Question 1

Suppose the interest rate is 5 percent per year. The present value of $210 to be received one year from today is

Accepted Answer

A)  $200.00. 
B)  $210.00. 
C)  $215.00. 
D)  $220.50. 
A)  $200.00. 
B)  $210.00. 
C)  $215.00. 
D)  $220.50.

Question 2

With respect to the labor supply curve, the income effect

Accepted Answer

A)  reinforces the substitution effect. 
B)  lowers the opportunity cost of labor. 
C)  raises the opportunity cost of labor. 
D)  influences a person to work less as the wage rate increases. 
A)  reinforces the substitution effect. 
B)  lowers the opportunity cost of labor. 
C)  raises the opportunity cost of labor. 
D)  influences a person to work less as the wage rate increases.

Question 3

-The figure above shows the labor demand and labor supply curves for workers in local fast-food restaurants. The fast-food restaurant industry is competitive. A decrease in the supply of labor shifts the labor supply curve from LS0 to LS1. Fast-food restaurants hire ________ and total labor income earned by the fast-food workers ________.

Accepted Answer

A)  40 hours of labor a day; increases 
B)  30 hours of labor a day; decreases 
C)  40 hours of labor a day; decreases 
D)  30 hours of labor a day; increases 
A)  40 hours of labor a day; increases 
B)  30 hours of labor a day; decreases 
C)  40 hours of labor a day; decreases 
D)  30 hours of labor a day; increases

Question 4

-In the table above, if the wage rate is $12.00 per hour, the profit-maximizing number of workers is

Accepted Answer

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

Question 5

S & S Backhoe Service in Ozark, Arkansas rents backhoes and other heavy equipment to local construction companies. What determines the demand for backhoes in Arkansas?

Accepted Answer

A)  The rental rate for backhoes 
B)  The equilibrium quantity of backhoes 
C)  The value of marginal product of backhoes 
D)  The maximum number of backhoes available to rent 
A)  The rental rate for backhoes 
B)  The equilibrium quantity of backhoes 
C)  The value of marginal product of backhoes 
D)  The maximum number of backhoes available to rent

Question 6

According to the Hotelling Principle, the price of an nonrenewable resource

Accepted Answer

A)  falls slowly over time. 
B)  falls at a rate equal to the interest rate. 
C)  rises at a rate equal to the interest rate. 
D)  remains constant over time. 
A)  falls slowly over time. 
B)  falls at a rate equal to the interest rate. 
C)  rises at a rate equal to the interest rate. 
D)  remains constant over time.

Question 7

-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 market wage is $300 per day, the firm will NOT hire a fourth worker because the fourth worker would create

Accepted Answer

A)  an economic loss and the firm would shut down. 
B)  additional revenue that exceeds the worker's wage. 
C)  additional revenue that exceeds the worker's value of marginal product. 
D)  additional revenue that falls short of the worker's wage. 
A)  an economic loss and the firm would shut down. 
B)  additional revenue that exceeds the worker's wage. 
C)  additional revenue that exceeds the worker's value of marginal product. 
D)  additional revenue that falls short of the worker's wage.

Question 8

Because of the income effect, a higher wage rate

Accepted Answer

A)  shifts the supply of labor curve leftward. 
B)  shifts the supply of labor curve rightward. 
C)  leads to a decrease in quantity of labor supplied. 
D)  leads to an increase in quantity of labor supplied. 
A)  shifts the supply of labor curve leftward. 
B)  shifts the supply of labor curve rightward. 
C)  leads to a decrease in quantity of labor supplied. 
D)  leads to an increase in quantity of labor supplied.

Question 9

For a monopsony, the labor supply curve

Accepted Answer

A)  lies above the MCL curve. 
B)  is the same as the MCL curve. 
C)  lies below the MCL curve. 
D)  is the same as the labor demand curve. 
A)  lies above the MCL curve. 
B)  is the same as the MCL curve. 
C)  lies below the MCL curve. 
D)  is the same as the labor demand curve.

Question 10

Suppose the price of oranges rises. As a result, the

Accepted Answer

A)  supply of orange pickers increases. 
B)  supply of orange pickers decreases. 
C)  demand for orange pickers increases. 
D)  demand for orange pickers decreases. 
A)  supply of orange pickers increases. 
B)  supply of orange pickers decreases. 
C)  demand for orange pickers increases. 
D)  demand for orange pickers decreases.

Question 11

A minimum wage might increase employment by a monopsony if it makes the supply of labor curve to that firm

Accepted Answer

A)  steeper, that is, makes supply more elastic. 
B)  steeper, that is, makes supply less elastic. 
C)  flatter, that is, makes supply more elastic. 
D)  flatter, that is, makes supply less elastic. 
A)  steeper, that is, makes supply more elastic. 
B)  steeper, that is, makes supply less elastic. 
C)  flatter, that is, makes supply more elastic. 
D)  flatter, that is, makes supply less elastic.

Question 12

In comparison to an employer in a competitive labor market, a monopsony employer pays a ________ wage rate and hires ________ workers.

Accepted Answer

A)  lower; fewer 
B)  lower; more 
C)  higher; more 
D)  higher; fewer 
A)  lower; fewer 
B)  lower; more 
C)  higher; more 
D)  higher; fewer

Question 13

The demand for labor is a derived demand because it is derived from

Accepted Answer

A)  the supply of labor. 
B)  union pressure. 
C)  the demand for the output the labor produces. 
D)  natural law. 
A)  the supply of labor. 
B)  union pressure. 
C)  the demand for the output the labor produces. 
D)  natural law.

