Question 1

In the market for land,an increase in demand ________ the equilibrium rent of land and ________ the equilibrium quantity.

Accepted Answer

A)  raises; does not change 
B)  lowers; increases 
C)  raises; increases 
D)  does not change; increases 
E)  does not change; does not change 
A)  raises; does not change 
B)  lowers; increases 
C)  raises; increases 
D)  does not change; increases 
E)  does not change; does not change A

Question 2

Why does a profit-maximizing firm hire labor up to the point where the value of marginal product equals the wage rate?

Accepted Answer

If a company stopped adding workers at the point where the wage rate was less than the value of marginal product of labor,the firm could hire more workers and its profit would increase.Why? Because the return from the workers,the value of marginal product of labor,exceeds the cost of hiring the workers.Because the marginal product of labor decreases as more workers are employed,as more workers are added,the marginal product of labor and hence the value of marginal product decreases.Eventually the firm will reach the point at which the value of marginal product of labor equals the wage rate.If still more workers are employed,then the wage the firm must pay the workers exceeds the value of marginal product of labor.These workers would contribute losses to the firm.So only when the value of marginal product of labor equals the wage rate can the firm not increase its profit by changing the quantity of workers it employs.

Question 3

The figure above shows a labor market in which a union has formed.
-Labor unions' support for increasing the minimum wage represents an attempt to shift the

Accepted Answer

A)  labor demand curve from LD₀ to LD₁. 
B)  labor demand curve from LD₁ to LD₀. 
C)  labor supply curve from LS₀ to LS₁. 
D)  labor supply curve from LS₁ to LS₀. 
E)  None of the above answers is correct. 
A)  labor demand curve from LD₀ to LD₁. 
B)  labor demand curve from LD₁ to LD₀. 
C)  labor supply curve from LS₀ to LS₁. 
D)  labor supply curve from LS₁ to LS₀. 
E)  None of the above answers is correct. A

Question 4

Which of the following is NOT a factor of production?

Accepted Answer

A)  labor 
B)  capital 
C)  entrepreneurship 
D)  bonds 
E)  land 
A)  labor 
B)  capital 
C)  entrepreneurship 
D)  bonds 
E)  land

Question 5

Which of the following is NOT a method by which unions try to increase the demand for the labor of their members?

Accepted Answer

A)  increasing the marginal product of union members 
B)  increasing the supply of the goods produced by union labor 
C)  supporting minimum wage laws 
D)  supporting import restrictions 
E)  supporting immigration restrictions 
A)  increasing the marginal product of union members 
B)  increasing the supply of the goods produced by union labor 
C)  supporting minimum wage laws 
D)  supporting import restrictions 
E)  supporting immigration restrictions

Question 6

Because leisure time has value to many workers,as wages increase the labor supply curve

Accepted Answer

A)  has a positive slope. 
B)  bends backwards and has a negative slope. 
C)  becomes a horizontal line. 
D)  becomes a vertical line. 
E)  bends forward and has a positive slope. 
A)  has a positive slope. 
B)  bends backwards and has a negative slope. 
C)  becomes a horizontal line. 
D)  becomes a vertical line. 
E)  bends forward and has a positive slope.

Question 7

Of the following,a union is LEAST likely to support

Accepted Answer

A)  an increase in the minimum wage rate. 
B)  laws that restrict immigration into the country. 
C)  on-the-job training that makes their members more productive. 
D)  laws that increase the quantity of the nation's imports. 
E)  programs that boost the demand for the goods and services their members produce. 
A)  an increase in the minimum wage rate. 
B)  laws that restrict immigration into the country. 
C)  on-the-job training that makes their members more productive. 
D)  laws that increase the quantity of the nation's imports. 
E)  programs that boost the demand for the goods and services their members produce.

Question 8

If the price of capital falls,in the long run under what circumstance could the demand for labor increase?

Accepted Answer

A)  The demand for labor can never increase when the price of capital falls. 
B)  The demand for labor will always increase when the price of capital falls. 
C)  It increases if the scale of production increases enough. 
D)  It increases if the demand for labor is inelastic. 
E)  None of the above answers is correct. 
A)  The demand for labor can never increase when the price of capital falls. 
B)  The demand for labor will always increase when the price of capital falls. 
C)  It increases if the scale of production increases enough. 
D)  It increases if the demand for labor is inelastic. 
E)  None of the above answers is correct.

Question 9

The value of the marginal product is equal to

Accepted Answer

A)  marginal product × marginal cost. 
B)  marginal product × product price. 
C)  marginal revenue × marginal cost. 
D)  marginal cost × product price. 
E)  marginal product ÷ product price. 
A)  marginal product × marginal cost. 
B)  marginal product × product price. 
C)  marginal revenue × marginal cost. 
D)  marginal cost × product price. 
E)  marginal product ÷ product price.

