Question 1

Which of the following is NOT an example of a factor of production?

Accepted Answer

A)  Coal 
B)  Tractors 
C)  Cigarettes 
D)  College graduates 
A)  Coal 
B)  Tractors 
C)  Cigarettes 
D)  College graduates

Question 2

Scenario: Consider a firm that produces and sells a good for the price of $2 in a perfectly competitive market. The following table shows the relationship between the number of workers and the output of this firm. Suppose the labor market from which this firm hires its employees is competitive.
  
-Refer to the scenario above.What is the value of the value of marginal product of labor when the third worker is hired?

Accepted Answer

A)  $36 
B)  $72 
C)  $18 
D)  $9 
A)  $36 
B)  $72 
C)  $18 
D)  $9

Question 3

Scenario: Mark grows herbs in his backyard. The following table shows his output as a function of the square feet of land used.
  
-Refer to the scenario above.Suppose Mark can sell his herbs at the price of $2.50 per pound,and that the rental price of land is $70 per square foot.How big of an herb garden should Mark maintain?

Accepted Answer

A)  A 2 square foot garden 
B)  A 3 square foot garden 
C)  A 4 square foot garden 
D)  A 5 square foot garden 
A)  A 2 square foot garden 
B)  A 3 square foot garden 
C)  A 4 square foot garden 
D)  A 5 square foot garden

Question 4

A firm will continue to purchase and use land until the value of the ________.

Accepted Answer

A)  marginal product of land equals the price of land 
B)  average product of land equals the marginal product of land 
C)  marginal product of land equals the marginal product of labor 
D)  marginal product of land equals the marginal product of capital 
A)  marginal product of land equals the price of land 
B)  average product of land equals the marginal product of land 
C)  marginal product of land equals the marginal product of labor 
D)  marginal product of land equals the marginal product of capital

Question 5

A person's stock of skills to produce economic value is referred to as ________.

Accepted Answer

A)  fixed capital 
B)  human capital 
C)  personal wealth 
D)  personal capital 
A)  fixed capital 
B)  human capital 
C)  personal wealth 
D)  personal capital

Question 6

Which of the following is likely to cause a rise in the wage rate and a decrease in the number of workers hired in a garage?

Accepted Answer

A)  The shutdown of a nearby garage 
B)  A decrease in the price of the services provided by the garage 
C)  An increase in the price of the services provided by the garage 
D)  The opening of a new garage nearby that offers higher wages to its workers 
A)  The shutdown of a nearby garage 
B)  A decrease in the price of the services provided by the garage 
C)  An increase in the price of the services provided by the garage 
D)  The opening of a new garage nearby that offers higher wages to its workers

Question 7

Which of the following is likely to cause an increase in both the wage rate and the level of employment in an industry?

Accepted Answer

A)  A leftward shift in the supply curve of labor, without any change in the demand curve for labor 
B)  A leftward shift in the demand curve for labor, without any change in the supply curve of labor 
C)  A rightward shift in the supply curve of labor, without any change in the demand curve for labor 
D)  A rightward shift in the demand curve for labor, without any change in the supply curve of labor 
A)  A leftward shift in the supply curve of labor, without any change in the demand curve for labor 
B)  A leftward shift in the demand curve for labor, without any change in the supply curve of labor 
C)  A rightward shift in the supply curve of labor, without any change in the demand curve for labor 
D)  A rightward shift in the demand curve for labor, without any change in the supply curve of labor

Question 8

The figure below shows output of a firm at different number of workers. Payment to workers is the only variable cost of the firm.
  
-Refer to the figure above.If the price of the output is $3.00 per unit and the wage is $11.00 per worker,the firm's optimal choice in the short run is to hire ________ workers.

Accepted Answer

A)  3 
B)  4 
C)  5 
D)  6 
A)  3 
B)  4 
C)  5 
D)  6

Question 9

Scenario: Consider a firm that produces and sells a good for the price of $2 in a perfectly competitive market. The following table shows the relationship between the number of workers and the output of this firm. Suppose the labor market from which this firm hires its employees is competitive.
  
-Refer to the scenario above.If the wage rate in this market is equal to $6,this firm will hire ________ workers.

Accepted Answer

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

Question 10

Which of the following does NOT cause a shift in the supply curve of labor in an industry?

