Question 1

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. Suppose that Harry pays each worker $80 per day and that he charges each customer $20 to have his driveway shoveled. What is the value of the marginal product of labor for the third worker?

Accepted Answer

A)  $160
B)  $640
C)  $1,600
D)  $2,400E) A) and B)
F) C) and D)

Question 2

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. What is the marginal product of the fourth worker?

Accepted Answer

A)  250 students
B)  62.5 students
C)  50 students
D)  30 studentsE) A) and C)
F) None of the above

Question 3

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)  42E) A) and B)
F) A) and C) C

Question 4

Suppose medical research provides evidence that eating bananas provides far greater health benefits than was previously thought. The resulting increase in the demand for bananas

Accepted Answer

A)  increases the marginal product of banana pickers for any given number of banana pickers.
B)  increases the value of the marginal product of banana pickers for any given number of banana pickers.
C)  increases the supply of banana pickers.
D)  All of the above are correct.E) All of the above
F) C) and D)

Question 5

Diminishing marginal product occurs when

Accepted Answer

A)  the marginal product of an input increases as the quantity of the input increases.
B)  the marginal product of an input decreases as the quantity of the input increases.
C)  total output increases as the quantity of an input increases.
D)  total output decreases as the quantity of an input increases.E) C) and D)
F) B) and D)

Question 6

Which of the following would decrease the demand for labor? (i) 
A decrease in the output price
(ii) 
An increase in the output price
(iii) 
A labor-saving technological advance
(iv) 
A labor-augmenting technological advance

Accepted Answer

A)  (i)  only
B)  (i)  and (iii)  only
C)  (ii)  only
D)  (ii)  and (iv)  onlyE) B) and C)
F) None of the above

Question 7

Suppose that a large lake in the middle of Minnesota evaporates, leaving more fertile farm land for growing corn available. Assuming that land and labor are complements in a farming 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.E) B) and C)
F) A) and D)

Question 8

A pretzel-stand owner in Chicago hires workers to make hot pretzels and sell them to customers. If the firm is competitive in both the market for pretzels and in the market for pretzel-makers, then it has

Accepted Answer

A)  some control over both the price of pretzels and the wage it pays to its workers.
B)  no control over the price of pretzels but some control over the wage it pays to its workers.
C)  some control over the price of pretzels but no control over the wage it pays to its workers.
D)  no control over either the price of pretzels or the wage it pays to its workers.E) B) and D)
F) C) and D)

Question 9

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

Question 10

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

Accepted Answer

Yes. Jen responded to the lowe...

Question 11

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 up to the point at which the price of output equals average variable cost.

Accepted Answer

A) True 
 B)False  False

Question 12

Figure 18-6 
-Refer to Figure 18-6. The graph above illustrates the market for bakers who make homemade breads and breakfast pastries. If the bakery profession becomes less attractive to young women and men because of news reports documenting health risks, what happens in the market for bakers?

Accepted Answer

A)  Demand increases from D1 to D2.
B)  Demand decreases from D2 to D1.
C)  Supply increases from S1 to S2.
D)  Supply decreases from S2 to S1.E) C) and D)
F) A) and D)

Question 13

When a competitive firm maximizes profit, it will hire workers up to the point where the

Accepted Answer

A)  marginal product of labor is equal to the product price.
B)  marginal product of labor is equal to the wage.
C)  value of the marginal product of labor is equal to the product price.
D)  value of the marginal product of labor is equal to the wage.E) A) and C)
F) A) and B)

Question 14

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 $8, how many workers would the firm employ if the weekly wage rate is $800?

Accepted Answer

A)  1
B)  2
C)  3
D)  4E) B) and D)
F) C) and D)

Question 15

If hiring more workers results in each additional worker contributing successively smaller amounts of output, then which of the following is present?

Accepted Answer

A)  diminishing profitability
B)  diminishing total product
C)  diminishing marginal product
D)  Both b and c are correct.E) C) and D)
F) A) and C)

Question 16

Changes in supply and demand in the labor market will cause changes in wages.

Accepted Answer

A) True 
 B)False

Question 17

Table 18-B
Consider the following daily production data for MadeFromScratch, Inc. MadeFromScratch sells cupcakes for $3 each and pays the workers a wage of $325 per day. 
-Refer to Table 18-B. Assuming MadeFromScratch is a competitive, profit-maximizing firm, how many workers will the firm hire?

Accepted Answer

A)  1 worker
B)  2 workers
C)  3 workers
D)  4 workersE) None of the above
F) A) and D)

Question 18

The owners of capital resources are compensated according to the

Accepted Answer

A)  purchase price of the capital stock.
B)  marginal product of capital.
C)  value of the marginal product of capital.
D)  absolute level of production of final goods and services.E) A) and B)
F) B) and C)

Question 19

Figure 18-1. The figure shows the relationship between the number of mechanics hired and the number of car repairs performed per day at a car-repair shop. 
-Refer to Figure 18-1. Suppose the shop pays each of its mechanics $210 per day. Over what interval of prices (that is, charges per car repair, P) would the shop maximize its profit by hiring exactly 3 mechanics? (Determine  and  such that  .)

