Question 1

Consider the market for medical doctors. Suppose the opportunity cost of going to medical school increases for many individuals. Suppose it generally takes about ten years to become a practicing doctor. Holding all else constant, in ten years the equilibrium quantity of doctors will

Accepted Answer

A) increase. 
B) decrease. 
C) not change. 
D) It is not possible to determine what will happen to the equilibrium quantity.

Question 2

The wage is to the labor market as the

Accepted Answer

A) rental price of capital is to the capital market. 
B) purchase price of capital is to the capital market. 
C) supply of land is to the land market. 
D) demand for land is to the land market.

Question 3

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.

Accepted Answer

A) True 
 B)False

Question 4

For a competitive, profit-maximizing firm, the labor demand curve is the same as the

Accepted Answer

A) marginal cost curve. 
B) value of marginal product curve. 
C) production function. 
D) profit function.

Question 5

Table 18-1 
-Refer to Table 18-1. Suppose that the firm pays its workers $80 per day. Each unit of output sells for $15. How many days of labor should the firm hire?

Accepted Answer

A) 3 
B) 4 
C) 5 
D) 6

Question 6

Figure 18-2
The figure below shows the production function for a particular firm. 
-Refer to Figure 18-2. Suppose the firm pays a wage equal to $160 per unit of labor and sells its output at $10 per unit. What is the value of the marginal product of labor for the third worker?

Accepted Answer

A) 20 units 
B) $200 
C) $2,720 
D) $3,200

Question 7

Table 18-3 
-Refer to Table 18-3. Which firm's production function exhibits negative marginal product?

Accepted Answer

A) Firm A 
B) Firm B 
C) Firm C 
D) Firm D

Question 8

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 marginal profit of the fourth worker?

Accepted Answer

A) $-132 
B) $-96 
C) $132 
D) $504

Question 9

Scenario 18-8
Suppose the following events occur in the market for university economics professors.
Event 1: A recession in the U.S. economy lowers the opportunity cost of going to graduate school in economics to become a university economics professor.
Event 2: A decreasing number of students in U.S. primary and secondary schools decreases the number of students entering college, decreasing the output price of university economics professors' services.
-Refer to Scenario 18-8. As a result of these two events, holding all else constant, the equilibrium quantity of university economics professors will

Accepted Answer

A) increase. 
B) decrease. 
C) not change. 
D) It is not possible to determine what will happen to the equilibrium quantity.

Question 10

Suppose that the labor market for life guards is initially in equilibrium. Then a new television series debuts which glamorizes the social opportunities for life guards. What happens to the equilibrium wage and quantity of life guards?

Accepted Answer

A) Both the equilibrium wage and quantity increase. 
B) Both the equilibrium wage and quantity decrease. 
C) The equilibrium wage increases, and the equilibrium quantity decreases. 
D) The equilibrium wage decreases, and the equilibrium quantity increases.

Question 11

Explain how a firm values the contribution of workers to its profitability. Would a profit-maximizing competitive firm ever stop increasing employment as long as marginal product is rising? Explain your answer.

Accepted Answer

The answer of Explain how a firm values the contribution...

Question 12

Figure 18-7 
-Refer to Figure 18-7. Assume W1 = $20 and W2 = $18, and the market is always in equilibrium. A shift of the labor supply curve from S1 to S2 would

Accepted Answer

A) increase the value of the marginal product of labor by $2. 
B) decrease the value of the marginal product of labor by $2. 
C) decrease the value of the marginal product of labor by more than $2. 
D) not change the value of the marginal product of labor.

Question 13

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

Accepted Answer

A) $400 
B) $100 
C) $0 
D) −$100

Question 14

Suppose that technological progress increases the productivity of teachers. Which of the following accurately describes the labor market for teachers after the technological change? Equilibrium wages will

Accepted Answer

A) rise, and the equilibrium quantity of teachers employed will fall. 
B) rise, and the equilibrium quantity of teachers employed will rise. 
C) fall, and the equilibrium quantity of teachers employed will fall. 
D) fall, and the equilibrium quantity of teachers employed will rise.

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

When deciding whether to hire an additional worker, firms need only consider how the additional worker would affect

Accepted Answer

A) costs. 
B) revenues. 
C) output. 
D) profit.

Question 17

In economics, the term capital refers to

Accepted Answer

A) money. 
B) stocks and bonds. 
C) equipment and structures used in production. 
D) All of the above are correct.

Question 18

Suppose that the market for labor is initially in equilibrium. Suppose that workers' tastes change so that they choose to retire at age 55 rather than age 67. Then the equilibrium wage

Accepted Answer

A) and the equilibrium quantity of labor will rise. 
B) and the equilibrium quantity of labor will fall. 
C) will rise, and the equilibrium quantity of labor will fall. 
D) will fall, and the equilibrium quantity of labor will rise.

