Question 1

An increase in the marginal product of capital shifts the

Accepted Answer

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

Question 2

The demand for labor depends on I. technology.
II) the prices of other factors of production.
III) the price of the product.

Accepted Answer

A)  I and II 
B)  II and III 
C)  I and III 
D)  I, II and III 
A)  I and II 
B)  II and III 
C)  I and III 
D)  I, II and III

Question 3

A monopsony pays a wage rate ________ the marginal cost of labor and ________ the value of marginal product of labor.

Accepted Answer

A)  equal to; equal to 
B)  lower than; lower than 
C)  equal to; lower than 
D)  lower than; equal to 
A)  equal to; equal to 
B)  lower than; lower than 
C)  equal to; lower than 
D)  lower than; equal to

Question 4

The lowest wage for which a person is willing to supply labor is known as the

Accepted Answer

A)  substitution wage. 
B)  income effect. 
C)  derived wage. 
D)  reservation wage. 
A)  substitution wage. 
B)  income effect. 
C)  derived wage. 
D)  reservation wage.

Question 5

As a competitive firm hires increasing amounts of labor, the value of marginal product of labor

Accepted Answer

A)  decreases. 
B)  increases. 
C)  remains constant. 
D)  decreases then increases. 
A)  decreases. 
B)  increases. 
C)  remains constant. 
D)  decreases then increases.

Question 6

Linda Evangelista, a supermodel, once said that she "won't get out of bed for less than $10,000 a day." This fee is an example of

Accepted Answer

A)  a reservation wage. 
B)  the demand for Linda's labor. 
C)  a competitive labor market. 
D)  the substitution effect. 
A)  a reservation wage. 
B)  the demand for Linda's labor. 
C)  a competitive labor market. 
D)  the substitution effect.

Question 7

The labor supply curve has a

Accepted Answer

A)  positive slope always. 
B)  negative slope if the income effect is greater than the substitution effect. 
C)  positive slope if the income effect is greater than the substitution effect. 
D)  negative slope always. 
A)  positive slope always. 
B)  negative slope if the income effect is greater than the substitution effect. 
C)  positive slope if the income effect is greater than the substitution effect. 
D)  negative slope always.

Question 8

-Winnie's Car Wash is a perfectly competitive firm. The table above shows Winnie's total product schedule. If the price of a car wash is $4, what is the value of marginal product of the second worker?

Accepted Answer

A)  $80 
B)  $20 
C)  $30 
D)  $180 
A)  $80 
B)  $20 
C)  $30 
D)  $180

Question 9

-The figure above shows a labor market. If there is a monopsony in this labor market, the wage rate is

Accepted Answer

A)  $4 per hour. 
B)  $6 per hour. 
C)  $8 per hour. 
D)  $10 per hour. 
A)  $4 per hour. 
B)  $6 per hour. 
C)  $8 per hour. 
D)  $10 per hour.

Question 10

-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 value of marginal product from hiring the fourth worker?

Accepted Answer

A)  $2,400 
B)  $840 
C)  $120 
D)  $60 
A)  $2,400 
B)  $840 
C)  $120 
D)  $60

Question 11

Sam's Scarves has 2 knitting machines and employs 2 people. They produce 15 scarves a day. If the firm hires an additional person, the 3 workers can produce 19 scarves a day other things remaining the same. The market for scarves is perfectly competitive and the price of a scarf is $20. The value of marginal product of the third worker is ________.

Accepted Answer

A)  $80 
B)  $300 
C)  $380 
D)  4 scarves 
A)  $80 
B)  $300 
C)  $380 
D)  4 scarves

Question 12

For a monopsony, the marginal cost of labor curve lies above the labor supply curve because

Accepted Answer

A)  to hire one more unit of labor requires that the wage be raised for all units of labor. 
B)  to hire one more unit of labor requires that the wage be raised for just the last unit of labor hired. 
C)  to hire one more unit of labor, the firm uses its monopsony power to not raise the wage it pays. 
D)  to hire one more unit of labor requires that the firm offer a lower wage. 
A)  to hire one more unit of labor requires that the wage be raised for all units of labor. 
B)  to hire one more unit of labor requires that the wage be raised for just the last unit of labor hired. 
C)  to hire one more unit of labor, the firm uses its monopsony power to not raise the wage it pays. 
D)  to hire one more unit of labor requires that the firm offer a lower wage.

