Question 1

In comparison to an employer in a competitive labor market, a monopsony employer hires ________ workers and produces ________ output.

Accepted Answer

A)  fewer; less 
B)  fewer; more 
C)  more; less 
D)  more; more 
A)  fewer; less 
B)  fewer; more 
C)  more; less 
D)  more; more

Question 2

-Based on the production and revenue data in the above table, if the wage rate is $35 per worker, how many workers will be hired?

Accepted Answer

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

Question 3

-In the table above, if the wage rate is $8.00 per hour, the profit-maximizing number of workers is

Accepted Answer

A)  1. 
B)  2. 
C)  4. 
D)  5. 
A)  1. 
B)  2. 
C)  4. 
D)  5.

Question 4

Which of the following is a nonrenewable resource?

Accepted Answer

A)  residential land 
B)  sunshine 
C)  a machine tool 
D)  oil 
A)  residential land 
B)  sunshine 
C)  a machine tool 
D)  oil

Question 5

When a union faces a monopsony buyer, a ________ exists.

Accepted Answer

A)  dual-monopoly 
B)  monopoly 
C)  bilateral monopoly 
D)  monopolistic monopsony 
A)  dual-monopoly 
B)  monopoly 
C)  bilateral monopoly 
D)  monopolistic monopsony

Question 6

The labor supply curve is backward bending because at higher wages the income effect eventually dominates the substitution effect.

Accepted Answer

A) True 
 B)False

Question 7

The marginal product of labor equals the value of marginal product of labor multiplied by the price of the output produced.

Accepted Answer

A) True 
 B)False

Question 8

-The figure above shows a local lawn cutting service's demand for labor curve when the price of cutting an acre of lawn is $50 per acre. If the price of lawn cutting rises to $60 per acre of lawn cut, the firm's demand for labor curve

Accepted Answer

A)  shifts rightward. 
B)  shifts leftward. 
C)  does not shift at all, but the firm moves upward along the curve. 
D)  None of the above because this change shifts the supply of labor curve. 
A)  shifts rightward. 
B)  shifts leftward. 
C)  does not shift at all, but the firm moves upward along the curve. 
D)  None of the above because this change shifts the supply of labor curve.

Question 9

A professional tennis player enters fewer tournaments each year as the prize money she won increased. This observation indicates that the tennis player

Accepted Answer

A)  is irrational. 
B)  has shifted her labor demand curve leftward. 
C)  has shifted her labor supply curve rightward. 
D)  has a backward bending labor supply curve. 
A)  is irrational. 
B)  has shifted her labor demand curve leftward. 
C)  has shifted her labor supply curve rightward. 
D)  has a backward bending labor supply curve.

Question 10

Which of the following would explain why Josh's Limo Service might increase its demand for limo drivers?

Accepted Answer

A)  an increase in demand for limo rides, resulting in a rise in the price of a limo ride 
B)  a decrease in the demand for limo rides 
C)  a fall in the price of a taxi ride 
D)  a rise in the wage paid to limo drivers 
A)  an increase in demand for limo rides, resulting in a rise in the price of a limo ride 
B)  a decrease in the demand for limo rides 
C)  a fall in the price of a taxi ride 
D)  a rise in the wage paid to limo drivers

Question 11

If the interest rate falls, the present value of $100 to be received in one year

Accepted Answer

A)  rises. 
B)  falls. 
C)  is unaffected. 
D)  might rise, fall, or not change. 
A)  rises. 
B)  falls. 
C)  is unaffected. 
D)  might rise, fall, or not change.

Question 12

-Sun's Gas Station is a firm operating in a perfectly competitive industry. Sun's Gas Station sells each gallon of gas for $3. What is the marginal product from hiring the fourth worker?