Accepted Answer

A)  Workers' tastes and preferences 
B)  The population of the concerned region 
C)  Opportunity costs faced by the workers 
D)  The price of the final good that labor produces 
A)  Workers' tastes and preferences 
B)  The population of the concerned region 
C)  Opportunity costs faced by the workers 
D)  The price of the final good that labor produces

Question 11

Scenario: Victoria Corp. makes running shoes by employing a robotics technology that requires at most a few, but highly skilled, workers for monitoring and maintenance of the robots. Each robot costs $240,000. The table below shows the marginal product of capital (MPK) per month when the firm employs one worker versus when it employs two workers. Each pair of Victoria shoes sells for $150.
  
-Refer to the scenario above.If the wage is $40,000 per month per worker,should the firm hire one worker or two workers?

Accepted Answer

A)  One worker, because one worker costs less than two workers 
B)  One worker, because the firm's maximum profit will be higher than it would be for hiring two 
C)  Two workers, because two workers generate more revenue 
D)  Two workers, because the firm's maximum profit will be higher than it would be hiring one 
A)  One worker, because one worker costs less than two workers 
B)  One worker, because the firm's maximum profit will be higher than it would be for hiring two 
C)  Two workers, because two workers generate more revenue 
D)  Two workers, because the firm's maximum profit will be higher than it would be hiring one

Question 12

If the value of the marginal product of a worker is $20 and the market price of the good she produces is $5,her marginal product is ________.

Accepted Answer

A)  4 units 
B)  10 units 
C)  25 units 
D)  100 units 
A)  4 units 
B)  10 units 
C)  25 units 
D)  100 units

Question 13

Which of the following statements is true?

Accepted Answer

A)  Employers are willing to forgo profits when engaging in special interest group discrimination. 
B)  Employers are willing to forgo profits when engaging in cultural discrimination. 
C)  Employers are willing to forgo profits when engaging in statistical discrimination. 
D)  Employers are willing to forgo profits when engaging in taste-based discrimination. 
A)  Employers are willing to forgo profits when engaging in special interest group discrimination. 
B)  Employers are willing to forgo profits when engaging in cultural discrimination. 
C)  Employers are willing to forgo profits when engaging in statistical discrimination. 
D)  Employers are willing to forgo profits when engaging in taste-based discrimination.

Question 14

A factor of production refers to any good or service that is ________.

Accepted Answer

A)  produced by the government 
B)  produced in a competitive market 
C)  used to produce other goods and services 
D)  produced using scarce economic resources 
A)  produced by the government 
B)  produced in a competitive market 
C)  used to produce other goods and services 
D)  produced using scarce economic resources

Question 15

The following figure depicts the labor markets of two different firms.
  
-Refer to the figure above.Let the price of A's output be PA and the price of B's output be PB.If both firms hire 4 employees at a wage of $8,what is the ratio PA/PB?

Accepted Answer

A)  2 
B)    
C)    
D)    
A)  2 
B)    
C)    
D)

Question 16

Other things remaining the same,which of the following is likely to decrease both the wage rate and the number of workers hired on a tea estate?

Accepted Answer

A)  An increase in the price of tea 
B)  A decrease in the price of tea 
C)  A decrease in the opportunity cost of leisure 
D)  An increase in the opportunity cost of leisure 
A)  An increase in the price of tea 
B)  A decrease in the price of tea 
C)  A decrease in the opportunity cost of leisure 
D)  An increase in the opportunity cost of leisure

Question 17

Advances in statistical software are an example of ________ technological changes.

Accepted Answer

A)  skill-biased 
B)  labor-saving 
C)  unskilled-biased 
D)  labor-complementary 
A)  skill-biased 
B)  labor-saving 
C)  unskilled-biased 
D)  labor-complementary

Question 18

A night shift cashier getting paid more than day shift cashiers is due to ________.

Accepted Answer

A)  compensating wage differentials 
B)  discrimination in the job market 
C)  differences in human capital 
D)  glass ceiling in the job market 
A)  compensating wage differentials 
B)  discrimination in the job market 
C)  differences in human capital 
D)  glass ceiling in the job market

Question 19

Scenario: There are two regional labor markets in a country, X and Y. Workers are equally qualified to perform the same type of job in either region. The labor demand in both markets is identical.
-Refer to the scenario above.If in equilibrium the wage in X is greater than the wage in Y,what can explain this wage difference?

