Question 1

Table 18-8
Harold and Maude own a dance studio where they and their employees teach ballroom dancing. Their company is a competitive, profit-maximizing firm. Harold and Maude's production function is detailed in the table below. 
-Refer to Table 18-8. If Harold and Maude pay their workers $80 per day and charge $20 per dance lesson, what is the value of the marginal product of the third worker?

Accepted Answer

A)   $400
B)   $800
C)   $1,000
D)   $1,600E) A) and B)
F) A) and C)

Question 2

Assume the market for handkerchiefs is competitive. A decrease in the market price of handkerchiefs

Accepted Answer

A)   decreases the demand for workers who make handkerchiefs and decreases their equilibrium wage.
B)   decreases the demand for workers who make handkerchiefs and increases their equilibrium wage.
C)   increases the demand for workers who make handkerchiefs and decreases their equilibrium wage.
D)   increases the demand for workers who make handkerchiefs and increases their equilibrium wage..E) All of the above
F) C) and D)

Question 3

For a profit-maximizing, competitive firm, the value of the marginal product of labor

Accepted Answer

A)   increases when the price of output decreases.
B)   is the firm's demand for labor.
C)   equals the marginal product of labor divided by the wage rate.
D)   All of the above are correct.E) C) and D)
F) B) and D)

Question 4

Among the people who are characterized below, who has the highest opportunity cost of leisure?

Accepted Answer

A)   an attorney who earns $200 per hour and who plays golf during her leisure time
B)   a medical doctor who earns $210 per hour and who sleeps during his leisure time
C)   a retail clerk who earns $15 per hour and who watches TV during her leisure time
D)   a waiter who earns $12 per hour and who reads poetry during his leisure timeE) A) and C)
F) None of the above

Question 5

The production function is

Accepted Answer

A)   the increase in the amount of output from an additional unit of labor.
B)   influenced by the productivity of workers.
C)   the marginal revenue produce minus the wage rate paid to workers.
D)   All of the above are correct.E) C) and D)
F) B) and D)

Question 6

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 7

Figure 18-1
On the graph, L represents the quantity of labor and Q represents the quantity of output per week. 
-Refer to Figure 18-1. The marginal product of the fourth worker is

Accepted Answer

A)   60 units of output.
B)   75 units of output.
C)   285 units of output.
D)   345 units of output.E) A) and B)
F) All of the above

Question 8

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.E) B) and C)
F) A) and D)

Question 9

Which of the following statements is correct?

Accepted Answer

A)   The value of the marginal product curve is the labor demand curve for competitive, profit-maximizing firms.
B)   A competitive, profit-maximizing firm hires workers up to the point where the value of the marginal product of labor equals the wage.
C)   By hiring labor up to the point where the value of the marginal product of labor equals the wage, the firm is producing where price equals marginal cost.
D)   All of the above are correct.E) B) and D)
F) A) and D)

Question 10

Willie's wage increased, and he responded by enjoying more hours of leisure per day. Is Willie's behavior consistent with an upward-sloping labor-supply curve?

Accepted Answer

No. If Willie's labor­supply c...

Question 11

Table 18-6 
-Refer to Table 18-6. What is the value for the cell labeled AA?

Accepted Answer

A)   $600
B)   $500
C)   $400
D)   $300E) A) and C)
F) B) and C)

Question 12

The value of the marginal product is

Accepted Answer

A)   total revenue minus total cost.
B)   the change in total output divided by the change in an input.
C)   the marginal product of an input times the price of the output.
D)   total output divided by total inputs.E) A) and B)
F) A) and C)

Question 13

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

Accepted Answer

A)   an increase in the wage paid to workers in a competing market
B)   labor-saving technology
C)   a change in worker tastes so that workers want to retire later
D)   an increase in immigrationE) All of the above
F) B) and D)

Question 14

Sonny's Surfer Shop produces and sells custom surf boards. Assume that labor is the only input that varies for the firm. The firm's owner has determined that if she hires 10 workers, the firm can produce 10 surf boards per day. If she hires 11 workers, the firm can produce 12 surfboards per day. The firm sells each surfboard for $2,000, and it pays each of its workers $200 per day. Which of the following is correct?

Accepted Answer

A)   For the 11th worker, the value of the marginal product of labor is $400.
B)   For the 11th worker, the value of the marginal product of labor is $4,000.
C)   The firm should not hire the 11th worker since hiring this worker reduces profit.
D)   In order to justify hiring the 11th worker the firm will need to raise the price of a surfboard.E) None of the above
F) A) and B)

Question 15

Profit maximization by firms ensures that the equilibrium wage always equals the value of the marginal product of capital.