Question 13

Homer has been saving to buy a new car in five years and expects that the car of his dreams will cost $35,000. If the interest rate is 8 percent per year, how much money should Homer have in his bank account today in order to have enough money to buy the car in 5 years?

Accepted Answer

A)  $1,852.28 
B)  $22,055.94 
C)  $23,820.41 
D)  $25,726.04 
A)  $1,852.28 
B)  $22,055.94 
C)  $23,820.41 
D)  $25,726.04

Question 14

-The table above gives information about the labor market in Lantis, a community in which the labor market is perfectly competitive. If the price of the good increases and increases the value of marginal product of labor by $10 an hour, the equilibrium wage rate ________ an hour and the quantity of labor employed ________.

Accepted Answer

A)  rises to $10; increases to 600 
B)  stays at $15; decreases to 300 hours 
C)  rises to $20; increases to 500 hours 
D)  None of the above answers is correct. 
A)  rises to $10; increases to 600 
B)  stays at $15; decreases to 300 hours 
C)  rises to $20; increases to 500 hours 
D)  None of the above answers is correct.

Question 15

-The above figure illustrates the case of a monopsony in the labor market. If the current wage paid is W1 and new wage legislation is passed that increases the minimum wage in this market to W2, the firm will

Accepted Answer

A)  hire less labor at the higher wage and, according to the law of demand, moving from point D to B. 
B)  hire the same amount of labor as before the law was passed because it cannot adjust to wage changes. 
C)  hire more labor, moving from point C to B. 
D)  pay a higher wage, moving from point C to A. 
A)  hire less labor at the higher wage and, according to the law of demand, moving from point D to B. 
B)  hire the same amount of labor as before the law was passed because it cannot adjust to wage changes. 
C)  hire more labor, moving from point C to B. 
D)  pay a higher wage, moving from point C to A.

Question 16

-The above table has the total product schedule for Joe's Barber Shop. Joe charges $6 per haircut. If the wage rate falls from $24 per worker to $12 per worker, the quantity of labor hired ________ and the new number of workers employed is ________.

Accepted Answer

A)  increases; 2 
B)  decreases; 2 
C)  increases; 5 
D)  increase; 3 
A)  increases; 2 
B)  decreases; 2 
C)  increases; 5 
D)  increase; 3

Question 17

If the interest rate is 10 percent, the present value of $400 to be received one year from today is about

Accepted Answer

A)  $440. 
B)  $390. 
C)  $364. 
D)  $377. 
A)  $440. 
B)  $390. 
C)  $364. 
D)  $377.

Question 18

In order to change the demand for union labor, unions favor all of the following EXCEPT increasing

Accepted Answer

A)  the minimum wage. 
B)  import restrictions. 
C)  immigration. 
D)  job training for members. 
A)  the minimum wage. 
B)  import restrictions. 
C)  immigration. 
D)  job training for members.

Question 19

An increase in the interest rate

Accepted Answer

A)  lowers the present value of future revenue. 
B)  increases the present value of future revenue. 
C)  has no effect on the present value of future revenue. 
D)  shifts the demand curve for capital leftward. 
A)  lowers the present value of future revenue. 
B)  increases the present value of future revenue. 
C)  has no effect on the present value of future revenue. 
D)  shifts the demand curve for capital leftward.

Question 20

Because a monopsony must raise the wage on all labor hired in order to hire more labor,

Accepted Answer

A)  the MCL curve is horizontal at the market wage. 
B)  the MCL curve is negatively sloped. 
C)  MCL = W. 
D)  MCL > W. 
A)  the MCL curve is horizontal at the market wage. 
B)  the MCL curve is negatively sloped. 
C)  MCL = W. 
D)  MCL > W.

