Question 1

Suppose the government designates certain areas within a community to be "wetlands," making it illegal to build on the land.What happens to land not classified as "wetlands" within the community?
(i)The price of non-wetland land will rise.
(ii)The marginal product of non-wetland land will fall.
(iii)The marginal product of non-wetland land will rise.

Accepted Answer

A)   (i)  and (ii)  only
B)   (ii)  only
C)   (i)  and (iii)  only
D)   (iii)  only C

Question 2

As a result of severe flooding,a farmer loses half of his productive farmland.He should expect to see the marginal productivity of his remaining land

Accepted Answer

A)   increase.
B)   remain unchanged.
C)   decrease but remain positive.
D)   decrease and become negative. A

Question 3

Approximately how much of the income in the United States is earned by workers in the form of wages and fringe benefits?

Accepted Answer

A)   25 percent
B)   50 percent
C)   75 percent
D)   90 percent C

Question 4

Suppose that the market for labor is initially in equilibrium.If the firm employs labor-saving technology,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 5

Most of the total income earned in the U.S.economy is ultimately paid to

Accepted Answer

A)   households in the form of wages and fringe benefits.
B)   landowners in the form of rent.
C)   landowners in the form of interest.
D)   landowners in the form of profit.

Question 6

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?

Accepted Answer

A)   12
B)   22
C)   30
D)   42

Question 7

Average productivity can be measured as total output divided by total units of labor.

Accepted Answer

A) True 
 B)False

Question 8

Consider the labor market for short-order cooks.A shortage in the availability of frying pans will cause

Accepted Answer

A)   both equilibrium wages and equilibrium employment to increase.
B)   both equilibrium wages and equilibrium employment to decrease.
C)   equilibrium wages to increase and equilibrium employment to decrease.
D)   equilibrium wages to decrease and equilibrium employment to increase.

Question 9

The distribution of immigrant workers in the United States is

Accepted Answer

A)   concentrated in low-skilled jobs.
B)   concentrated in high-skilled jobs.
C)   evenly distributed among low-, medium-, and high-skilled jobs.
D)   more concentrated in low- and high-skilled jobs than in medium-skilled jobs.

Question 10

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?

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

A profit-maximizing competitive firm will hire workers up to the point at which the wage equals the price of the final good.

Accepted Answer

A) True 
 B)False

Question 12

Suppose that a toxic waste spill renders half of the land in New Jersey uninhabitable.Assuming that land and labor are complements in the production function,what would happen to the wages earned by workers and 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 13

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 14

If the wage exceeds the value of the marginal product of labor,then hiring another worker

Accepted Answer

A)   decreases the firm's total revenue.
B)   increases the firm's profit.
C)   decreases the firm's total cost.
D)   decreases the firm's profit.

Question 15

Table 18-6
 
-Refer to Table 18-6.The fact that the production function exhibits diminishing marginal productivity implies that

Accepted Answer

A)   total production decreases beyond a certain level of output.
B)   labor markets are not always competitive.
C)   the additions to total output get smaller as more workers are hired.
D)   marginal profit is negative.

Question 16

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

Accepted Answer

A)   technological progress
B)   an increase in the price of firms' output
C)   an increase in the supply of a relevant factor of production other than labor
D)   All of the above are correct.

Question 17

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 wages 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 wage.

Question 18

Table 18-10
Consider the following daily production data for Caroline's Cookies, Inc. Caroline's sells cookies for $2.50 each and pays the workers a wage of $325 per day.
 
-Refer to Table 18-10.The marginal product of labor begins to diminish with the addition of which worker?

Accepted Answer

A)   the 1st worker
B)   the 2nd worker
C)   the 3rd worker
D)   the 4th worker

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

Consider the market for capital equipment.Suppose the price of firms' output increases.Holding all else constant,the equilibrium rental price of capital equipment will

Accepted Answer

A)   increase.
B)   decrease.
C)   not change.
D)   It is not possible to determine what will happen to the equilibrium rental price of capital equipment.

Exam 18: The Market For the Factors of Production.

As a result of severe flooding,a farmer loses half of his productive farmland.He should expect to see the marginal productivity of his remaining land

Approximately how much of the income in the United States is earned by workers in the form of wages and fringe benefits?

Suppose that the market for labor is initially in equilibrium.If the firm employs labor-saving technology,the equilibrium wage

Most of the total income earned in the U.S.economy is ultimately paid to

Average productivity can be measured as total output divided by total units of labor.

Consider the labor market for short-order cooks.A shortage in the availability of frying pans will cause

The distribution of immigrant workers in the United States is

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?

A profit-maximizing competitive firm will hire workers up to the point at which the wage equals the price of the final good.

Suppose that a toxic waste spill renders half of the land in New Jersey uninhabitable.Assuming that land and labor are complements in the production function,what would happen to the wages earned by workers and rents earned by landowners?

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.

If the wage exceeds the value of the marginal product of labor,then hiring another worker

Table 18-6 -Refer to Table 18-6.The fact that the production function exhibits diminishing marginal productivity implies that

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

Table 18-10 Consider the following daily production data for Caroline's Cookies, Inc. Caroline's sells cookies for $2.50 each and pays the workers a wage of $325 per day. -Refer to Table 18-10.The marginal product of labor begins to diminish with the addition of which worker?

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.

Consider the market for capital equipment.Suppose the price of firms' output increases.Holding all else constant,the equilibrium rental price of capital equipment will