Question 1

Which of the following would tend to raise real wages?

Accepted Answer

A)  An increase in the demand for labor and no change in the supply of labor. 
B)  A decrease in the demand for labor and no change in the supply of labor. 
C)  An increase in the demand for labor that is greater than an increase in the supply of labor. 
D)  Either (a) or (c). 
A)  An increase in the demand for labor and no change in the supply of labor. 
B)  A decrease in the demand for labor and no change in the supply of labor. 
C)  An increase in the demand for labor that is greater than an increase in the supply of labor. 
D)  Either (a) or (c).

Question 2

Exhibit 16-2 The following lists possible capital investments that a business might pursue.
  Refer to Exhibit 16-2.How many projects would the firm invest in if the interest rate is 5 percent?

Accepted Answer

A)  0 
B)  1 
C)  2 
D)  3 
A)  0 
B)  1 
C)  2 
D)  3

Question 3

If the rate of interest increases,firms will most likely respond by:

Accepted Answer

A)  increasing investment. 
B)  decreasing investment. 
C)  not changing investment. 
D)  increasing their capital stock. 
A)  increasing investment. 
B)  decreasing investment. 
C)  not changing investment. 
D)  increasing their capital stock.

Question 4

Exhibit 16-1 Several congressmen and senators have been greatly concerned about the fairness of salaries in the marketplace.They are contemplating enacting a law that would fix the wage rate at WA.Their aides,who were all excellent economics students,have returned with the results of an investigation into the matter,as portrayed below.   Refer to Exhibit 16-1.If the law were not enacted,the prevailing wage rate and quantity of labor at equilibrium in the market for computer software programmers would be:

Accepted Answer

A)  WA and Q4, respectively. 
B)  WA and Q5, respectively. 
C)  WA and Q6, respectively. 
D)  WC and Q5, respectively. 
A)  WA and Q4, respectively. 
B)  WA and Q5, respectively. 
C)  WA and Q6, respectively. 
D)  WC and Q5, respectively.

Question 5

Based on the table below,how many workers will the firm employ in order to maximize profits?

Accepted Answer

A)  10 
B)  11 
C)  12 
D)  13 
A)  10 
B)  11 
C)  12 
D)  13

Question 6

Would an increase in the productivity of labor lead to an increase or a decrease in the demand for labor? Why?

Accepted Answer

An increase in productivity would lead t

Question 7

The supply curve for land:

Accepted Answer

A)  is almost perfectly elastic. 
B)  is almost perfectly inelastic. 
C)  is downward sloping. 
D)  is horizontal. 
A)  is almost perfectly elastic. 
B)  is almost perfectly inelastic. 
C)  is downward sloping. 
D)  is horizontal.

Question 8

Unions tend to:

Accepted Answer

A)  shift labor from the union sector to the non-union sector of the economy. 
B)  shift labor from the non-union sector to the union sector of the economy. 
C)  decrease wages in the union sector. 
D)  increase wages in the non-union sector. 
A)  shift labor from the union sector to the non-union sector of the economy. 
B)  shift labor from the non-union sector to the union sector of the economy. 
C)  decrease wages in the union sector. 
D)  increase wages in the non-union sector.

Question 9

The quantity of funds demanded by borrowers:

Accepted Answer

A)  is directly related to the rate of interest. 
B)  is inversely related to the rate of interest. 
C)  is unrelated to the rate of interest. 
D)  first increases and then decreases with the rate of interest. 
A)  is directly related to the rate of interest. 
B)  is inversely related to the rate of interest. 
C)  is unrelated to the rate of interest. 
D)  first increases and then decreases with the rate of interest.

Question 10

Unions have found it particularly difficult to organize workers in service-based industries.Why?

Accepted Answer

Unions have found that the service indus

Question 11

As more workers are hired to harvest grapes in a vineyard,the fields become overcrowded.As a result,the marginal product of labor is likely to diminish.

Accepted Answer

A) True 
 B)False

Question 12

The salaries of college professors are partly determined by the demand for college education.

Accepted Answer

A) True 
 B)False

Question 13

For a firm that is competitive in both product and factor markets,the value of the marginal product of labor:

Accepted Answer

A)  is constant and equal to the market wage. 
B)  increases, causing the labor supply curve to slope upward. 
C)  declines because the marginal product of labor diminishes as the number of workers rises. 
D)  declines because a competitive firm must lower product price in order to increase sales. 
A)  is constant and equal to the market wage. 
B)  increases, causing the labor supply curve to slope upward. 
C)  declines because the marginal product of labor diminishes as the number of workers rises. 
D)  declines because a competitive firm must lower product price in order to increase sales.