An increase in the marginal product of capital shifts the

The demand for labor depends on I. technology. II) the prices of other factors of production. III) the price of the product.

A monopsony pays a wage rate the marginal cost of labor and the value of marginal product of labor.

The lowest wage for which a person is willing to supply labor is known as the

As a competitive firm hires increasing amounts of labor, the value of marginal product of labor

Linda Evangelista, a supermodel, once said that she "won't get out of bed for less than $10,000 a day." This fee is an example of

The labor supply curve has a

-Winnie's Car Wash is a perfectly competitive firm. The table above shows Winnie's total product schedule. If the price of a car wash is $4, what is the value of marginal product of the second worker?

-The figure above shows a labor market. If there is a monopsony in this labor market, the wage rate is

-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 value of marginal product from hiring the fourth worker?

For a monopsony, the marginal cost of labor curve lies above the labor supply curve because

Homer has been saving to buy a new car in five years and expects that the car of his dreams will cost $35,000. If the interest rate is 8 percent per year, how much money should Homer have in his bank account today in order to have enough money to buy the car in 5 years?

-The above figure illustrates the case of a monopsony in the labor market. If the current wage paid is W₁ and new wage legislation is passed that increases the minimum wage in this market to W₂, the firm will

-The above table has the total product schedule for Joe's Barber Shop. Joe charges $6 per haircut. If the wage rate falls from $24 per worker to $12 per worker, the quantity of labor hired and the new number of workers employed is .

If the interest rate is 10 percent, the present value of $400 to be received one year from today is about

In order to change the demand for union labor, unions favor all of the following EXCEPT increasing

An increase in the interest rate

Because a monopsony must raise the wage on all labor hired in order to hire more labor,

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

An increase in the marginal product of capital shifts the

The demand for labor depends on I. technology. II) the prices of other factors of production. III) the price of the product.

A monopsony pays a wage rate ________ the marginal cost of labor and ________ the value of marginal product of labor.

The lowest wage for which a person is willing to supply labor is known as the

As a competitive firm hires increasing amounts of labor, the value of marginal product of labor

Linda Evangelista, a supermodel, once said that she "won't get out of bed for less than $10,000 a day." This fee is an example of

The labor supply curve has a

-Winnie's Car Wash is a perfectly competitive firm. The table above shows Winnie's total product schedule. If the price of a car wash is $4, what is the value of marginal product of the second worker?

-The figure above shows a labor market. If there is a monopsony in this labor market, the wage rate is

-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 value of marginal product from hiring the fourth worker?

For a monopsony, the marginal cost of labor curve lies above the labor supply curve because

Homer has been saving to buy a new car in five years and expects that the car of his dreams will cost $35,000. If the interest rate is 8 percent per year, how much money should Homer have in his bank account today in order to have enough money to buy the car in 5 years?

-The above figure illustrates the case of a monopsony in the labor market. If the current wage paid is W1 and new wage legislation is passed that increases the minimum wage in this market to W2, the firm will

-The above table has the total product schedule for Joe's Barber Shop. Joe charges $6 per haircut. If the wage rate falls from $24 per worker to $12 per worker, the quantity of labor hired ________ and the new number of workers employed is ________.

If the interest rate is 10 percent, the present value of $400 to be received one year from today is about

In order to change the demand for union labor, unions favor all of the following EXCEPT increasing

An increase in the interest rate

Because a monopsony must raise the wage on all labor hired in order to hire more labor,

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

A monopsony pays a wage rate the marginal cost of labor and the value of marginal product of labor.

-The above figure illustrates the case of a monopsony in the labor market. If the current wage paid is W₁ and new wage legislation is passed that increases the minimum wage in this market to W₂, the firm will

-The above table has the total product schedule for Joe's Barber Shop. Joe charges $6 per haircut. If the wage rate falls from $24 per worker to $12 per worker, the quantity of labor hired and the new number of workers employed is .