Question 1

Scenario 18-5
Suppose that workers from northern Minnesota, North Dakota, and Montana decide to emigrate to southern Canada.
-Refer to Scenario 18-5. In the labor market in southern Canada, 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 2

Which of the following would be an example of capital for a retail gasoline station?

Accepted Answer

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

Question 3

When a competitive firm hires labor up to the point at which the value of the marginal product of labor equals the wage, it also produces output up to the point at which marginal cost is equal to .

Accepted Answer

The answer of When a competitive firm hires labor up...

Question 4

Table 18-2 
-Refer to Table 18-2. The table shows the number of bracelets that can be assembled per week by various numbers of workers. If the price per bracelet in a perfectly competitive product market is $2.50, how many workers would the firm employ if the weekly wage rate is $375?

Accepted Answer

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

Question 5

What are the typical effects on the labor market of technological progress?

Accepted Answer

The answer of What are the typical effects on the...

Question 6

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 fourth worker?

Accepted Answer

A)  $200 
B)  $1,000 
C)  $6,400 
D)  $32,000

Question 7

The production function is the

Accepted Answer

A)  increase in the amount of output from an additional unit of labor. 
B)  marginal product of an input times the price of output. 
C)  relationship between the quantity of inputs and output. 
D)  shift in labor demand caused by a change in the price of output.

Question 8

What is the relationship between the marginal product of labor and the value of the marginal product of labor?

Accepted Answer

The answer of What is the relationship between the marginal...

Question 9

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 10

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 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 11

Your college roommate receives a pay raise at her part-time job from $9 to $11 per hour. She used to work 25 hours per week, but now she decides to work 20 hours per week in order to spend more time studying economics. For this price range, her labor supply curve is

Accepted Answer

A)  vertical. 
B)  horizontal. 
C)  upward sloping. 
D)  backward sloping.

Question 12

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 13

Sunshine's Organic Market sells organic produce. Assume that labor is the only input that varies for the firm. The store manager has determined that if she hires 5 workers, the store can sell 150 pounds of produce per day. If she hires 6 workers, the store can sell 170 pounds of produce per day. The store earns $4 for each pound of produce that it sells, and the manager pays each worker $60 per day. Which of the following is not correct?

Accepted Answer

A)  For the 6th worker, the marginal product is 20 pounds of produce per day. 
B)  For the 6th worker, the marginal revenue product is $20 per day. 
C)  The store earns a higher profit by employing 6 workers than by employing 5 workers. 
D)  Assuming no changes in either the daily wages paid to store workers or the price at which the store sells its produce, the firm would maximize profits by hiring a 7th worker so long as the store can increase its sales to at least 185 pounds per day.

Question 14

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. If Gertrude is a price taker in the labor market, she can choose

Accepted Answer

A)  the price at which she will sell the fish she catches. 
B)  how many crew members she will hire. 
C)  the wages that she will pay to her crew members. 
D)  All of the above.

Question 15

Suppose that workers immigrate to Minnesota from Canada. Which of the following correctly describes what would happen in the market for labor in Minnesota?

Accepted Answer

A)  The equilibrium wage would increase, and the quantity of labor would increase. With more workers, the added output from an extra worker is larger. 
B)  The equilibrium wage would decrease, and the quantity of labor would decrease. With fewer workers, the added output from an extra worker is smaller. 
C)  The equilibrium wage would decrease, and the quantity of labor would increase. With more workers, the added output from an extra worker is smaller. 
D)  The equilibrium wage would decrease, and the quantity of labor would increase. With more workers, the added output from an extra worker is larger.

Question 16

Table 18-1 
-Refer to Table 18-1. Suppose that the firm pays its workers $50 per day. Each unit of output sells for $20. How many days of labor should the firm hire?

Accepted Answer

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

Question 17

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 18

Scenario 18-6
Rocchetta Industries manufactures and supplies bottled water in Mexico. As a result of a contamination of water supplies at many of Mexico's resort communities, the demand for bottled water has increased.
-Refer to Scenario 18-6. We would expect that, as a result of the contamination, the value of the marginal product for Rocchetta Industries' workers would

Accepted Answer

A)  be offset by a decrease in wages. 
B)  be unaffected by a rise in demand for bottled water. 
C)  increase. 
D)  decrease.

Question 19

Which of the following could decrease the labor-supply curve for teachers?

Accepted Answer

A)  a decrease in the wages paid to teachers 
B)  an increase in immigration 
C)  a change in the work preferences of men, with more of them preferring to be stay-at-home fathers 
D)  any factor that would decrease the labor-demand curve

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 18: The Markets for the Factors of Production

Scenario 18-5 Suppose that workers from northern Minnesota, North Dakota, and Montana decide to emigrate to southern Canada. -Refer to Scenario 18-5. In the labor market in southern Canada, the equilibrium wage