Question 1

If the price of airline tickets falls,what will happen to the demand curve for flight attendants?

Accepted Answer

A) It will shift to the right. 
B) It will shift to the left. 
C) The direction of the shift is ambiguous. 
D) It will remain unchanged. 
A) It will shift to the right. 
B) It will shift to the left. 
C) The direction of the shift is ambiguous. 
D) It will remain unchanged.

Question 2

For a computer software firm,capital could be thought of as (i)	the firm's computer programmers.
(ii)	the wages the firm pays to its computer programmers.
(iii)	computer equipment.

Accepted Answer

A) (i) only 
B) (ii) only 
C) (iii) only 
D) (i) and (iii) 
A) (i) only 
B) (ii) only 
C) (iii) only 
D) (i) and (iii)

Question 3

Capital is paid according to the value of its marginal product

Accepted Answer

A) only if earnings from capital are paid to households in the form of dividends. 
B) only if earnings from capital are kept within firms as retained earnings. 
C) regardless of whether earnings from capital are paid to households in the form of dividends or whether those earnings are kept within firms as retained earnings. 
D) None of the above are correct; capital is a factor of production for which earnings are unrelated to the value of marginal product. 
A) only if earnings from capital are paid to households in the form of dividends. 
B) only if earnings from capital are kept within firms as retained earnings. 
C) regardless of whether earnings from capital are paid to households in the form of dividends or whether those earnings are kept within firms as retained earnings. 
D) None of the above are correct; capital is a factor of production for which earnings are unrelated to the value of marginal product.

Question 4

Table 18-3
  
-Refer to Table 18-3.To maximize its profit,the firm will hire workers as long as the value of the marginal product of labor equals or exceeds

Accepted Answer

A) $100. 
B) $200. 
C) $400. 
D) $500. 
A) $100. 
B) $200. 
C) $400. 
D) $500.

Question 5

The purchase price of capital is

Accepted Answer

A) the value of the capital to the firm. 
B) always less than the rental price. 
C) the price received from the flow of some capital services. 
D) the price a person pays to own that factor of production indefinitely. 
A) the value of the capital to the firm. 
B) always less than the rental price. 
C) the price received from the flow of some capital services. 
D) the price a person pays to own that factor of production indefinitely.

Question 6

Suppose that a new invention decreases the marginal productivity of labor,shifting labor demand to the left.Such an invention would be an example of

Accepted Answer

A) labor-saving technology. 
B) labor-augmenting technology. 
C) Luddite technology. 
D) supply-shifting technology. 
A) labor-saving technology. 
B) labor-augmenting technology. 
C) Luddite technology. 
D) supply-shifting technology.

Question 7

Labor-augmenting technology causes which of the following? (i)	The marginal productivity of labor increases.
(ii)	The marginal productivity of labor decreases.
(iii)	Labor demand shifts to the right.
(iv)	Labor demand shifts to the left.

Accepted Answer

A) (i) only 
B) (ii) only 
C) (i) and (iii) 
D) (ii) and (iv) 
A) (i) only 
B) (ii) only 
C) (i) and (iii) 
D) (ii) and (iv)

Question 8

Table 18-1
  
-Refer to Table 18-1.This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor.Each baseball sells for $5 in a competitive market.If the firm is maximizing the marginal product of labor,what is the firm's marginal revenue product?

Accepted Answer

A) 140 baseballs. 
B) $300. 
C) $400. 
D) $700. 
A) 140 baseballs. 
B) $300. 
C) $400. 
D) $700.

Question 9

Labor-saving technological advances decrease the marginal productivity of labor.

Accepted Answer

A) True 
 B)False

Question 10

When a firm decides to retain its earnings instead of paying dividends,the stockholders necessarily suffer.

Accepted Answer

A) True 
 B)False

Question 11

A change in the supply of one factor of production

Accepted Answer

A) will not change either the marginal productivities or the prices of other factors. 
B) will not change the prices of other factors, but it may change their marginal productivities. 
C) will not change the marginal productivities of other factors, but it may change their prices. 
D) changes the marginal productivities and the prices of other factors. 
A) will not change either the marginal productivities or the prices of other factors. 
B) will not change the prices of other factors, but it may change their marginal productivities. 
C) will not change the marginal productivities of other factors, but it may change their prices. 
D) changes the marginal productivities and the prices of other factors.

Question 12

The equilibrium rental income paid to landowners at any point in time equals the

Accepted Answer

A) purchase price of land. 
B) value of the marginal product of land. 
C) marginal product of land. 
D) wage paid to laborers. 
A) purchase price of land. 
B) value of the marginal product of land. 
C) marginal product of land. 
D) wage paid to laborers.