Accepted Answer

A)  70 gallons of gasoline 
B)  280 gallons of gasoline 
C)  40 gallons of gasoline 
D)  80 gallons of gasoline 
A)  70 gallons of gasoline 
B)  280 gallons of gasoline 
C)  40 gallons of gasoline 
D)  80 gallons of gasoline

Question 13

If the interest rate is 8 percent, the present value of $10,000 to be received 10 years from today is about

Accepted Answer

A)  $21,589. 
B)  $9,259. 
C)  $4,632. 
D)  $10,800. 
A)  $21,589. 
B)  $9,259. 
C)  $4,632. 
D)  $10,800.

Question 14

A company is considering the purchase or the rental of a new machine. An increase in the interest rate

Accepted Answer

A)  increases the likelihood the company will buy the machine. 
B)  increases the likelihood the company will rent the machine. 
C)  has no effect on the likelihood that the company will buy the machine. 
D)  has no effect on the likelihood that the company will rent the machine. 
A)  increases the likelihood the company will buy the machine. 
B)  increases the likelihood the company will rent the machine. 
C)  has no effect on the likelihood that the company will buy the machine. 
D)  has no effect on the likelihood that the company will rent the machine.

Question 15

A firm's demand for labor curve is the same as the firm's

Accepted Answer

A)  marginal product curve. 
B)  marginal cost curve. 
C)  marginal revenue curve. 
D)  value of marginal product curve. 
A)  marginal product curve. 
B)  marginal cost curve. 
C)  marginal revenue curve. 
D)  value of marginal product curve.

Question 16

-Based on the production and revenue data in the above table, what is the price of the product?

Accepted Answer

A)  $100 
B)  $10 
C)  $1 
D)  More information is needed to determine the price of the product. 
A)  $100 
B)  $10 
C)  $1 
D)  More information is needed to determine the price of the product.

Question 17

Pennsylvania's largest grower of fresh-to-market tomatoes announced in March 2009 he will no longer produce the crop because he can't find enough workers to harvest it. Though his tomato pickers made an average of $16.59 per hour last year, he said the relatively high wage is not enough to attract local labor to work the fields. In the market for tomato workers, what is TRUE?

Accepted Answer

A)  $16.59 is above the equilibrium wage rate 
B)  $16.59 is the equilibrium wage rate 
C)  $16.59 is below the equilibrium wage rate 
D)  Cannot determine where the equilibrium wage rate is in comparison to $16.59 without more information. 
A)  $16.59 is above the equilibrium wage rate 
B)  $16.59 is the equilibrium wage rate 
C)  $16.59 is below the equilibrium wage rate 
D)  Cannot determine where the equilibrium wage rate is in comparison to $16.59 without more information.

Question 18

If your labor supply increases when you get a raise, which of the following is TRUE?

Accepted Answer

A)  Your substitution effect is greater than your income effect. 
B)  Your substitution effect is less than your income effect. 
C)  Your substitution effect equals your income effect. 
D)  None of the above answers is correct. 
A)  Your substitution effect is greater than your income effect. 
B)  Your substitution effect is less than your income effect. 
C)  Your substitution effect equals your income effect. 
D)  None of the above answers is correct.

Question 19

Other things being equal, a technological change that raises the value of marginal product of capital raises the rental rate of capital because the

Accepted Answer

A)  supply curve of capital shifts leftward. 
B)  supply curve of capital shifts rightward. 
C)  demand curve for capital shifts rightward. 
D)  demand curve for capital shifts leftward. 
A)  supply curve of capital shifts leftward. 
B)  supply curve of capital shifts rightward. 
C)  demand curve for capital shifts rightward. 
D)  demand curve for capital shifts leftward.

Question 20

For many jobs, as wages increase, the quantity supplied of labor increases. This set of facts is evidence that the

Accepted Answer

A)  substitution effect is larger than the income effect and the supply of labor curve is upward sloping. 
B)  income effect is larger than the substitution effect and the supply of labor curve is upward sloping. 
C)  substitution effect is larger than the income effect and the supply of labor curve is backward bending. 
D)  income effect is larger than the substitution effect and the supply of labor curve is backward bending. 
A)  substitution effect is larger than the income effect and the supply of labor curve is upward sloping. 
B)  income effect is larger than the substitution effect and the supply of labor curve is upward sloping. 
C)  substitution effect is larger than the income effect and the supply of labor curve is backward bending. 
D)  income effect is larger than the substitution effect and the supply of labor curve is backward bending.

