Question 1

Suppose that the wage paid to workers who de-tassel corn rises. What happens in the market for workers who weed soybean fields, given that workers who de-tassel corn can easily work weeding soybean fields?

Accepted Answer

A) The demand curve for soybean workers increases. 
B) The demand curve for soybean workers decreases. 
C) The supply curve for soybean workers increases. 
D) The supply curve for soybean workers decreases.

Question 2

Consider the market for capital equipment. Suppose the value of the marginal product of capital equipment increases. Holding all else constant, the equilibrium rental price of capital equipment will

Accepted Answer

A) increase. 
B) decrease. 
C) not change. 
D) not be able to be determined without more information.

Question 3

Why do we say that the demand for labor is a derived demand?

Accepted Answer

The answer of Why do we say that the demand...

Question 4

Omega Custom Cabinets produces and sells custom bathroom vanities. Assume that labor is the only input that varies for the firm. The firm has determined that if it hires 10 workers, it can produce and sell 20 vanities per week. If it hires 11 workers, it can produce and sell 22 vanities per week. It sells each vanity for $800, and it pays each of its workers $1,000 per week. Which of the following is correct?

Accepted Answer

A) For the 11th worker, the marginal profit is $600. 
B) For the 11th worker, the marginal revenue product (value of the marginal product) is $2,000. 
C) The firm is maximizing its profit. 
D) If the firm is employing 11 workers, then its profit would increase if it cut back to 10 workers.

Question 5

The labor supply curve reflects how workers' decisions about the labor-leisure tradeoff respond to changes in the opportunity cost of leisure.

Accepted Answer

A) True 
 B)False

Question 6

The marginal product of labor is defined as the change in

Accepted Answer

A) output per additional unit of revenue. 
B) output per additional unit of labor. 
C) revenue per additional unit of labor. 
D) revenue per additional unit of output.

Question 7

Figure 18-1 
-Refer to Figure 18-1. Suppose the firm sells its output for $14 per unit, and it pays each of its workers $143 per day. How many workers will the firm hire to maximize its profit?

Accepted Answer

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

Question 8

The opportunity cost of leisure is impossible to measure because we cannot measure leisure time in dollars.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

The answer of Using the theory of wage determination, explain...

Question 10

Describe the process by which the market for capital and the market for land reach equilibrium. As part of your description, elaborate on the role of the stock of the resource versus the flow of services from the resource.

Accepted Answer

The answer of Describe the process by which the market...

Question 11

A decrease in population can be expected to

Accepted Answer

A) increase the marginal product of land. 
B) decrease the supply of land. 
C) decrease the rents on land. 
D) increase the demand for land.

Question 12

Table 18-5
​
​
  ​
​
-Refer to Table 18-5. What is the value for the cell labeled AA?

Accepted Answer

A) $600 
B) $500 
C) $400 
D) $300

Question 13

Figure 18-5 
-Refer to Figure 18-5. Assume W1 = $15 and W2 = $11, and the market is always in equilibrium. A shift of the labor supply curve from S2 to S1 would

Accepted Answer

A) decrease the value of the marginal product of labor by $4. 
B) increase the value of the marginal product of labor by $4. 
C) increase the value of the marginal product of labor by more than $4. 
D) not change the value of the marginal product of labor.

Question 14

Capital owners are compensated according to the value of the marginal product of that capital.

Accepted Answer

A) True 
 B)False

Question 15

If men's preferences for work change such that more men want to be stay-at-home fathers, the wages paid to men who remain in the workplace would rise, all else equal.

Accepted Answer

A) True 
 B)False

Question 16

Suppose that a rare virus infects and kills a significant percentage of the population. Assuming that land and labor are complements in a farming production function, what would happen to the wages earned by workers and the rents earned by landowners?

Accepted Answer

A) Both wages and rents would increase. 
B) Both wages and rents would decrease. 
C) Wages would increase, and rents would decrease. 
D) Wages would decrease, and rents would increase.

Question 17

The value of the marginal product of capital can be calculated as the marginal product of capital multiplied by the cost of the capital input.

