Question 1

The term Luddite is used to describe

Accepted Answer

A)  a person who readily adopts the latest technological advances.
B)  a person who fears computers.
C)  a person who opposes technological advances.
D)  any mythical historical figure.E) C) and D)
F) B) and D)

Question 2

A Luddite would be expected to fear

Accepted Answer

A)  labor-saving technologies.
B)  labor-augmenting technologies.
C)  supply-shifting technologies.
D)  the Chairman of the Federal Reserve.E) A) and B)
F) B) and C)

Question 3

Suppose that technological progress increases the productivity of teachers.Which of the following accurately describes the labor market for teachers after the technological change?

Accepted Answer

A)  Wages will rise, and quantity of teachers employed will fall.
B)  Wages will rise, and the quantity of teachers employed will rise.
C)  Wages will fall, and the quantity of teachers employed will fall.
D)  Wages will fall, and the quantity of teachers employed will rise.E) A) and C)
F) None of the above

Question 4

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) B) and C)
F) None of the above

Question 5

Figure 18-4
 
-Refer to Figure 18-4.If the relevant labor demand curve is D₂ and the current wage is W₁,

Accepted Answer

A)  there is a surplus of labor.
B)  there is a shortage of labor.
C)  the quantity of labor supplied exceeds the quantity of labor demanded.
D)  workers are failing to take into account the work-leisure tradeoff in deciding what quantity of labor to supply at alternative wages.E) A) and D)
F) None of the above

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

When firms are able to increase the amount of physical capital available to workers,the

Accepted Answer

A)  marginal product of labor will decrease.
B)  value of the marginal product of labor will decrease.
C)  value of the marginal product of labor will increase.
D)  final product price will increase.E) A) and C)
F) All of the above

Question 8

Using the theory of wage determination,explain why wages in developing countries are typically quite low.

Accepted Answer

Wages are determined by the value of wor...

Question 9

The quantity available of one factor of production can affect the marginal product of other factors.

Accepted Answer

A) True 
 B)False

Question 10

Bill is trying to convince the owner of a pizza shop to hire him.He argues that he could help the shop sell an additional five pizzas per day at the market price of $8 each.If the facts are not in dispute,but the owner does not hire him,then

Accepted Answer

A)  the wage rate must be less than $40 per day.
B)  hiring Bill would involve a negative marginal product.
C)  the wage rate must be more than $40 per day.
D)  the wage rate must be less than $8 per day.E) A) and C)
F) None of the above

Question 11

For a competitive firm experiencing diminishing marginal productivity,the value of the marginal product (i) 	increases when the price of output decreases.
(ii) 	changes when marginal product changes.
(iii) 	diminishes as the number of workers rises.

Accepted Answer

A)  (i)  and (ii) 
B)  (i)  and (iii) 
C)  (ii)  and (iii) 
D)  All of the above are correct.E) B) and C)
F) B) and D)

Question 12

For a retail gasoline station,which of the following would qualify as capital? (i) 	the gas tanks and pumps
(ii) 	the service attendants' time
(iii) 	the plot of land on which the station sits

Accepted Answer

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

Question 13

Which of the following events would lead to an increase in the supply of labor?

Accepted Answer

A)  The price of a firm's product increases.
B)  A country experiences an increase in immigrant labor.
C)  The wage rate increases.
D)  All of the above are correct.E) B) and C)
F) All of the above

Question 14

Factor markets are different from product markets in an important way because

Accepted Answer

A)  equilibrium is the exception, and not the rule, in factor markets.
B)  the demand for a factor of production is a derived demand.
C)  the demand for a factor of production is likely to be upward sloping, in violation of the law of demand.
D)  All of the above are correct.E) All of the above
F) None of the above

Question 15

The rental price of capital is

Accepted Answer

A)  determined outside the realm of factor markets.
B)  the price paid to use capital for a limited time period.
C)  the price paid for ownership of the capital.
D)  always more than the purchase price.E) A) and C)
F) B) and C)

Question 16

A recent flood in the Midwest has destroyed much of the farmland that lies in fertile regions near the rivers.Describe the effect of the flood on the marginal productivity of land,labor,and capital.How would the flood affect the price of inputs? Provide some examples.

Accepted Answer

The flood would increase the marginal pr...

