Question 1

The term "factor market" applies to the market for

Accepted Answer

A) labor. 
B) capital. 
C) land. 
D) All of the above are correct. 
A) labor. 
B) capital. 
C) land. 
D) All of the above are correct.

Question 2

When a firm experiences diminishing marginal product,what is the shape of the curve that represents the value of the marginal product of labor?

Accepted Answer

A) U-shaped 
B) flat 
C) downward sloping 
D) upward sloping 
A) U-shaped 
B) flat 
C) downward sloping 
D) upward sloping

Question 3

The opportunity cost of leisure is impossible to measure,since we can't measure leisure time in dollars.

Accepted Answer

A) True 
 B)False

Question 4

Table 18-2
Consider the following daily production data for Davis Golf Balls, Inc. Davis Golf Balls, Inc. sells golf balls for 50 cents each and pays the workers a wage of $30 a day.
  
-Refer to Table 18-2.What is the third worker's marginal product of labor?

Accepted Answer

A) 75 golf balls 
B) 100 golf balls 
C) 125 golf balls 
D) 150 golf balls 
A) 75 golf balls 
B) 100 golf balls 
C) 125 golf balls 
D) 150 golf balls

Question 5

The owners of capital resources are compensated according to the

Accepted Answer

A) purchase price of the capital stock. 
B) marginal product of capital. 
C) value of the marginal product of capital. 
D) absolute level of production of final goods and services. 
A) purchase price of the capital stock. 
B) marginal product of capital. 
C) value of the marginal product of capital. 
D) absolute level of production of final goods and services.

Question 6

The labor supply curve reflects how

Accepted Answer

A) workers' decisions about the labor-leisure tradeoff respond to a change in the wage. 
B) workers' decisions about the opportunity cost of labor respond to a change in the quantity of labor supplied. 
C) firms' decisions about the labor-leisure tradeoff respond to the quantity of labor demanded. 
D) firms' decisions about how the quantity of labor they hire respond to changes in their opportunities to earn profits. 
A) workers' decisions about the labor-leisure tradeoff respond to a change in the wage. 
B) workers' decisions about the opportunity cost of labor respond to a change in the quantity of labor supplied. 
C) firms' decisions about the labor-leisure tradeoff respond to the quantity of labor demanded. 
D) firms' decisions about how the quantity of labor they hire respond to changes in their opportunities to earn profits.

Question 7

Consider the labor market for heath care workers,which is in equilibrium.Because of the aging population in the United States,the output price for health care services has increased.Holding all else equal,what effect does this have on the equilibrium quantity of health care employees?

Accepted Answer

A) The equilibrium quantity increases. 
B) The equilibrium quantity decreases. 
C) The equilibrium quantity does not change. 
D) It is not possible to determine what happens to the equilibrium quantity. 
A) The equilibrium quantity increases. 
B) The equilibrium quantity decreases. 
C) The equilibrium quantity does not change. 
D) It is not possible to determine what happens to the equilibrium quantity.

Question 8

Which of the following events would bring about a change in the value of the marginal product of labor?

Accepted Answer

A) technological progress 
B) a change in the marginal product of labor 
C) a change in the price of the product that the firm sells 
D) All of the above are correct. 
A) technological progress 
B) a change in the marginal product of labor 
C) a change in the price of the product that the firm sells 
D) All of the above are correct.

Question 9

Scenario 18-1
Gertrude Kelp owns three boats that participate in commercial fishing for fresh Pacific salmon off the coast of Alaska. As part of her business she hires a captain and several crew members for each boat. In the market for fresh Pacific salmon, there are thousands of firms like Gertrude's. While Gertrude usually catches a significant number of fish each year, her contribution to the entire harvest of salmon is negligible relative to the size of the market.
-Refer to Scenario 18-1.If Gertrude is a competitor in both the fresh Pacific salmon market and in the market for crew members,she is called a price

Accepted Answer

A) taker in the salmon market and a wage setter in the crew market. 
B) taker in the crew market and a price setter in the salmon market. 
C) taker in both markets. 
D) setter in both markets. 
A) taker in the salmon market and a wage setter in the crew market. 
B) taker in the crew market and a price setter in the salmon market. 
C) taker in both markets. 
D) setter in both markets.

Question 10

The rental price of capital is determined by

Accepted Answer

A) forces of supply and demand in capital markets. 
B) the amount of equity that is generated in equity markets. 
C) the amount of bond financing used by profit-maximizing firms. 
D) the amount of dividends paid out to stockholders by profit-maximizing firms. 
A) forces of supply and demand in capital markets. 
B) the amount of equity that is generated in equity markets. 
C) the amount of bond financing used by profit-maximizing firms. 
D) the amount of dividends paid out to stockholders by profit-maximizing firms.

Question 11

The value of the marginal product is

Accepted Answer

A) total revenue minus total cost. 
B) the change in total output divided by the change in an input. 
C) the marginal product of an input times the price of the output. 
D) total output divided by total inputs. 
A) total revenue minus total cost. 
B) the change in total output divided by the change in an input. 
C) the marginal product of an input times the price of the output. 
D) total output divided by total inputs.

