is directly linked to the:

Accepted Answer

A) relationship between labour inputs and output described by the production function 
B) value of leisure time to a worker 
C) number of workers available for work 
D) marginal satisfaction that a worker receives from labour 
A) relationship between labour inputs and output described by the production function 
B) value of leisure time to a worker 
C) number of workers available for work 
D) marginal satisfaction that a worker receives from labour

Question 16

A massive power surge wipes out half of all computers in Melbourne.This will result in a lower demand for office workers, increasing their marginal product of labour and, hence, raising the wage of office workers.

Accepted Answer

A) True 
 B)False

Question 17

Suppose that a profit-maximising firm is increasing employment.A likely reason for this is that the:

Accepted Answer

A) wage exceeds the value of the marginal product 
B) marginal product is rising 
C) value of the marginal product exceeds the wage 
D) firm is increasing its market share 
A) wage exceeds the value of the marginal product 
B) marginal product is rising 
C) value of the marginal product exceeds the wage 
D) firm is increasing its market share

Question 18

Table 18-1 $$\begin{array} { | c | c | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Number of } \
\text { Workers }
\end{array} & \text { Output } & \begin{array} { c } 
\text { Marginal Product } \
\text { of Labor }
\end{array} & \begin{array} { c } 
\text { Value of Margina1 } \
\text { Product of Labor }
\end{array} & \text { Wage } & \text { Marginal Profit } \
\hline 0 & 0 & & & & \
\hline 1 & 100 & & \$ 1000 & \$ 500 & \$ 500 \
\hline 2 & & 80 & \$ 800 & \$ 500 & \
\hline 3 & & 60 & & \$ 500 & \$ 100 \
\hline 4 & 280 & & & \$ 500 & \
\hline 5 & & 20 & & & \
\hline
\end{array}$$ $\begin{array}{|l|l|l|l|l|l|}\hline\begin{array}{l}
\text { Number of } \
\text { Workers }
\end{array} & \text { Output } & \begin{array}{l}
\text { Marginal Product of } \
\text { Labour }
\end{array} & \begin{array}{l}
\text { Value of Marginal } \
\text { Product of Labour }
\end{array}&\text { Wage }&\text { Marginal Profit } \
\hline &0&0\
\hline 1 & 25 & 25 & \$ 125 & \$ 40 & \$ 85 \
\hline 2 & 45 & 20 & \$ 100 & \$ 40 & \$ 60 \
\hline 3 & 60 & 15 & \$ 75 & \$ 40 & \$ 35 \
\hline 4 & 70 & 10 & \$ 50 & \$ 40 & \$ 10 \
\hline 5 & 75 & 5 & \$ 25 & \$ 40 & -\$ 15 \
\hline
\end{array}$
-Refer to Table 18-1.It is apparent from this table that increasing marginal product:

Accepted Answer

A) never occurs 
B) occurs until the second worker is hired 
C) occurs until the third worker is hired 
D) occurs until the fourth worker is hired 
A) never occurs 
B) occurs until the second worker is hired 
C) occurs until the third worker is hired 
D) occurs until the fourth worker is hired

Question 19

What is the best example of the diminishing product of labour on an orchard?

Accepted Answer

A) when only a few workers are hired, they pick from only the best (most productive and accessible) trees in the orchard 
B) as more workers are hired, the orchard might become crowded with fruit pickers 
C) as more workers are hired, workers are required to pick from trees that have fewer fruit 
D) all of the above are good explanations 
A) when only a few workers are hired, they pick from only the best (most productive and accessible) trees in the orchard 
B) as more workers are hired, the orchard might become crowded with fruit pickers 
C) as more workers are hired, workers are required to pick from trees that have fewer fruit 
D) all of the above are good explanations

Question 20

During the Black Death, with fewer workers available to farm the land, employers were able to choose better skilled labour to employ.

Accepted Answer

A) True 
 B)False

Exam 19: The Markets for the Factors of Production

Factor market analysis could not be complete without some characterisation of:

Technological progress has led to a decrease in the demand for labour.

The marginal product of a worker is equivalent to:

What happens to the profit earned by apple producers and the wage earned by apple pickers when the price of apples falls?

If an increase in the number of workers leads to all workers becoming less productive, this situation is called:

The value of the marginal product of labour curve is:

Refer to the information provided.Assume that Amy has an upward-sloping labour supply curve.Amy's crocodile zoo employer is considering decreasing her wage.If Amy is offered $22 per hour, it is likely that she will:

Bob has been a private school caretaker for 30 years.For practical purposes, assume that Bob's productivity never changes.What then, if anything, will decrease the value of the labour that Bob performs?

What happens to the demand for piano tuners and the wage paid to piano tuners when the price of pianos increases?

When deciding how much labour to hire, a profit-maximising firm should hire workers until:

The market for apples is competitive, as is the market for apples pickers.An increase in price of apples will cause:

What happens to the profit earned by apple producers and the wage earned by apple pickers when the price of apples rises?

A competitive profit-maximising firm hires workers up to the point where the wage equals the price of the final good.

The value of the marginal product of labour is equal to the change in:

The hiring decision of a profit-maximising firm is directly linked to the:

A massive power surge wipes out half of all computers in Melbourne.This will result in a lower demand for office workers, increasing their marginal product of labour and, hence, raising the wage of office workers.

Suppose that a profit-maximising firm is increasing employment.A likely reason for this is that the:

What is the best example of the diminishing product of labour on an orchard?

During the Black Death, with fewer workers available to farm the land, employers were able to choose better skilled labour to employ.

Ten Lessons From Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand and Government Policies

Consumers, Producers and the Efficiency of Markets

Application: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Business Strategy and Oligopoly

Competition Policy

Earnings, Unions and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Global Financial Crisis of 2008 and Beyond

Five Debates Over Macroeconomic Policy

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