Accepted Answer

A)  Differences in human capital 
B)  Differences in compensating wages 
C)  Taste-based discrimination 
D)  Statistical discrimination 
A)  Differences in human capital 
B)  Differences in compensating wages 
C)  Taste-based discrimination 
D)  Statistical discrimination

Question 20

Assume that both the goods and the labor market are perfectly competitive.If at equilibrium,the marginal cost faced by a firm is $6 and the marginal product of the last unit of labor hired by the firm is 2 units,the market wage rate must be ________.

Accepted Answer

A)  $3 
B)  $6 
C)  $12 
D)  $18 
A)  $3 
B)  $6 
C)  $12 
D)  $18

Which of the following is NOT an example of a factor of production?

A firm will continue to purchase and use land until the value of the ________.

A person's stock of skills to produce economic value is referred to as ________.

Which of the following is likely to cause a rise in the wage rate and a decrease in the number of workers hired in a garage?

Which of the following is likely to cause an increase in both the wage rate and the level of employment in an industry?

Which of the following does NOT cause a shift in the supply curve of labor in an industry?

If the value of the marginal product of a worker is $20 and the market price of the good she produces is $5,her marginal product is ________.

Which of the following statements is true?

A factor of production refers to any good or service that is ________.

The following figure depicts the labor markets of two different firms. -Refer to the figure above.Let the price of A's output be PA and the price of B's output be PB.If both firms hire 4 employees at a wage of $8,what is the ratio PA/PB?

Other things remaining the same,which of the following is likely to decrease both the wage rate and the number of workers hired on a tea estate?

Advances in statistical software are an example of ________ technological changes.

A night shift cashier getting paid more than day shift cashiers is due to ________.

Assume that both the goods and the labor market are perfectly competitive.If at equilibrium,the marginal cost faced by a firm is $6 and the marginal product of the last unit of labor hired by the firm is 2 units,the market wage rate must be ________.

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, supply, and Equilibrium

Consumers and Incentives

Sellers and Incentives

Perfect Competition and the Invisible Hand

Trade

Externalities and Public Goods

The Government in the Economy: Taxation and Regulation

Monopoly

Game Theory and Strategic Play

Oligopoly and Monopolistic Competition

Trade-Offs Involving Time and Risk

The Economics of Information

Auctions and Bargaining

Social Economics

Filters

Exam 11: Markets for Factors of Production

Which of the following is NOT an example of a factor of production?

A firm will continue to purchase and use land until the value of the ________.

A person's stock of skills to produce economic value is referred to as ________.

Which of the following is likely to cause a rise in the wage rate and a decrease in the number of workers hired in a garage?

Which of the following is likely to cause an increase in both the wage rate and the level of employment in an industry?

Which of the following does NOT cause a shift in the supply curve of labor in an industry?

If the value of the marginal product of a worker is $20 and the market price of the good she produces is $5,her marginal product is ________.

Which of the following statements is true?

A factor of production refers to any good or service that is ________.

The following figure depicts the labor markets of two different firms. -Refer to the figure above.Let the price of A's output be PA and the price of B's output be PB.If both firms hire 4 employees at a wage of $8,what is the ratio PA/PB?

Other things remaining the same,which of the following is likely to decrease both the wage rate and the number of workers hired on a tea estate?

Advances in statistical software are an example of ________ technological changes.

A night shift cashier getting paid more than day shift cashiers is due to ________.

Assume that both the goods and the labor market are perfectly competitive.If at equilibrium,the marginal cost faced by a firm is $6 and the marginal product of the last unit of labor hired by the firm is 2 units,the market wage rate must be ________.

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, supply, and Equilibrium

Consumers and Incentives

Sellers and Incentives

Perfect Competition and the Invisible Hand

Trade

Externalities and Public Goods

The Government in the Economy: Taxation and Regulation

Monopoly

Game Theory and Strategic Play

Oligopoly and Monopolistic Competition

Trade-Offs Involving Time and Risk

The Economics of Information

Auctions and Bargaining

Social Economics

Filters