Exam 18: The Markets for the Factors of Production

Scenario 18-1 Harry owns a snow-removal business. He hires workers to shovel driveways for him during the winter. The first worker he hires can shovel twelve driveways in one day. When Harry hires two workers, they can shovel a total of 22 driveways in one day. When Harry hires a third worker, he shovels an additional eight driveways in one day. -Refer to Scenario 18-1. What is the total productivity of three workers?

Using the theory of wage determination, explain why wages in developing countries, where levels of capital are small, are typically quite low.

Figure 18-10 -Refer to Figure 18-10. Which of the following would shift of the labor demand curve from D1 to D2?

For a worker, the opportunity cost of an hour of leisure

Over time, there have been technological advances in the production of radios. At the same time, it has become less popular to listen to radio. Taking these two events into account, what would be the likely effect on the wages of workers who manufacture radios?

Suppose that the labor market for life guards is initially in equilibrium. Then the marginal productivity of life guards increases. What happens to the equilibrium wage and quantity of life guards?

The purchase price of capital is

The marginal product of land depends on the quantity of land that is available.

Figure 18-10 -Refer to Figure 18-10. When the relevant labor demand curve is D1 and the labor market is in equilibrium,

Table 18-12 The table displays data for a small, competitive, profit-maximizing firm that produces and sells envelopes. The time frame is one week. -Refer to Table 18-12. Suppose the firm sells each box of envelopes that it produces for $6. What is the value of the marginal product of the second worker?

Table 18-7 -Refer to Table 18-7. What is the value of the cell labeled JJ?

If the demand for labor decreases and the supply of labor is unchanged, then the opportunity cost of leisure will decrease.

Figure 18-6 -Refer to Figure 18-6. The graph above illustrates the market for bakers who make homemade breads and breakfast pastries. If the wages paid to wedding cake bakers decrease, what happens in the market for bread bakers?

Suppose an influenza pandemic were to significantly decrease the population of a country. We would predict a decrease in the marginal product of land in that country.

Along the horizontal axis of the production function we typically measure

Table 18-9 The following table shows the production function for a particular business. The numbers represent the various labor and output combinations the firm may choose for its output on a daily basis. -Refer to Table 18-9. Suppose this firm charges a price of $5 per unit of output and pays workers a wage equal to $160 per day. What is the value of the marginal product of labor for the third worker?

Figure 18-3 -Refer to Figure 18-3. Suppose that the price of the output is $20. What is the value of the marginal product of the third worker?

An upward-sloping labor-supply curve implies that an increase in the wage induces

Table 18-7 -Refer to Table 18-7. It is apparent from this table that increasing marginal product

The marginal product of labor is defined as the change in