Question 1

-Refer to Table 16-2. What is the profit-maximizing quantity of labor that the firm should hire?

Accepted Answer

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

Question 2

-Refer to Table 16-6. The Hair Cuttery, a new hair salon, is ready to start hiring. The table above shows the relationship between the number of hairdressers the firm hires and the quantity of haircuts it produces.
a. Suppose the price of haircuts is $8. Complete the table by filling in the values for marginal product and marginal revenue product.
b. The Hair Cuttery is an input price-taker. Suppose the wage paid to hairdressers is $40 per day. What is the profit-maximizing number of hairdressers?
c. Suppose the wage rate rises to $60 per day.
(i) What happens to the firm's demand curve for hairdressers?
(ii) What happens to the profit-maximizing quantity of hairdressers?
d. Suppose the wage rate is $40 per day and the price of haircuts is now $10.
(i) What happens to the firm's demand curve for hairdressers?
(ii) What happens to the profit-maximizing quantity of hairdressers?

Accepted Answer

a.
   
b. The profit-maximizing number of hairdressers is 5, where the marginal revenue product equals the wage rate.
c. (i) The demand curve does not change.
(ii) The profit-maximizing quantity of hairdressers falls to 2.
d. (i) The demand curve shifts to the right.
(ii) The profit-maximizing quantity of hairdressers increases to 6.

Question 3

Table 16-4 lists data for the production of Apple iPods. Apple is assumed to be a price maker, so to increase its sales of iPods the firm must lower its price. MPL and MRPL refer to the marginal product of labor and the marginal revenue product of labor, respectively.
-Refer to Table 16-4. What are the quantity of labor and marginal revenue product of labor that will maximize the profit Apple would earn from selling iPods?

Accepted Answer

A)  2; $160 
B)  3; $340 
C)  2; $680 
D)  3; $140 
A)  2; $160 
B)  3; $340 
C)  2; $680 
D)  3; $140 C

Question 4

In 2019, the foreign-born population in the United States was almost half of the total U.S. population.

Accepted Answer

A) True 
 B)False

Question 5

Figure 16-4
 
-Refer to Figure 16-4. Which of the following is true if the wage rate increases from W0 to W1?

Accepted Answer

A)  The income effect is larger than the substitution effect. 
B)  The substitution effect is larger than the income effect. 
C)  The income effect and the substitution effect are equal. 
D)  The supply curve is unit elastic. 
A)  The income effect is larger than the substitution effect. 
B)  The substitution effect is larger than the income effect. 
C)  The income effect and the substitution effect are equal. 
D)  The supply curve is unit elastic.

Question 6

In economic recessions when unemployment in the economy rises, the unemployment rate tends to be lowest for those people

Accepted Answer

A)  who are high school dropouts. 
B)  who are high school graduates but have no college education. 
C)  who have some college or an Associate Degree. 
D)  who have graduated college with a Bachelor's Degree or higher. 
A)  who are high school dropouts. 
B)  who are high school graduates but have no college education. 
C)  who have some college or an Associate Degree. 
D)  who have graduated college with a Bachelor's Degree or higher.

Question 7

-Refer to Table 16-1. Suppose the output price is $3. If the firm represented in the table is maximizing its profit by hiring six workers, what is the wage rate?

Accepted Answer

A)  $120 
B)  $65 
C)  $40 
D)  There is insufficient information to answer the question. 
A)  $120 
B)  $65 
C)  $40 
D)  There is insufficient information to answer the question.

Question 8

During economic recessions, the unemployment rate for college graduates tends to decrease.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is an example of a compensating wage differential?

Accepted Answer

A)  Nurse anesthetists are paid less than anesthesiologists (who have medical degrees). 
B)  Workers in a uranium mine receive higher wages than if they worked in other jobs that require the same level of skills. 
C)  In the market for lawyers, top graduates from the top programs earn starting salaries that are significantly higher than the starting salaries earned by lower-ranked graduates from the lower-ranked programs. 
D)  Popular movie stars like Chris Hemsworth command much higher salaries than other talented but lesser-known actors. 
A)  Nurse anesthetists are paid less than anesthesiologists (who have medical degrees). 
B)  Workers in a uranium mine receive higher wages than if they worked in other jobs that require the same level of skills. 
C)  In the market for lawyers, top graduates from the top programs earn starting salaries that are significantly higher than the starting salaries earned by lower-ranked graduates from the lower-ranked programs. 
D)  Popular movie stars like Chris Hemsworth command much higher salaries than other talented but lesser-known actors.

Question 10

Figure 16-1 shows the marginal revenue product for Dale's Hand-Sewn Doilies, a producer of linen doilies.
-Refer to Figure 16-1. If Dale can sell her doilies at $2 each, what is the marginal product of the 5th worker?