Accepted Answer

A) True 
 B)False

Question 18

Labor supply curves are always upward sloping.

Accepted Answer

A) True 
 B)False

Question 19

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 20

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

Exam 18: The Markets for the Factors of Production

Suppose that the wage paid to workers who de-tassel corn rises. What happens in the market for workers who weed soybean fields, given that workers who de-tassel corn can easily work weeding soybean fields?

Consider the market for capital equipment. Suppose the value of the marginal product of capital equipment increases. Holding all else constant, the equilibrium rental price of capital equipment will

Why do we say that the demand for labor is a derived demand?

The labor supply curve reflects how workers' decisions about the labor-leisure tradeoff respond to changes in the opportunity cost of leisure.

The marginal product of labor is defined as the change in

Figure 18-1 -Refer to Figure 18-1. Suppose the firm sells its output for $14 per unit, and it pays each of its workers $143 per day. How many workers will the firm hire to maximize its profit?

The opportunity cost of leisure is impossible to measure because we cannot measure leisure time in dollars.

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

Describe the process by which the market for capital and the market for land reach equilibrium. As part of your description, elaborate on the role of the stock of the resource versus the flow of services from the resource.

A decrease in population can be expected to

Table 18-5 -Refer to Table 18-5. What is the value for the cell labeled AA?

Figure 18-5 -Refer to Figure 18-5. Assume W₁ = $15 and W₂ = $11, and the market is always in equilibrium. A shift of the labor supply curve from S₂to S₁ would

Capital owners are compensated according to the value of the marginal product of that capital.

If men's preferences for work change such that more men want to be stay-at-home fathers, the wages paid to men who remain in the workplace would rise, all else equal.

Suppose that a rare virus infects and kills a significant percentage of the population. Assuming that land and labor are complements in a farming production function, what would happen to the wages earned by workers and the rents earned by landowners?

The value of the marginal product of capital can be calculated as the marginal product of capital multiplied by the cost of the capital input.

Labor supply curves are always upward sloping.

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.

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

Exam 18: The Markets for the Factors of Production

Suppose that the wage paid to workers who de-tassel corn rises. What happens in the market for workers who weed soybean fields, given that workers who de-tassel corn can easily work weeding soybean fields?

Consider the market for capital equipment. Suppose the value of the marginal product of capital equipment increases. Holding all else constant, the equilibrium rental price of capital equipment will

Why do we say that the demand for labor is a derived demand?

The labor supply curve reflects how workers' decisions about the labor-leisure tradeoff respond to changes in the opportunity cost of leisure.

The marginal product of labor is defined as the change in

Figure 18-1 -Refer to Figure 18-1. Suppose the firm sells its output for $14 per unit, and it pays each of its workers $143 per day. How many workers will the firm hire to maximize its profit?

The opportunity cost of leisure is impossible to measure because we cannot measure leisure time in dollars.

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

Describe the process by which the market for capital and the market for land reach equilibrium. As part of your description, elaborate on the role of the stock of the resource versus the flow of services from the resource.

A decrease in population can be expected to

Table 18-5 ​ ​ ​ ​ -Refer to Table 18-5. What is the value for the cell labeled AA?

Figure 18-5 -Refer to Figure 18-5. Assume W1 = $15 and W2 = $11, and the market is always in equilibrium. A shift of the labor supply curve from S2 to S1 would

Capital owners are compensated according to the value of the marginal product of that capital.

If men's preferences for work change such that more men want to be stay-at-home fathers, the wages paid to men who remain in the workplace would rise, all else equal.

Suppose that a rare virus infects and kills a significant percentage of the population. Assuming that land and labor are complements in a farming production function, what would happen to the wages earned by workers and the rents earned by landowners?

The value of the marginal product of capital can be calculated as the marginal product of capital multiplied by the cost of the capital input.

Labor supply curves are always upward sloping.

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.

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

Table 18-5 -Refer to Table 18-5. What is the value for the cell labeled AA?

Figure 18-5 -Refer to Figure 18-5. Assume W₁ = $15 and W₂ = $11, and the market is always in equilibrium. A shift of the labor supply curve from S₂to S₁ would