Accepted Answer

A) True 
 B)False

Question 16

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 $7. Suppose also that the firm's fixed costs amount to $400. How many workers should the firm hire in order to maximize profit, and what is the maximum profit?

Accepted Answer

A)   The firm should hire 2 workers; its maximum profit is $80.
B)   The firm should hire 2 workers; its maximum profit is $96.
C)   The firm should hire 3 workers; its maximum profit is $96.
D)   The firm should hire 3 workers; its maximum profit is $124.E) B) and D)
F) A) and D)

Question 17

What happens to labor supply in the pear-picking market when the wage paid to apple pickers increases?

Accepted Answer

A)   The labor supply will stay unchanged until the wages paid to pear pickers change.
B)   The labor supply will decrease.
C)   The labor supply will increase.
D)   The labor supply may fall or rise, depending on the price of pears.E) All of the above
F) A) and D)

Question 18

Suppose XYZ Corporation is currently renting 300 units of capital at a rental price of $500 units per unit. The value of the marginal product of the 300th unit of capital is $400. How can the corporation increase its profit?

Accepted Answer

In view of the fact that the V...

Question 19

An increase in the output price will increase the firm's demand for labor, all else equal.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following would be an example of capital for a computer software firm?

Accepted Answer

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

Exam 18: The Markets for the Factors of Production

Among the people who are characterized below, who has the highest opportunity cost of leisure?

Correct Answer
verified

The production function is

Correct Answer
verified

Figure 18-1 On the graph, L represents the quantity of labor and Q represents the quantity of output per week. -Refer to Figure 18-1. The marginal product of the fourth worker is

Correct Answer
verified

An increase in the output price will increase the firm's demand for labor, all else equal.

Correct Answer
verified

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

Correct Answer
verified

Assume the market for handkerchiefs is competitive. A decrease in the market price of handkerchiefs

Correct Answer
verified

The value of the marginal product is

Correct Answer
verified

Profit maximization by firms ensures that the equilibrium wage always equals the value of the marginal product of capital.

Correct Answer
verified

Correct Answer
verified

What happens to labor supply in the pear-picking market when the wage paid to apple pickers increases?

Correct Answer
verified

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.

Correct Answer
verified

Correct Answer
verified

Suppose XYZ Corporation is currently renting 300 units of capital at a rental price of $500 units per unit. The value of the marginal product of the 300th unit of capital is $400. How can the corporation increase its profit?

Correct Answer
verified
In view of the fact that the V...
View Answer

Willie's wage increased, and he responded by enjoying more hours of leisure per day. Is Willie's behavior consistent with an upward-sloping labor-supply curve?

Correct Answer
verified
No. If Willie's laborsupply c...
View Answer

Which of the following statements is correct?

Correct Answer
verified

Which of the following would be an example of capital for a computer software firm?

Correct Answer
verified

Table 18-6 -Refer to Table 18-6. What is the value for the cell labeled AA?

Correct Answer
verified

For a profit-maximizing, competitive firm, the value of the marginal product of labor

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Exam 18: The Markets for the Factors of Production

Among the people who are characterized below, who has the highest opportunity cost of leisure?

Correct AnswerverifiedShow Answer

The production function is

Correct AnswerverifiedShow Answer

Figure 18-1 On the graph, L represents the quantity of labor and Q represents the quantity of output per week. -Refer to Figure 18-1. The marginal product of the fourth worker is

Correct AnswerverifiedShow Answer

An increase in the output price will increase the firm's demand for labor, all else equal.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Assume the market for handkerchiefs is competitive. A decrease in the market price of handkerchiefs

Correct AnswerverifiedShow Answer

The value of the marginal product is

Correct AnswerverifiedShow Answer

Profit maximization by firms ensures that the equilibrium wage always equals the value of the marginal product of capital.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What happens to labor supply in the pear-picking market when the wage paid to apple pickers increases?

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose XYZ Corporation is currently renting 300 units of capital at a rental price of $500 units per unit. The value of the marginal product of the 300th unit of capital is $400. How can the corporation increase its profit?

Correct AnswerverifiedIn view of the fact that the V...View AnswerShow Answer

Willie's wage increased, and he responded by enjoying more hours of leisure per day. Is Willie's behavior consistent with an upward-sloping labor-supply curve?

Correct AnswerverifiedNo. If Willie's labor­supply c...View AnswerShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Which of the following would be an example of capital for a computer software firm?

Correct AnswerverifiedShow Answer

Table 18-6 -Refer to Table 18-6. What is the value for the cell labeled AA?

Correct AnswerverifiedShow Answer

For a profit-maximizing, competitive firm, the value of the marginal product of labor

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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In view of the fact that the V...
View Answer

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No. If Willie's laborsupply c...
View Answer

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