Question 1

If a union successfully restricts the supply of labor to the firm but the union has no effect on the demand for labor, then the

Accepted Answer

A)  wage increases and there is no change in employment. 
B)  wage increases and employment increases. 
C)  wage increases and employment decreases. 
D)  wage increases and there is an unambiguous effect on employment. 
A)  wage increases and there is no change in employment. 
B)  wage increases and employment increases. 
C)  wage increases and employment decreases. 
D)  wage increases and there is an unambiguous effect on employment.

Question 2

Land is an example of a renewable resource.

Accepted Answer

A) True 
 B)False

Question 3

-Tom and Mary own a perfectly competitive tomato farm. They can hire different numbers of college students to help plant, cultivate, and harvest the tomatoes. The above table gives their marginal product schedule.
a) If the price of a pound of tomatoes is $2 a pound, complete the first value of marginal product column in the table. If Tom and Mary must pay their workers $10 an hour, how many workers do they hire?
b) If the price of a pound of tomatoes falls to $1 a pound, complete the second value of marginal product column in the table. If Tom and Mary still must pay their workers $10 an hour, how many workers do they hire?
c) When the price of a pound of tomatoes falls, what happens to Tom and Mary's demand for labor curve?

Accepted Answer

@#IMG-DLM& a) The completed table is above. Tom an

Question 4

-Consider the labor market depicted in the above figure. The competitive equilibrium would be for ________ hours of employment.

Accepted Answer

A)  200 
B)  400 
C)  600 
D)  None of the above answers is correct. 
A)  200 
B)  400 
C)  600 
D)  None of the above answers is correct.

Question 5

If the interest rate is 20 percent, $100 to be received four years from today has a present value of approximately

Accepted Answer

A)  $48. 
B)  $69. 
C)  $80. 
D)  $100. 
A)  $48. 
B)  $69. 
C)  $80. 
D)  $100.

Question 6

If the income effect is larger than the substitution effect, then a wage hike will be accompanied by an increase in the quantity of labor supplied.

Accepted Answer

A) True 
 B)False

Question 7

Why does a firm maximize its profits by hiring so that VMP = W?

Accepted Answer

The VMP represents the additional revenu

Question 8

-The above figure shows the market for labor. The employer is a monopsony. The firm will not hire 800 hours of labor because at that point

Accepted Answer

A) VMP > MCL. B) VMP = MCL. C) VMP < MCL. D) VMP = W. A) VMP > MCL. B) VMP = MCL. C) VMP < MCL. D) VMP = W.

Question 9

If a labor market that was previously competitive becomes controlled by a monopsony, the wage rate ________ and employment ________.

Accepted Answer

A)  rises; increases 
B)  falls; decreases 
C)  rises; decreases 
D)  falls; increase 
A)  rises; increases 
B)  falls; decreases 
C)  rises; decreases 
D)  falls; increase

Question 10

Which of the following is a condition for maximum profit?

Accepted Answer

A)  VMP = W. 
B)  VMP = MC. 
C)  MP = W. 
D)  MC = W. 
A)  VMP = W. 
B)  VMP = MC. 
C)  MP = W. 
D)  MC = W.

Question 11

Unions support minimum wage laws, because

Accepted Answer

A)  union workers are typically paid the minimum wage. 
B)  an increase in the minimum wage paid to low-skilled labor increases the opportunity cost of employing high-skilled union labor and, hence, increases the demand for union labor. 
C)  an increase in the minimum wage paid to low-skilled labor increases the opportunity cost of employing low-skilled labor and, hence, increases the demand for union labor. 
D)  an increase in the minimum wage paid to low-skilled labor causes the supply curve of low-skilled labor to shift leftward and, hence, increases the demand for union labor. 
A)  union workers are typically paid the minimum wage. 
B)  an increase in the minimum wage paid to low-skilled labor increases the opportunity cost of employing high-skilled union labor and, hence, increases the demand for union labor. 
C)  an increase in the minimum wage paid to low-skilled labor increases the opportunity cost of employing low-skilled labor and, hence, increases the demand for union labor. 
D)  an increase in the minimum wage paid to low-skilled labor causes the supply curve of low-skilled labor to shift leftward and, hence, increases the demand for union labor.

Question 12

If the interest rate is 5 percent, what is the present value of $100 that will be received 3 years from now?

Accepted Answer

A)  $90.70 
B)  $86.38 
C)  $115.00 
D)  $13.62 
A)  $90.70 
B)  $86.38 
C)  $115.00 
D)  $13.62

Question 13

New technology

Accepted Answer

A)  definitely increases a firm's demand for labor. 
B)  definitely decreases a firm's demand for labor. 
C)  definitely does not change a firm's demand for labor. 
D)  could increase or decrease a firm's demand for labor. 
A)  definitely increases a firm's demand for labor. 
B)  definitely decreases a firm's demand for labor. 
C)  definitely does not change a firm's demand for labor. 
D)  could increase or decrease a firm's demand for labor.

Question 14

-Hank's Propane Storage Company is a profit-maximizing monopsony in the local labor market for propane handling, delivery, and other associated services. The supply and marginal cost of labor curves are shown in the figure above. Hank's demand for labor curve is the curve labeled VMP = D. Hank will employ ________ hours of labor per week and pay a wage rate of ________ per hour.

Accepted Answer

A)  100; $12 
B)  100; $8 
C)  100; $6 
D)  120; $8 
A)  100; $12 
B)  100; $8 
C)  100; $6 
D)  120; $8

Question 15

The interest rate is 8 percent. The present value of $110 three years from now equals

Accepted Answer

A)  $101.85. 
B)  $94.31. 
C)  $118.80. 
D)  $128.30. 
A)  $101.85. 
B)  $94.31. 
C)  $118.80. 
D)  $128.30.