Question 12

Figure 18-4
  
-Refer to Figure 18-4.The shift of the labor demand curve from D₁ to D₂ could possibly be explained by

Accepted Answer

A) a change in workers' attitudes toward the work-leisure tradeoff. 
B) decreases in wages in other labor markets. 
C) an increase in the price of firms' output. 
D) All of the above are correct. 
A) a change in workers' attitudes toward the work-leisure tradeoff. 
B) decreases in wages in other labor markets. 
C) an increase in the price of firms' output. 
D) All of the above are correct.

Question 13

Table 18-3
  
-Refer to Table 18-3.If the firm hires two workers,the two workers together produce

Accepted Answer

A) 80 units. 
B) 100 units. 
C) 180 units. 
D) 200 units. 
A) 80 units. 
B) 100 units. 
C) 180 units. 
D) 200 units.

Question 14

Table 18-3
  
-Refer to Table 18-3.What is the market price of the final good?

Accepted Answer

A) $5 
B) $6 
C) $8 
D) $10 
A) $5 
B) $6 
C) $8 
D) $10

Question 15

A household member's decision on how much labor to supply is most closely linked to

Accepted Answer

A) the supply of factors of production other than labor. 
B) technological change. 
C) the tradeoff between leisure and work. 
D) immigration trends. 
A) the supply of factors of production other than labor. 
B) technological change. 
C) the tradeoff between leisure and work. 
D) immigration trends.

Question 16

The equilibrium rental income paid to the owners of capital at any point in time equals the

Accepted Answer

A) marginal product of capital. 
B) value of the marginal product of capital. 
C) percentage of profits paid out to stockholders in the form of dividends. 
D) equilibrium purchase price of capital. 
A) marginal product of capital. 
B) value of the marginal product of capital. 
C) percentage of profits paid out to stockholders in the form of dividends. 
D) equilibrium purchase price of capital.

Question 17

If one were to consider a university as a business,the computers in the computer labs would be regarded by economists as

Accepted Answer

A) technology flows. 
B) mechanization flows. 
C) part of the university's stock of capital. 
D) a flow of services from the university's stock of capital. 
A) technology flows. 
B) mechanization flows. 
C) part of the university's stock of capital. 
D) a flow of services from the university's stock of capital.

Question 18

Labor markets are different from most other markets because labor demand is

Accepted Answer

A) represented by a vertical line on a supply-demand diagram. 
B) represented by an upward-sloping line on a supply-demand diagram. 
C) such an elusive concept. 
D) derived. 
A) represented by a vertical line on a supply-demand diagram. 
B) represented by an upward-sloping line on a supply-demand diagram. 
C) such an elusive concept. 
D) derived.

Question 19

Which of the following statements is correct?

Accepted Answer

A) The value of the marginal product curve is the labor demand curve for competitive, profit-maximizing firms. 
B) A competitive, profit-maximizing firm hires workers up to the point where the value of the marginal product of labor equals the wage. 
C) By hiring labor up to the point where the value of the marginal product of labor equals the wage, the firm is producing where price equals marginal cost. 
D) All of the above are correct. 
A) The value of the marginal product curve is the labor demand curve for competitive, profit-maximizing firms. 
B) A competitive, profit-maximizing firm hires workers up to the point where the value of the marginal product of labor equals the wage. 
C) By hiring labor up to the point where the value of the marginal product of labor equals the wage, the firm is producing where price equals marginal cost. 
D) All of the above are correct.

Question 20

Which of the following qualify as part of our economy's capital income?

Accepted Answer

A) wages paid to workers 
B) interest paid to the owners of corporate bonds 
C) salaries paid to chief executive officers of corporations 
D) All of the above are correct. 
A) wages paid to workers 
B) interest paid to the owners of corporate bonds 
C) salaries paid to chief executive officers of corporations 
D) All of the above are correct.

Exam 18: The Markets for the Factors of Production

The term "factor market" applies to the market for

When a firm experiences diminishing marginal product,what is the shape of the curve that represents the value of the marginal product of labor?

The opportunity cost of leisure is impossible to measure,since we can't measure leisure time in dollars.

Table 18-2 Consider the following daily production data for Davis Golf Balls, Inc. Davis Golf Balls, Inc. sells golf balls for 50 cents each and pays the workers a wage of $30 a day. -Refer to Table 18-2.What is the third worker's marginal product of labor?

The owners of capital resources are compensated according to the

The labor supply curve reflects how

Consider the labor market for heath care workers,which is in equilibrium.Because of the aging population in the United States,the output price for health care services has increased.Holding all else equal,what effect does this have on the equilibrium quantity of health care employees?

Which of the following events would bring about a change in the value of the marginal product of labor?

The rental price of capital is determined by

The value of the marginal product is

Figure 18-4 -Refer to Figure 18-4.The shift of the labor demand curve from D₁ to D₂ could possibly be explained by

Table 18-3 -Refer to Table 18-3.If the firm hires two workers,the two workers together produce

Table 18-3 -Refer to Table 18-3.What is the market price of the final good?

A household member's decision on how much labor to supply is most closely linked to

The equilibrium rental income paid to the owners of capital at any point in time equals the

If one were to consider a university as a business,the computers in the computer labs would be regarded by economists as

Labor markets are different from most other markets because labor demand is

Which of the following statements is correct?

Which of the following qualify as part of our economy's capital income?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Applications

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

Oligopoly

Monopolistic Competition

Earnings and Discrimination

Income Inequality 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 Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

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

Five Debates Over Macroeconomic Policy

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