Accepted Answer

The marginal product of the third mechan...

Question 20

Increases in productivity are not responsible for increased standards of living in the United States.

Accepted Answer

A) True 
 B)False

Exam 18: The Markets for the Factors of Production

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C

Suppose medical research provides evidence that eating bananas provides far greater health benefits than was previously thought. The resulting increase in the demand for bananas

Correct Answer
verified

Diminishing marginal product occurs when

Correct Answer
verified

Which of the following would decrease the demand for labor? (i) A decrease in the output price (ii) An increase in the output price (iii) A labor-saving technological advance (iv) A labor-augmenting technological advance

Correct Answer
verified

Suppose that a large lake in the middle of Minnesota evaporates, leaving more fertile farm land for growing corn available. Assuming that land and labor are complements in a farming production function, what would happen to the wages earned by workers and rents earned by landowners?

Correct Answer
verified

A pretzel-stand owner in Chicago hires workers to make hot pretzels and sell them to customers. If the firm is competitive in both the market for pretzels and in the market for pretzel-makers, then it has

Correct Answer
verified

Correct Answer
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A

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

Correct Answer
verified
Yes. Jen responded to the lowe...
View Answer

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 up to the point at which the price of output equals average variable cost.

Correct Answer
verified
False

Figure 18-6 -Refer to Figure 18-6. The graph above illustrates the market for bakers who make homemade breads and breakfast pastries. If the bakery profession becomes less attractive to young women and men because of news reports documenting health risks, what happens in the market for bakers?

Correct Answer
verified

When a competitive firm maximizes profit, it will hire workers up to the point where the

Correct Answer
verified

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 $8, how many workers would the firm employ if the weekly wage rate is $800?

Correct Answer
verified

If hiring more workers results in each additional worker contributing successively smaller amounts of output, then which of the following is present?

Correct Answer
verified

Changes in supply and demand in the labor market will cause changes in wages.

Correct Answer
verified

Table 18-B Consider the following daily production data for MadeFromScratch, Inc. MadeFromScratch sells cupcakes for $3 each and pays the workers a wage of $325 per day. -Refer to Table 18-B. Assuming MadeFromScratch is a competitive, profit-maximizing firm, how many workers will the firm hire?

Correct Answer
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The owners of capital resources are compensated according to the

Correct Answer
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Correct Answer
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The marginal product of the third mechan...
View Answer

Increases in productivity are not responsible for increased standards of living in the United States.

Correct Answer
verified

Exam 18: The Markets for the Factors of Production

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedC

Suppose medical research provides evidence that eating bananas provides far greater health benefits than was previously thought. The resulting increase in the demand for bananas

Correct AnswerverifiedShow Answer

Diminishing marginal product occurs when

Correct AnswerverifiedShow Answer

Which of the following would decrease the demand for labor? (i) A decrease in the output price (ii) An increase in the output price (iii) A labor-saving technological advance (iv) A labor-augmenting technological advance

Correct AnswerverifiedShow Answer

Suppose that a large lake in the middle of Minnesota evaporates, leaving more fertile farm land for growing corn available. Assuming that land and labor are complements in a farming production function, what would happen to the wages earned by workers and rents earned by landowners?

Correct AnswerverifiedShow Answer

A pretzel-stand owner in Chicago hires workers to make hot pretzels and sell them to customers. If the firm is competitive in both the market for pretzels and in the market for pretzel-makers, then it has

Correct AnswerverifiedShow Answer

Correct AnswerverifiedA

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

Correct AnswerverifiedYes. Jen responded to the lowe...View AnswerShow Answer

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 up to the point at which the price of output equals average variable cost.

Correct AnswerverifiedFalse

Figure 18-6 -Refer to Figure 18-6. The graph above illustrates the market for bakers who make homemade breads and breakfast pastries. If the bakery profession becomes less attractive to young women and men because of news reports documenting health risks, what happens in the market for bakers?

Correct AnswerverifiedShow Answer

When a competitive firm maximizes profit, it will hire workers up to the point where the

Correct AnswerverifiedShow Answer

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 $8, how many workers would the firm employ if the weekly wage rate is $800?

Correct AnswerverifiedShow Answer

If hiring more workers results in each additional worker contributing successively smaller amounts of output, then which of the following is present?

Correct AnswerverifiedShow Answer

Changes in supply and demand in the labor market will cause changes in wages.

Correct AnswerverifiedShow Answer

Table 18-B Consider the following daily production data for MadeFromScratch, Inc. MadeFromScratch sells cupcakes for $3 each and pays the workers a wage of $325 per day. -Refer to Table 18-B. Assuming MadeFromScratch is a competitive, profit-maximizing firm, how many workers will the firm hire?

Correct AnswerverifiedShow Answer

The owners of capital resources are compensated according to the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe marginal product of the third mechan...View AnswerShow Answer

Increases in productivity are not responsible for increased standards of living in the United States.

Correct AnswerverifiedShow Answer

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C

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A

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Yes. Jen responded to the lowe...
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False

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The marginal product of the third mechan...
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