Question 17

Consider the labor market for heath care workers,which is in equilibrium.Because of the aging population in the United States,the output price for health care services has increased.Holding all else equal,what effect does this have on the labor market for health care employees?

Accepted Answer

A)  The equilibrium wage increases, and the equilibrium quantity of labor increases.
B)  The equilibrium wage increases, and the equilibrium quantity of labor decreases.
C)  The equilibrium wage decreases, and the equilibrium quantity of labor increases.
D)  The equilibrium wage decreases, and the equilibrium quantity of labor decreases.E) All of the above
F) A) and B)

Question 18

If a firm experiences diminishing marginal productivity of labor,the marginal product

Accepted Answer

A)  increases as total product increases.
B)  decreases as total product increases.
C)  increases as total product decreases.
D)  decreases as total product decreases.E) A) and C)
F) C) and D)

Question 19

The Black Death in fourteenth-century Europe resulted in

Accepted Answer

A)  a lower marginal product of land.
B)  a lower marginal product of labor of surviving workers.
C)  economic hardship for surviving peasants.
D)  economic prosperity for surviving landowners.E) A) and B)
F) B) and C)

Question 20

When we focus on the firm as a supplier of a good or a service,we assume that the firm is a profit maximizer.When we focus on the firm as a demander of labor,we assume that the firm's objective is to

Accepted Answer

A)  minimize wages.
B)  minimize variable costs.
C)  maximize the number of workers hired.
D)  maximize profit.E) A) and B)
F) A) and C)

Exam 18: The Markets for the Factors of Production

The rental price of capital is

Correct AnswerverifiedShow Answer

The quantity available of one factor of production can affect the marginal product of other factors.

Correct AnswerverifiedShow Answer

If a firm experiences diminishing marginal productivity of labor,the marginal product

Correct AnswerverifiedShow Answer

Suppose that technological progress increases the productivity of teachers.Which of the following accurately describes the labor market for teachers after the technological change?

Correct AnswerverifiedShow Answer

Factor markets are different from product markets in an important way because

Correct AnswerverifiedShow Answer

A recent flood in the Midwest has destroyed much of the farmland that lies in fertile regions near the rivers.Describe the effect of the flood on the marginal productivity of land,labor,and capital.How would the flood affect the price of inputs? Provide some examples.

Correct AnswerverifiedThe flood would increase the marginal pr...View AnswerShow Answer

Consider the labor market for heath care workers,which is in equilibrium.Because of the aging population in the United States,the output price for health care services has increased.Holding all else equal,what effect does this have on the labor market for health care employees?

Correct AnswerverifiedShow Answer

Which of the following events would lead to an increase in the supply of labor?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A Luddite would be expected to fear

Correct AnswerverifiedShow Answer

For a retail gasoline station,which of the following would qualify as capital? (i) the gas tanks and pumps (ii) the service attendants' time (iii) the plot of land on which the station sits

Correct AnswerverifiedShow Answer

For a competitive firm experiencing diminishing marginal productivity,the value of the marginal product (i) increases when the price of output decreases. (ii) changes when marginal product changes. (iii) diminishes as the number of workers rises.

Correct AnswerverifiedShow Answer

Figure 18-4 -Refer to Figure 18-4.If the relevant labor demand curve is D₂ and the current wage is W₁,

Correct AnswerverifiedShow Answer

Bill is trying to convince the owner of a pizza shop to hire him.He argues that he could help the shop sell an additional five pizzas per day at the market price of $8 each.If the facts are not in dispute,but the owner does not hire him,then

Correct AnswerverifiedShow Answer

The term Luddite is used to describe

Correct AnswerverifiedShow Answer

The Black Death in fourteenth-century Europe resulted in

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When we focus on the firm as a supplier of a good or a service,we assume that the firm is a profit maximizer.When we focus on the firm as a demander of labor,we assume that the firm's objective is to

Correct AnswerverifiedShow Answer

Using the theory of wage determination,explain why wages in developing countries are typically quite low.

Correct AnswerverifiedWages are determined by the value of wor...View AnswerShow Answer

When firms are able to increase the amount of physical capital available to workers,the

Correct AnswerverifiedShow Answer

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The flood would increase the marginal pr...
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Wages are determined by the value of wor...
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