Question 14

Coal is an example of

Accepted Answer

A)  a nonrenewable natural resource. 
B)  a renewable natural resource. 
C)  capital. 
D)  a casual resource. 
A)  a nonrenewable natural resource. 
B)  a renewable natural resource. 
C)  capital. 
D)  a casual resource.

Question 15

A firm in a competitive labor market will hire labor until the value of marginal product of labor equals the

Accepted Answer

A)  firm's marginal revenue. 
B)  firm's marginal cost. 
C)  firm's average cost. 
D)  wage rate. 
A)  firm's marginal revenue. 
B)  firm's marginal cost. 
C)  firm's average cost. 
D)  wage rate.

Question 16

In order to hire an additional worker, a monopsony must pay

Accepted Answer

A)  a higher wage rate than it paid before. 
B)  the same wage rate it paid before. 
C)  a lower wage rate than it paid before. 
D)  a wage rate that is sometimes higher, sometimes lower, and sometimes the same as before, depending on the elasticity of the supply of labor. 
A)  a higher wage rate than it paid before. 
B)  the same wage rate it paid before. 
C)  a lower wage rate than it paid before. 
D)  a wage rate that is sometimes higher, sometimes lower, and sometimes the same as before, depending on the elasticity of the supply of labor.

Question 17

The demand curve for labor is negatively sloped only because the firm must lower its price if it wishes to sell more output.

Accepted Answer

A) True 
 B)False

Question 18

If the value of marginal product of the last worker hired is $24 and the wage rate is $25, then

Accepted Answer

A)  more workers should be hired. 
B)  the worker should be fired. 
C)  the firm has hired the profit maximizing number of workers. 
D)  the firm is earning $1 of profit from this worker. 
A)  more workers should be hired. 
B)  the worker should be fired. 
C)  the firm has hired the profit maximizing number of workers. 
D)  the firm is earning $1 of profit from this worker.

Question 19

To maximize profit, a firm hires the quantity of labor that makes the ________ of labor equal to the ________.

Accepted Answer

A)  value of marginal product; wage rate 
B)  total revenue; total cost of labor 
C)  marginal product; total cost of labor 
D)  marginal product; marginal revenue 
A)  value of marginal product; wage rate 
B)  total revenue; total cost of labor 
C)  marginal product; total cost of labor 
D)  marginal product; marginal revenue

Question 20

Which of the following lowers the current price of an nonrenewable natural resource?

Accepted Answer

A)  an increase in the interest rate 
B)  a decrease in the stock of the resource 
C)  an increase in the marginal revenue product of the resource 
D)  an increase in the price of a substitute resource 
A)  an increase in the interest rate 
B)  a decrease in the stock of the resource 
C)  an increase in the marginal revenue product of the resource 
D)  an increase in the price of a substitute resource

Suppose the interest rate is 5 percent per year. The present value of $210 to be received one year from today is

With respect to the labor supply curve, the income effect

-In the table above, if the wage rate is $12.00 per hour, the profit-maximizing number of workers is

S & S Backhoe Service in Ozark, Arkansas rents backhoes and other heavy equipment to local construction companies. What determines the demand for backhoes in Arkansas?

According to the Hotelling Principle, the price of an nonrenewable resource

-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 market wage is $300 per day, the firm will NOT hire a fourth worker because the fourth worker would create

Because of the income effect, a higher wage rate

For a monopsony, the labor supply curve

Suppose the price of oranges rises. As a result, the

A minimum wage might increase employment by a monopsony if it makes the supply of labor curve to that firm

In comparison to an employer in a competitive labor market, a monopsony employer pays a wage rate and hires workers.

The demand for labor is a derived demand because it is derived from

Coal is an example of

A firm in a competitive labor market will hire labor until the value of marginal product of labor equals the

In order to hire an additional worker, a monopsony must pay

The demand curve for labor is negatively sloped only because the firm must lower its price if it wishes to sell more output.

If the value of marginal product of the last worker hired is $24 and the wage rate is $25, then

To maximize profit, a firm hires the quantity of labor that makes the of labor equal to the .

Which of the following lowers the current price of an nonrenewable natural resource?

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

Suppose the interest rate is 5 percent per year. The present value of $210 to be received one year from today is

With respect to the labor supply curve, the income effect

-In the table above, if the wage rate is $12.00 per hour, the profit-maximizing number of workers is

S & S Backhoe Service in Ozark, Arkansas rents backhoes and other heavy equipment to local construction companies. What determines the demand for backhoes in Arkansas?

According to the Hotelling Principle, the price of an nonrenewable resource

-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 market wage is $300 per day, the firm will NOT hire a fourth worker because the fourth worker would create

Because of the income effect, a higher wage rate

For a monopsony, the labor supply curve

Suppose the price of oranges rises. As a result, the

A minimum wage might increase employment by a monopsony if it makes the supply of labor curve to that firm

In comparison to an employer in a competitive labor market, a monopsony employer pays a ________ wage rate and hires ________ workers.

The demand for labor is a derived demand because it is derived from

Coal is an example of

A firm in a competitive labor market will hire labor until the value of marginal product of labor equals the

In order to hire an additional worker, a monopsony must pay

The demand curve for labor is negatively sloped only because the firm must lower its price if it wishes to sell more output.

If the value of marginal product of the last worker hired is $24 and the wage rate is $25, then

To maximize profit, a firm hires the quantity of labor that makes the ________ of labor equal to the ________.

Which of the following lowers the current price of an nonrenewable natural resource?

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 pays a wage rate and hires workers.

To maximize profit, a firm hires the quantity of labor that makes the of labor equal to the .