Question 14

If the demand for software engineers ____ slower than does supply,wages of software engineers will ____.

Accepted Answer

A)  increases; remain constant 
B)  increases, rise 
C)  increases; fall 
D)  decreases; fall 
A)  increases; remain constant 
B)  increases, rise 
C)  increases; fall 
D)  decreases; fall

Question 15

Labor unions:

Accepted Answer

A)  increase employment in the non-union sector. 
B)  decrease employment in the union sector. 
C)  decrease non-union wages. 
D)  do all of the above. 
A)  increase employment in the non-union sector. 
B)  decrease employment in the union sector. 
C)  decrease non-union wages. 
D)  do all of the above.

Question 16

Explain what is meant by "derived demand" as it relates to factors of production.

Accepted Answer

The demand for a factor of production is

Question 17

Labor unions:

Accepted Answer

A)  have no influence over wages. 
B)  can influence wages by restricting labor supply. 
C)  are illegal in the United States. 
D)  have significantly increased their membership in the last two decades. 
A)  have no influence over wages. 
B)  can influence wages by restricting labor supply. 
C)  are illegal in the United States. 
D)  have significantly increased their membership in the last two decades.

Question 18

Improvements in the productivity of labor will tend to:

Accepted Answer

A)  increase the supply of labor. 
B)  increase wages. 
C)  decrease the supply of labor. 
D)  decrease wages. 
A)  increase the supply of labor. 
B)  increase wages. 
C)  decrease the supply of labor. 
D)  decrease wages.

Question 19

Exhibit 16-1 Several congressmen and senators have been greatly concerned about the fairness of salaries in the marketplace.They are contemplating enacting a law that would fix the wage rate at WA.Their aides,who were all excellent economics students,have returned with the results of an investigation into the matter,as portrayed below.   Refer to Exhibit 16-1.If the wage law was not enacted,the prevailing wage rate and quantity of labor in the marketplace for K-12 teachers at equilibrium would be:

Accepted Answer

A)  WB and Q2, respectively. 
B)  WA and Q2, respectively. 
C)  WA and Q3, respectively. 
D)  WB and Q1, respectively. 
A)  WB and Q2, respectively. 
B)  WA and Q2, respectively. 
C)  WA and Q3, respectively. 
D)  WB and Q1, respectively.

Question 20

Bob's Baubles,Inc.,sells its product for $3 each in a perfectly competitive market.If it increases its workforce from 1,000 to 1,001,its output goes from 615 to 625 per day.Its marginal revenue product for the 1,001st worker is:

Accepted Answer

A)  $3. 
B)  $1, 845. 
C)  $30. 
D)  $3,003 
A)  $3. 
B)  $1, 845. 
C)  $30. 
D)  $3,003

Exam 16: The Markets for Labor, Capital, and Land

Which of the following would tend to raise real wages?

Exhibit 16-2 The following lists possible capital investments that a business might pursue. Refer to Exhibit 16-2.How many projects would the firm invest in if the interest rate is 5 percent?

If the rate of interest increases,firms will most likely respond by:

Based on the table below,how many workers will the firm employ in order to maximize profits?

Would an increase in the productivity of labor lead to an increase or a decrease in the demand for labor? Why?

The supply curve for land:

Unions tend to:

The quantity of funds demanded by borrowers:

Unions have found it particularly difficult to organize workers in service-based industries.Why?

As more workers are hired to harvest grapes in a vineyard,the fields become overcrowded.As a result,the marginal product of labor is likely to diminish.

The salaries of college professors are partly determined by the demand for college education.

For a firm that is competitive in both product and factor markets,the value of the marginal product of labor:

If the demand for software engineers ____ slower than does supply,wages of software engineers will ____.

Labor unions:

Explain what is meant by "derived demand" as it relates to factors of production.

Labor unions:

Improvements in the productivity of labor will tend to:

Bob's Baubles,Inc.,sells its product for $3 each in a perfectly competitive market.If it increases its workforce from 1,000 to 1,001,its output goes from 615 to 625 per day.Its marginal revenue product for the 1,001st worker is:

The Role and Method of Economics

Economics: Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Markets in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

Income, Poverty, and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Aggregate Demand and Aggregate Supply

The Aggregate Expenditure Model

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Trade

International Finance

Filters

If the demand for software engineers slower than does supply,wages of software engineers will .

Bob's Baubles,Inc.,sells its product for $3 each in a perfectly competitive market.If it increases its workforce from 1,000 to 1,001,its output goes from 615 to 625 per day.Its marginal revenue product for the 1,001^st worker is: