Question 1

The substantial increases in output per worker over the last 50 or so years are largely explained by .

Accepted Answer

The answer of The substantial increases in output per worker...

Question 2

When a competitive firm produces output up to the point at which the price is equal to marginal cost, it also hires labor up to the point at which the wage is equal to the

Accepted Answer

A)  marginal cost of labor. 
B)  marginal profit of labor. 
C)  marginal product of labor. 
D)  value of the marginal product of labor.

Question 3

Over time, carpenters become aware of more attractive employment opportunities outside of carpentry. Does this development affect the demand for carpenters, or does it affect the supply of carpenters?

Accepted Answer

The answer of Over time, carpenters become aware of more...

Question 4

When labor is the only input a firm uses, the marginal cost of a unit of output can be defined as the

Accepted Answer

A)  marginal revenue multiplied by the wage. 
B)  marginal product of labor multiplied by the wage. 
C)  marginal product of labor divided by the wage. 
D)  None of the above is correct.

Question 5

An increase in the supply of labor has the effect of decreasing the

Accepted Answer

A)  wage. 
B)  marginal product of labor. 
C)  value of the marginal product of labor. 
D)  All of the above are correct.

Question 6

Because of diminishing returns, a factor in abundant supply has a

Accepted Answer

A)  high marginal product and a high rental price. 
B)  high marginal product and a low rental price. 
C)  low marginal product and a high rental price. 
D)  low marginal product and a low rental price.

Question 7

Consider the labor market for computer programmers. During the late 1990s, the value of the marginal product of all computer programmers increased dramatically. Holding all else equal, the equilibrium wage in the labor market for computer programmers

Accepted Answer

A)  increased. 
B)  decreased. 
C)  did not change. 
D)  It is not possible to determine the equilibrium wage.

Question 8

Which of the following is not an example of a factor of production?

Accepted Answer

A)  labor 
B)  interest 
C)  land 
D)  capital

Question 9

Consider the labor market for computer programmers. During the late 1990s, the value of the marginal product of all computer programmers increased dramatically. Holding all else equal, what effect did this process have on the labor market for computer programmers? The equilibrium wage

Accepted Answer

A)  increased, and the equilibrium quantity of labor increased. 
B)  increased, and the equilibrium quantity of labor decreased. 
C)  decreased, and the equilibrium quantity of labor increased. 
D)  decreased, and the equilibrium quantity of labor decreased.

Question 10

Table 18-11
Consider the following daily production data for MadeFromScratch, Inc. MadeFromScratch sells cupcakes for $2 each and pays the workers a wage of $325 per day.
 
-Refer to Table 18-11. 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 11

Figure 18-8
This figure below shows the labor market for automobile workers. The curve labeled S is the labor supply curve, and the curves labeled DS1U1B11S1U1B0S1U1B1 S1U1B0and DS1U1B12S1U1B0S1U1B1 S1U1B0are the labor demand curves. On the horizontal axis, L represents the quantity of labor in the market. 
-Refer to Figure 18-8. What is measured along the vertical axis on the graph?

Accepted Answer

A)  the quantity of automobiles produced 
B)  the price of automobiles 
C)  the wage paid to automobile workers 
D)  time spent by workers producing automobiles

Question 12

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 13

Suppose that eight workers can manufacture 70 radios per day and that nine workers can manufacture 90 radios per day. If radios can be sold for $20 each, the value of marginal product of the ninth worker is

Accepted Answer

A)  20 radios. 
B)  90 radios. 
C)  $200. 
D)  $400.

Question 14

Suppose an increase in the demand for labor results in an increase of $4 per hour in the equilibrium wage. How does the increase in the demand for labor affect the value of the marginal product of labor (VMPL)?

Accepted Answer

A)  The VMPL increases by less than $4. 
B)  The VMPL increases by $4. 
C)  The VMPL increases by more than $4. 
D)  The VMPL decreases by $4.

Question 15

Scenario 18-2
Gertrude Kelp owns three boats that participate in commercial fishing for fresh Pacific salmon off the coast of Alaska. As part of her business she hires a captain and several crew members for each boat. In the market for fresh Pacific salmon, there are thousands of firms like Gertrude's. While Gertrude usually catches a significant number of fish each year, her contribution to the entire harvest of salmon is negligible relative to the size of the market.
-Refer to Scenario 18-2. Based on the given information, it is likely that Gertrude's firm has

Accepted Answer

A)  some influence over the wages paid to crew members but no influence over the price of salmon. 
B)  some influence over the price of salmon but no influence over the wages paid to crew members. 
C)  some influence over both the price of salmon and the wages paid to crew members. 
D)  no influence over either the price of salmon or the wages paid to crew members.

Question 16

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

Accepted Answer

A)  occurs only after the first worker is hired. 
B)  occurs only after the second worker is hired. 
C)  occurs only after the third worker is hired. 
D)  never occurs.

Question 17

Owners of land are compensated according to the

Accepted Answer

A)  absolute level of production from the land. 
B)  number of laborers the land can support. 
C)  purchase price of the land stock. 
D)  value of the marginal product of land.

Question 18

Which of the following would shift a market labor supply curve to the left?

Accepted Answer

A)  a decrease in the price of output 
B)  an increase in the price of output 
C)  a labor-augmenting technological change 
D)  better employment opportunities in a closely-related job

Question 19

Table 18-11
Consider the following daily production data for MadeFromScratch, Inc. MadeFromScratch sells cupcakes for $2 each and pays the workers a wage of $325 per day.
 
-Refer to Table 18-11. What is the marginal profit of the fourth worker?

Accepted Answer

A)  $280 
B)  $25 
C)  -$5 
D)  -$45

Question 20

When a firm experiences diminishing marginal product, what is the shape of the curve that represents the value of the marginal product of labor?

Accepted Answer

A)  U-shaped 
B)  vertical 
C)  downward sloping 
D)  upward sloping

Exam 18: The Markets for the Factors of Production