Question 16

With respect to labor supply, the substitution effect takes account of the point that at higher wage rates

Accepted Answer

A)  a person can afford to take more leisure. 
B)  leisure has become less expensive and so a person consumes less leisure. 
C)  there are no factors inducing a person to work less. 
D)  leisure has become more expensive and so a person consumes less leisure. 
A)  a person can afford to take more leisure. 
B)  leisure has become less expensive and so a person consumes less leisure. 
C)  there are no factors inducing a person to work less. 
D)  leisure has become more expensive and so a person consumes less leisure.

Question 17

An auction of the leases to drill for natural gas on about 55,000 acres on the Roan Plateau in western Colorado in August 2008 generated nearly $114 million, a record for onshore energy lease sales in the lower 48 states. Is natural gas a renewable or non-renewable resource? Why?

Accepted Answer

A)  Renewable, because the resource can be recycled 
B)  Non-renewable, because the used resource cannot be reused 
C)  Non-renewable, because the value of marginal product for natural gas is diminishing 
D)  Renewable, because oil, natural gas, and coal are traded in global community markets 
A)  Renewable, because the resource can be recycled 
B)  Non-renewable, because the used resource cannot be reused 
C)  Non-renewable, because the value of marginal product for natural gas is diminishing 
D)  Renewable, because oil, natural gas, and coal are traded in global community markets

Question 18

An increase in the price of a firm's output

Accepted Answer

A)  raises the value of marginal product of each unit of labor. 
B)  shifts the firm's demand for labor curve rightward. 
C)  results in the firm increasing the amount of output it produces. 
D)  All of the above answers are correct. 
A)  raises the value of marginal product of each unit of labor. 
B)  shifts the firm's demand for labor curve rightward. 
C)  results in the firm increasing the amount of output it produces. 
D)  All of the above answers are correct.

Question 19

If Sam decides to work, his

Accepted Answer

A)  reservation wage is greater than his wage rate. 
B)  reservation wage is less than his wage rate. 
C)  value of marginal product is greater than his wage rate. 
D)  value of marginal product equals his wage rate. 
A)  reservation wage is greater than his wage rate. 
B)  reservation wage is less than his wage rate. 
C)  value of marginal product is greater than his wage rate. 
D)  value of marginal product equals his wage rate.

Question 20

If the wage rate is ________ the value of marginal product, a firm can increase its profit by ________.

Accepted Answer

A)  greater than; selling an extra unit of output 
B)  less than; selling one less unit of output 
C)  less than; hiring an extra worker 
D)  less than; hiring one less worker 
A)  greater than; selling an extra unit of output 
B)  less than; selling one less unit of output 
C)  less than; hiring an extra worker 
D)  less than; hiring one less worker

If a union successfully restricts the supply of labor to the firm but the union has no effect on the demand for labor, then the

Land is an example of a renewable resource.

-Consider the labor market depicted in the above figure. The competitive equilibrium would be for ________ hours of employment.

If the interest rate is 20 percent, $100 to be received four years from today has a present value of approximately

If the income effect is larger than the substitution effect, then a wage hike will be accompanied by an increase in the quantity of labor supplied.

Why does a firm maximize its profits by hiring so that VMP = W?

-The above figure shows the market for labor. The employer is a monopsony. The firm will not hire 800 hours of labor because at that point

If a labor market that was previously competitive becomes controlled by a monopsony, the wage rate and employment .

Which of the following is a condition for maximum profit?

Unions support minimum wage laws, because

If the interest rate is 5 percent, what is the present value of $100 that will be received 3 years from now?

New technology

The interest rate is 8 percent. The present value of $110 three years from now equals

With respect to labor supply, the substitution effect takes account of the point that at higher wage rates

An auction of the leases to drill for natural gas on about 55,000 acres on the Roan Plateau in western Colorado in August 2008 generated nearly $114 million, a record for onshore energy lease sales in the lower 48 states. Is natural gas a renewable or non-renewable resource? Why?

An increase in the price of a firm's output

If Sam decides to work, his

If the wage rate is the value of marginal product, a firm can increase its profit by .

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

If a union successfully restricts the supply of labor to the firm but the union has no effect on the demand for labor, then the

Land is an example of a renewable resource.

-Consider the labor market depicted in the above figure. The competitive equilibrium would be for ________ hours of employment.

If the interest rate is 20 percent, $100 to be received four years from today has a present value of approximately

If the income effect is larger than the substitution effect, then a wage hike will be accompanied by an increase in the quantity of labor supplied.

Why does a firm maximize its profits by hiring so that VMP = W?

-The above figure shows the market for labor. The employer is a monopsony. The firm will not hire 800 hours of labor because at that point

If a labor market that was previously competitive becomes controlled by a monopsony, the wage rate ________ and employment ________.

Which of the following is a condition for maximum profit?

Unions support minimum wage laws, because

If the interest rate is 5 percent, what is the present value of $100 that will be received 3 years from now?

New technology

The interest rate is 8 percent. The present value of $110 three years from now equals

With respect to labor supply, the substitution effect takes account of the point that at higher wage rates

An auction of the leases to drill for natural gas on about 55,000 acres on the Roan Plateau in western Colorado in August 2008 generated nearly $114 million, a record for onshore energy lease sales in the lower 48 states. Is natural gas a renewable or non-renewable resource? Why?

An increase in the price of a firm's output

If Sam decides to work, his

If the wage rate is ________ the value of marginal product, a firm can increase its profit by ________.

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

If a labor market that was previously competitive becomes controlled by a monopsony, the wage rate and employment .

If the wage rate is the value of marginal product, a firm can increase its profit by .