Question 10

If the quantity of capital supplied exceeds the quantity of capital demanded,what takes place?

Accepted Answer

If the quantity of capital supplied exce

Question 11

The value of marginal product of labor curve

Accepted Answer

A)  is upward sloping because firms want to hire more workers to increase production. 
B)  shows the price of a factor of production multiplied by the amount of the factor employed. 
C)  is the same as a firm's supply of labor curve. 
D)  is downward sloping if each additional worker's marginal product is decreasing. 
E)  is U-shaped. 
A)  is upward sloping because firms want to hire more workers to increase production. 
B)  shows the price of a factor of production multiplied by the amount of the factor employed. 
C)  is the same as a firm's supply of labor curve. 
D)  is downward sloping if each additional worker's marginal product is decreasing. 
E)  is U-shaped.

Question 12

The supply of land is perfectly ________ because no matter the amount of rent offered for land,the quantity of land is ________.

Accepted Answer

A)  elastic; fixed 
B)  inelastic; fixed 
C)  elastic: renewable 
D)  inelastic; nonrenewable 
E)  elastic; nonrenewable 
A)  elastic; fixed 
B)  inelastic; fixed 
C)  elastic: renewable 
D)  inelastic; nonrenewable 
E)  elastic; nonrenewable

Question 13

Which of the following is NOT a method used by union to increase their members' wages?

Accepted Answer

A)  Limit the supply of non-union workers. 
B)  Increase the demand for union workers. 
C)  Support minimum wage increases. 
D)  Increase union members' productivity. 
E)  None of the above because they are all methods unions use to increase their members' wages. 
A)  Limit the supply of non-union workers. 
B)  Increase the demand for union workers. 
C)  Support minimum wage increases. 
D)  Increase union members' productivity. 
E)  None of the above because they are all methods unions use to increase their members' wages.

Question 14

The total output of candles in Nick's Wicks candle shop increases from 20 per hour to 30 per hour as he hires the second worker.The price of each candle is $2.The

Accepted Answer

A)  marginal product of the second worker is 20 candles. 
B)  marginal product of the second worker is 30 candles. 
C)  value of marginal product of the second worker is $20. 
D)  value of marginal product of the second worker is $30. 
E)  value of marginal product of the second worker is $60. 
A)  marginal product of the second worker is 20 candles. 
B)  marginal product of the second worker is 30 candles. 
C)  value of marginal product of the second worker is $20. 
D)  value of marginal product of the second worker is $30. 
E)  value of marginal product of the second worker is $60.

Question 15

If the wage rate exceeds the value of marginal product,a firm

Accepted Answer

A)  is maximizing its profit. 
B)  can increase its profit by hiring more workers. 
C)  can increase its profit by firing some workers. 
D)  can increase its profit by increasing the wage rate and not changing its employment. 
E)  can increase its profit by increasing the wage rate and increasing its employment. 
A)  is maximizing its profit. 
B)  can increase its profit by hiring more workers. 
C)  can increase its profit by firing some workers. 
D)  can increase its profit by increasing the wage rate and not changing its employment. 
E)  can increase its profit by increasing the wage rate and increasing its employment.

Question 16

The Small Bookshop hires teenagers who love books.How does each of the following changes affect the supply and demand for workers for the Small Bookshop?
a.The Big Bookshop,a chain bookstore down the street,offers a higher wage rate.
b.More people buy books from Amazon.com.
c.People watch more television and read fewer books.
d.More older people who love to read move into the area where the Small Bookshop is located.

Accepted Answer

a.The supply of workers for Small Booksh

Question 17

If a firm uses new technology that increases its demand for labor,the firm's demand for labor curve

Accepted Answer

A)  shifts leftward. 
B)  shifts rightward only if the demand for labor is elastic. 
C)  shifts rightward no matter if the demand for labor is elastic or inelastic. 
D)  does not shift, but there is a movement along it. 
E)  shifts rightward only if the demand for labor is inelastic. 
A)  shifts leftward. 
B)  shifts rightward only if the demand for labor is elastic. 
C)  shifts rightward no matter if the demand for labor is elastic or inelastic. 
D)  does not shift, but there is a movement along it. 
E)  shifts rightward only if the demand for labor is inelastic.