Accepted Answer

A)  $28 
B)  28 doilies 
C)  14 doilies 
D)  $56 
A)  $28 
B)  28 doilies 
C)  14 doilies 
D)  $56

Question 11

Table 16-4 lists data for the production of Apple iPods. Apple is assumed to be a price maker, so to increase its sales of iPods the firm must lower its price. MPL and MRPL refer to the marginal product of labor and the marginal revenue product of labor, respectively.
-Refer to Table 16-4. What are the price and quantity of workers that result in the maximum amount of revenue Apple would earn from selling iPods?

Accepted Answer

A)  $180; 1 
B)  $140; 2 
C)  $120; 2 
D)  $120; 4 
A)  $180; 1 
B)  $140; 2 
C)  $120; 2 
D)  $120; 4

Question 12

-Refer to Table 16-2. The firm represented in the diagram

Accepted Answer

A)  has market power in the factor market. 
B)  has market power in the output market. 
C)  has market power in both the factor and product market. 
D)  has no market power in the factor or product market. 
A)  has market power in the factor market. 
B)  has market power in the output market. 
C)  has market power in both the factor and product market. 
D)  has no market power in the factor or product market.

Question 13

Hotspur Incorporated, a manufacturer of microwave ovens, is a price taker in its input and output markets. The firm hires labor at a constant wage rate of $800 per week and sells microwave ovens at a constant price of $80. Table 16-3 shows the relationship between the quantity of labor it hires and the quantity of microwave ovens it produces. Assume that labor is the only variable input.
-Refer to Table 16-3. What is the amount of profit added as a result of hiring the fourth worker?

Accepted Answer

A)  $7,200 
B)  $1,200 
C)  $800 
D)  $400 
A)  $7,200 
B)  $1,200 
C)  $800 
D)  $400

Question 14

Figure 16-6 shows two different compensation schemes for the Vortex Vacuum Cleaner Company. 
Under Scheme I, the firm pays a consistent wage of $2,500 per month to all its salespeople for sales up to 20 vacuum cleaners. For sales of 21-30 vacuum cleaners, its salespeople earn $125 per vacuum cleaner, with wages capped at $3,750 per month for sales over 30 vacuum cleaners. If a salesperson has three consecutive months of sales below 20 vacuum cleaners, the person loses his or her job. 
Scheme II represents a straight commission, with salespeople earning a commission of $125 per vacuum cleaner sold, with no wage cap.
-Refer to Figure 16-6. Under Scheme I

Accepted Answer

A)  workers compete with each other to see who can sell more than 20 vacuum cleaners in the shortest possible time. 
B)  workers have no incentive to sell more than 30 vacuum cleaners. 
C)  workers signal their productivity to the firm by consistently selling above 30 vacuum cleaners. 
D)  the incentive to increase productivity only occurs for sales of fewer than 20 vacuum cleaners or more than 30 vacuum cleaners. 
A)  workers compete with each other to see who can sell more than 20 vacuum cleaners in the shortest possible time. 
B)  workers have no incentive to sell more than 30 vacuum cleaners. 
C)  workers signal their productivity to the firm by consistently selling above 30 vacuum cleaners. 
D)  the incentive to increase productivity only occurs for sales of fewer than 20 vacuum cleaners or more than 30 vacuum cleaners.

Question 15

Figure 16-3
 
-Refer to Figure 16-3. Which of the panels in the diagram best represents an individual's labor supply curve?

Accepted Answer

A)  Panel A 
B)  Panel B 
C)  Panel C 
D)  Panel D 
A)  Panel A 
B)  Panel B 
C)  Panel C 
D)  Panel D

Question 16

In academia, professors in some disciplines receive higher salaries than others. For example, professors teaching in business schools receive higher salaries than professors in the English department. Suppose at Unity College, assistant professors in the business school earn $80,000 while assistant professors in the English department earn $50,000. Now suppose the government passes comparable worth legislation that requires academic institutions to pay all faculty the same salaries.
-Refer to Scenario 16-1. Following the passage of comparable worth legislation, Unity College responds by placing salaries at $65,000. Which of the following is the result of the legislation?

Accepted Answer

A)  The supply of English professors increases and the supply of business professors decreases. 
B)  The demand for English professors decreases and the demand for business professors increases. 
C)  There will be a surplus in the market for English professors and a shortage in the market for business professors. 
D)  There will be a surplus in the market for English professors and the market for business professors will not be affected. 
A)  The supply of English professors increases and the supply of business professors decreases. 
B)  The demand for English professors decreases and the demand for business professors increases. 
C)  There will be a surplus in the market for English professors and a shortage in the market for business professors. 
D)  There will be a surplus in the market for English professors and the market for business professors will not be affected.