Question 13

Describe the difference between the purchase price of capital and the rental price of capital.If you know the value of marginal product from the flow of capital services,how would you determine the market price for the capital stock?

Accepted Answer

The purchase price of capital is a refle

Question 14

Value of marginal product is defined as the additional

Accepted Answer

A) output a firm would receive after hiring one more factor of production. 
B) cost of hiring one more factor of production. 
C) revenue earned from selling one more unit of product. 
D) revenue earned from hiring one more factor of production. 
A) output a firm would receive after hiring one more factor of production. 
B) cost of hiring one more factor of production. 
C) revenue earned from selling one more unit of product. 
D) revenue earned from hiring one more factor of production.

Question 15

Suppose medical research provides evidence that eating bananas provides far greater health benefits than was previously thought.The resulting increase in the demand for bananas

Accepted Answer

A) increases the marginal product of banana pickers for any given number of banana pickers. 
B) increases the value of the marginal product of banana pickers for any given number of banana pickers. 
C) increases the supply of banana pickers. 
D) All of the above are correct. 
A) increases the marginal product of banana pickers for any given number of banana pickers. 
B) increases the value of the marginal product of banana pickers for any given number of banana pickers. 
C) increases the supply of banana pickers. 
D) All of the above are correct.

Question 16

A competitive firm will hire workers up to the point at which the value of the marginal product of labor equals the

Accepted Answer

A) average total cost. 
B) average variable cost. 
C) wage. 
D) price per unit of output. 
A) average total cost. 
B) average variable cost. 
C) wage. 
D) price per unit of output.

Question 17

The rental price of land is

Accepted Answer

A) the price paid for ownership of the land. 
B) the price paid for the flow of services from land over a specified time period. 
C) always more than the purchase price. 
D) All of the above are correct. 
A) the price paid for ownership of the land. 
B) the price paid for the flow of services from land over a specified time period. 
C) always more than the purchase price. 
D) All of the above are correct.

Question 18

The figure represents the value of marginal product for a firm that sells its product in a competitive market.
Figure 18-1
  
-Refer to Figure 18-1.The shape of the curve suggests the presence of

Accepted Answer

A) an inverted production function. 
B) diminishing total product. 
C) increasing marginal product. 
D) diminishing marginal product. 
A) an inverted production function. 
B) diminishing total product. 
C) increasing marginal product. 
D) diminishing marginal product.

Question 19

Along the horizontal axis of the production function we typically measure

Accepted Answer

A) revenue. 
B) the marginal product of the input. 
C) the quantity of input. 
D) the quantity of output. 
A) revenue. 
B) the marginal product of the input. 
C) the quantity of input. 
D) the quantity of output.

Question 20

Labor-saving technological advances increase the marginal productivity of labor.

Accepted Answer

A) True 
 B)False

Exam 18: The Markets for the Factors of Production

If the price of airline tickets falls,what will happen to the demand curve for flight attendants?

For a computer software firm,capital could be thought of as (i) the firm's computer programmers. (ii) the wages the firm pays to its computer programmers. (iii) computer equipment.

Capital is paid according to the value of its marginal product

Table 18-3 -Refer to Table 18-3.To maximize its profit,the firm will hire workers as long as the value of the marginal product of labor equals or exceeds

The purchase price of capital is

Suppose that a new invention decreases the marginal productivity of labor,shifting labor demand to the left.Such an invention would be an example of

Labor-augmenting technology causes which of the following? (i) The marginal productivity of labor increases. (ii) The marginal productivity of labor decreases. (iii) Labor demand shifts to the right. (iv) Labor demand shifts to the left.

Table 18-1 -Refer to Table 18-1.This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor.Each baseball sells for $5 in a competitive market.If the firm is maximizing the marginal product of labor,what is the firm's marginal revenue product?

Labor-saving technological advances decrease the marginal productivity of labor.

When a firm decides to retain its earnings instead of paying dividends,the stockholders necessarily suffer.

A change in the supply of one factor of production

The equilibrium rental income paid to landowners at any point in time equals the

Describe the difference between the purchase price of capital and the rental price of capital.If you know the value of marginal product from the flow of capital services,how would you determine the market price for the capital stock?

Value of marginal product is defined as the additional

Suppose medical research provides evidence that eating bananas provides far greater health benefits than was previously thought.The resulting increase in the demand for bananas

A competitive firm will hire workers up to the point at which the value of the marginal product of labor equals the

The rental price of land is

The figure represents the value of marginal product for a firm that sells its product in a competitive market. Figure 18-1 -Refer to Figure 18-1.The shape of the curve suggests the presence of

Along the horizontal axis of the production function we typically measure

Labor-saving technological advances increase the marginal productivity of labor.

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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