Question 18

If we compare the value of marginal product of labor curve and the demand for labor curve we see that

Accepted Answer

A)  they are the same thing. 
B)  the value of marginal product curve is twice as steep. 
C)  the demand for labor curve has no relationship to the value of marginal product curve. 
D)  the demand for labor curve is twice as steep but they share the same axes. 
E)  the demand for labor curve lies above the value of marginal product curve. 
A)  they are the same thing. 
B)  the value of marginal product curve is twice as steep. 
C)  the demand for labor curve has no relationship to the value of marginal product curve. 
D)  the demand for labor curve is twice as steep but they share the same axes. 
E)  the demand for labor curve lies above the value of marginal product curve.

Question 19

In the labor market,

Accepted Answer

A)  households demand labor. 
B)  firms demand labor. 
C)  firms supply labor. 
D)  wage are determined only by firms alone. 
E)  None of the above answers is correct. 
A)  households demand labor. 
B)  firms demand labor. 
C)  firms supply labor. 
D)  wage are determined only by firms alone. 
E)  None of the above answers is correct.

Question 20

If a union is able to organize workers in a competitive labor market but the union cannot affect the demand for its members' labor,then the wage rate ________ and the quantity of labor hired ________.

Accepted Answer

A)  rises; increases 
B)  rises; decreases 
C)  rises; does not change 
D)  does not change; increases 
E)  falls; decreases 
A)  rises; increases 
B)  rises; decreases 
C)  rises; does not change 
D)  does not change; increases 
E)  falls; decreases

In the market for land,an increase in demand the equilibrium rent of land and the equilibrium quantity.

Why does a profit-maximizing firm hire labor up to the point where the value of marginal product equals the wage rate?

The figure above shows a labor market in which a union has formed. -Labor unions' support for increasing the minimum wage represents an attempt to shift the

Which of the following is NOT a factor of production?

Which of the following is NOT a method by which unions try to increase the demand for the labor of their members?

Because leisure time has value to many workers,as wages increase the labor supply curve

Of the following,a union is LEAST likely to support

If the price of capital falls,in the long run under what circumstance could the demand for labor increase?

The value of the marginal product is equal to

If the quantity of capital supplied exceeds the quantity of capital demanded,what takes place?

The value of marginal product of labor curve

The supply of land is perfectly because no matter the amount of rent offered for land,the quantity of land is .

Which of the following is NOT a method used by union to increase their members' wages?

The total output of candles in Nick's Wicks candle shop increases from 20 per hour to 30 per hour as he hires the second worker.The price of each candle is $2.The

If the wage rate exceeds the value of marginal product,a firm

If a firm uses new technology that increases its demand for labor,the firm's demand for labor curve

If we compare the value of marginal product of labor curve and the demand for labor curve we see that

In the labor market,

If a union is able to organize workers in a competitive labor market but the union cannot affect the demand for its members' labor,then the wage rate and the quantity of labor hired .

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets With Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Economic Inequality

Filters

Exam 19: Markets for Factors of Production

In the market for land,an increase in demand ________ the equilibrium rent of land and ________ the equilibrium quantity.

Why does a profit-maximizing firm hire labor up to the point where the value of marginal product equals the wage rate?

The figure above shows a labor market in which a union has formed. -Labor unions' support for increasing the minimum wage represents an attempt to shift the

Which of the following is NOT a factor of production?

Which of the following is NOT a method by which unions try to increase the demand for the labor of their members?

Because leisure time has value to many workers,as wages increase the labor supply curve

Of the following,a union is LEAST likely to support

If the price of capital falls,in the long run under what circumstance could the demand for labor increase?

The value of the marginal product is equal to

If the quantity of capital supplied exceeds the quantity of capital demanded,what takes place?

The value of marginal product of labor curve

The supply of land is perfectly ________ because no matter the amount of rent offered for land,the quantity of land is ________.

Which of the following is NOT a method used by union to increase their members' wages?

The total output of candles in Nick's Wicks candle shop increases from 20 per hour to 30 per hour as he hires the second worker.The price of each candle is $2.The

If the wage rate exceeds the value of marginal product,a firm

If a firm uses new technology that increases its demand for labor,the firm's demand for labor curve

If we compare the value of marginal product of labor curve and the demand for labor curve we see that

In the labor market,

If a union is able to organize workers in a competitive labor market but the union cannot affect the demand for its members' labor,then the wage rate ________ and the quantity of labor hired ________.

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets With Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Economic Inequality

Filters

In the market for land,an increase in demand the equilibrium rent of land and the equilibrium quantity.

The supply of land is perfectly because no matter the amount of rent offered for land,the quantity of land is .

If a union is able to organize workers in a competitive labor market but the union cannot affect the demand for its members' labor,then the wage rate and the quantity of labor hired .