Question 17

Figure 16-1 shows the marginal revenue product for Dale's Hand-Sewn Doilies, a producer of linen doilies.
-Refer to Figure 16-1. If the wage rate is $40, how many workers should Dale hire?

Accepted Answer

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

Question 18

-Refer to Table 16-2. The marginal revenue product of labor from the third unit of labor is

Accepted Answer

A)  $5,460. 
B)  $1,560. 
C)  $1,260. 
D)  $780. 
A)  $5,460. 
B)  $1,560. 
C)  $1,260. 
D)  $780.

Question 19

-Refer to Table 16-1. If the output price is $3, what is the marginal revenue product of the fifth unit of labor?

Accepted Answer

A)  $1,050 
B)  $360 
C)  $210 
D)  $150 
A)  $1,050 
B)  $360 
C)  $210 
D)  $150

Question 20

-Refer to Table 16-1. Suppose the output price is $3. If the wage rate is $90, what is the profit-maximizing quantity of labor that the firm should hire?

Accepted Answer

A)  7 units 
B)  5 units 
C)  4 units 
D)  3 units 
A)  7 units 
B)  5 units 
C)  4 units 
D)  3 units

-Refer to Table 16-2. What is the profit-maximizing quantity of labor that the firm should hire?

In 2019, the foreign-born population in the United States was almost half of the total U.S. population.

Figure 16-4 -Refer to Figure 16-4. Which of the following is true if the wage rate increases from W0 to W1?

In economic recessions when unemployment in the economy rises, the unemployment rate tends to be lowest for those people

-Refer to Table 16-1. Suppose the output price is $3. If the firm represented in the table is maximizing its profit by hiring six workers, what is the wage rate?

During economic recessions, the unemployment rate for college graduates tends to decrease.

Which of the following is an example of a compensating wage differential?

Figure 16-1 shows the marginal revenue product for Dale's Hand-Sewn Doilies, a producer of linen doilies. -Refer to Figure 16-1. If Dale can sell her doilies at $2 each, what is the marginal product of the 5th worker?

-Refer to Table 16-2. The firm represented in the diagram

Figure 16-3 -Refer to Figure 16-3. Which of the panels in the diagram best represents an individual's labor supply curve?

Figure 16-1 shows the marginal revenue product for Dale's Hand-Sewn Doilies, a producer of linen doilies. -Refer to Figure 16-1. If the wage rate is $40, how many workers should Dale hire?

-Refer to Table 16-2. The marginal revenue product of labor from the third unit of labor is

-Refer to Table 16-1. If the output price is $3, what is the marginal revenue product of the fifth unit of labor?

-Refer to Table 16-1. Suppose the output price is $3. If the wage rate is $90, what is the profit-maximizing quantity of labor that the firm should hire?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: The Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: The Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Public Choice, Taxes, and the Distribution of Income

Filters

Exam 16: The Markets for Labor and Other Factors of Production

-Refer to Table 16-2. What is the profit-maximizing quantity of labor that the firm should hire?

In 2019, the foreign-born population in the United States was almost half of the total U.S. population.

Figure 16-4 -Refer to Figure 16-4. Which of the following is true if the wage rate increases from W0 to W1?

In economic recessions when unemployment in the economy rises, the unemployment rate tends to be lowest for those people

-Refer to Table 16-1. Suppose the output price is $3. If the firm represented in the table is maximizing its profit by hiring six workers, what is the wage rate?

During economic recessions, the unemployment rate for college graduates tends to decrease.

Which of the following is an example of a compensating wage differential?

Figure 16-1 shows the marginal revenue product for Dale's Hand-Sewn Doilies, a producer of linen doilies. -Refer to Figure 16-1. If Dale can sell her doilies at $2 each, what is the marginal product of the 5th worker?

-Refer to Table 16-2. The firm represented in the diagram

Figure 16-3 -Refer to Figure 16-3. Which of the panels in the diagram best represents an individual's labor supply curve?

Figure 16-1 shows the marginal revenue product for Dale's Hand-Sewn Doilies, a producer of linen doilies. -Refer to Figure 16-1. If the wage rate is $40, how many workers should Dale hire?

-Refer to Table 16-2. The marginal revenue product of labor from the third unit of labor is

-Refer to Table 16-1. If the output price is $3, what is the marginal revenue product of the fifth unit of labor?

-Refer to Table 16-1. Suppose the output price is $3. If the wage rate is $90, what is the profit-maximizing quantity of labor that the firm should hire?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: The Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: The Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Public Choice, Taxes, and the Distribution of Income

Filters