Question 19

Daryn is raking leaves to earn money for his university's economics club. In the first hour, he rakes 8 bags of leaves. In the second hour, he rakes 6 bags of leaves. If he earns $8 per hour, the value of the marginal product of the second hour of labor is $48.

Accepted Answer

A) True 
 B)False

Question 20

The effect of the Black Death in 14th-century Europe was to

Accepted Answer

A) decrease wages. 
B) increase land rents. 
C) reduce income inequality between peasants and the landed classes. 
D) Both a) and b) are correct.

Exam 18: The Markets for the Factors of Production

Consider the market for medical doctors. Suppose the opportunity cost of going to medical school increases for many individuals. Suppose it generally takes about ten years to become a practicing doctor. Holding all else constant, in ten years the equilibrium quantity of doctors will

The wage is to the labor market as the

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.

For a competitive, profit-maximizing firm, the labor demand curve is the same as the

Table 18-1 -Refer to Table 18-1. Suppose that the firm pays its workers $80 per day. Each unit of output sells for $15. How many days of labor should the firm hire?

Figure 18-2 The figure below shows the production function for a particular firm. -Refer to Figure 18-2. Suppose the firm pays a wage equal to $160 per unit of labor and sells its output at $10 per unit. What is the value of the marginal product of labor for the third worker?

Table 18-3 -Refer to Table 18-3. Which firm's production function exhibits negative marginal product?

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 marginal profit of the fourth worker?

Suppose that the labor market for life guards is initially in equilibrium. Then a new television series debuts which glamorizes the social opportunities for life guards. What happens to the equilibrium wage and quantity of life guards?

Explain how a firm values the contribution of workers to its profitability. Would a profit-maximizing competitive firm ever stop increasing employment as long as marginal product is rising? Explain your answer.

Figure 18-7 -Refer to Figure 18-7. Assume W₁ = $20 and W₂ = $18, and the market is always in equilibrium. A shift of the labor supply curve from S₁ to S₂ would

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

Suppose that technological progress increases the productivity of teachers. Which of the following accurately describes the labor market for teachers after the technological change? Equilibrium wages will

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

When deciding whether to hire an additional worker, firms need only consider how the additional worker would affect

In economics, the term capital refers to

Suppose that the market for labor is initially in equilibrium. Suppose that workers' tastes change so that they choose to retire at age 55 rather than age 67. Then the equilibrium wage

Daryn is raking leaves to earn money for his university's economics club. In the first hour, he rakes 8 bags of leaves. In the second hour, he rakes 6 bags of leaves. If he earns $8 per hour, the value of the marginal product of the second hour of labor is $48.

The effect of the Black Death in 14th-century Europe was to

Exam 18: The Markets for the Factors of Production

Consider the market for medical doctors. Suppose the opportunity cost of going to medical school increases for many individuals. Suppose it generally takes about ten years to become a practicing doctor. Holding all else constant, in ten years the equilibrium quantity of doctors will

The wage is to the labor market as the

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.

For a competitive, profit-maximizing firm, the labor demand curve is the same as the

Table 18-1 -Refer to Table 18-1. Suppose that the firm pays its workers $80 per day. Each unit of output sells for $15. How many days of labor should the firm hire?

Figure 18-2 The figure below shows the production function for a particular firm. -Refer to Figure 18-2. Suppose the firm pays a wage equal to $160 per unit of labor and sells its output at $10 per unit. What is the value of the marginal product of labor for the third worker?

Table 18-3 -Refer to Table 18-3. Which firm's production function exhibits negative marginal product?

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 marginal profit of the fourth worker?

Suppose that the labor market for life guards is initially in equilibrium. Then a new television series debuts which glamorizes the social opportunities for life guards. What happens to the equilibrium wage and quantity of life guards?

Explain how a firm values the contribution of workers to its profitability. Would a profit-maximizing competitive firm ever stop increasing employment as long as marginal product is rising? Explain your answer.

Figure 18-7 -Refer to Figure 18-7. Assume W1 = $20 and W2 = $18, and the market is always in equilibrium. A shift of the labor supply curve from S1 to S2 would

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

Suppose that technological progress increases the productivity of teachers. Which of the following accurately describes the labor market for teachers after the technological change? Equilibrium wages will

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

When deciding whether to hire an additional worker, firms need only consider how the additional worker would affect

In economics, the term capital refers to

Suppose that the market for labor is initially in equilibrium. Suppose that workers' tastes change so that they choose to retire at age 55 rather than age 67. Then the equilibrium wage

Daryn is raking leaves to earn money for his university's economics club. In the first hour, he rakes 8 bags of leaves. In the second hour, he rakes 6 bags of leaves. If he earns $8 per hour, the value of the marginal product of the second hour of labor is $48.

The effect of the Black Death in 14th-century Europe was to

Figure 18-7 -Refer to Figure 18-7. Assume W₁ = $20 and W₂ = $18, and the market is always in equilibrium. A shift of the labor supply curve from S₁ to S₂ would