In comparison to an employer in a competitive labor market, a monopsony employer hires workers and produces output.

-Based on the production and revenue data in the above table, if the wage rate is $35 per worker, how many workers will be hired?

-In the table above, if the wage rate is $8.00 per hour, the profit-maximizing number of workers is

Which of the following is a nonrenewable resource?

When a union faces a monopsony buyer, a ________ exists.

The labor supply curve is backward bending because at higher wages the income effect eventually dominates the substitution effect.

The marginal product of labor equals the value of marginal product of labor multiplied by the price of the output produced.

-The figure above shows a local lawn cutting service's demand for labor curve when the price of cutting an acre of lawn is $50 per acre. If the price of lawn cutting rises to $60 per acre of lawn cut, the firm's demand for labor curve

A professional tennis player enters fewer tournaments each year as the prize money she won increased. This observation indicates that the tennis player

Which of the following would explain why Josh's Limo Service might increase its demand for limo drivers?

If the interest rate falls, the present value of $100 to be received in one year

-Sun's Gas Station is a firm operating in a perfectly competitive industry. Sun's Gas Station sells each gallon of gas for $3. What is the marginal product from hiring the fourth worker?

If the interest rate is 8 percent, the present value of $10,000 to be received 10 years from today is about

A company is considering the purchase or the rental of a new machine. An increase in the interest rate

A firm's demand for labor curve is the same as the firm's

-Based on the production and revenue data in the above table, what is the price of the product?

If your labor supply increases when you get a raise, which of the following is TRUE?

Other things being equal, a technological change that raises the value of marginal product of capital raises the rental rate of capital because the

For many jobs, as wages increase, the quantity supplied of labor increases. This set of facts is evidence that the

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Economic Inequality

Uncertainty and Information

Filters

Exam 18: Markets for Factors of Production

In comparison to an employer in a competitive labor market, a monopsony employer hires ________ workers and produces ________ output.

-Based on the production and revenue data in the above table, if the wage rate is $35 per worker, how many workers will be hired?

-In the table above, if the wage rate is $8.00 per hour, the profit-maximizing number of workers is

Which of the following is a nonrenewable resource?

When a union faces a monopsony buyer, a ________ exists.

The labor supply curve is backward bending because at higher wages the income effect eventually dominates the substitution effect.

The marginal product of labor equals the value of marginal product of labor multiplied by the price of the output produced.

-The figure above shows a local lawn cutting service's demand for labor curve when the price of cutting an acre of lawn is $50 per acre. If the price of lawn cutting rises to $60 per acre of lawn cut, the firm's demand for labor curve

A professional tennis player enters fewer tournaments each year as the prize money she won increased. This observation indicates that the tennis player

Which of the following would explain why Josh's Limo Service might increase its demand for limo drivers?

If the interest rate falls, the present value of $100 to be received in one year

-Sun's Gas Station is a firm operating in a perfectly competitive industry. Sun's Gas Station sells each gallon of gas for $3. What is the marginal product from hiring the fourth worker?

If the interest rate is 8 percent, the present value of $10,000 to be received 10 years from today is about

A company is considering the purchase or the rental of a new machine. An increase in the interest rate

A firm's demand for labor curve is the same as the firm's

-Based on the production and revenue data in the above table, what is the price of the product?

If your labor supply increases when you get a raise, which of the following is TRUE?

Other things being equal, a technological change that raises the value of marginal product of capital raises the rental rate of capital because the

For many jobs, as wages increase, the quantity supplied of labor increases. This set of facts is evidence that the

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Economic Inequality

Uncertainty and Information

Filters

In comparison to an employer in a competitive labor market, a monopsony employer hires workers and produces output.