Question 1

Suppose that the market for labor is initially in equilibrium.If the firm employs labor-saving technology,

Accepted Answer

A)   the equilibrium wage and the quantity of labor will both rise.
B)   the equilibrium wage and the quantity of labor will both fall.
C)   the equilibrium wage will rise and the quantity of labor will fall.
D)   the equilibrium wage will fall and the quantity of labor will rise.E) A) and B)
F) None of the above B

Question 2

A profit-maximizing competitive firm will hire workers up to the point at which the wage equals the marginal product of labor.

Accepted Answer

A) True 
 B)False

Question 3

The labor supply curve is fundamentally a representation of the trade-off people face between which of the following?

Accepted Answer

A)   Work and wage
B)   Work and leisure
C)   Wage and productivity
D)   Technology and wageE) None of the above
F) B) and C)

Question 4

Figure 18-6 1 to D2 could possibly be explained by A)  a change in workers' attitudes toward the work-leisure tradeoff. B)  decreases in wages in other labor markets. C)  an increase in the price of firms' output. D)  All of the above are correct." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 18-6.The shift of the labor demand curve from D1 to D2 could possibly be explained by

Accepted Answer

A)   a change in workers' attitudes toward the work-leisure tradeoff.
B)   decreases in wages in other labor markets.
C)   an increase in the price of firms' output.
D)   All of the above are correct.E) C) and D)
F) B) and D)

Question 5

Consider the market for capital equipment.Suppose the market price of firms' output decreases.Holding all else constant,what will happen to the equilibrium quantity of capital equipment?

Accepted Answer

A)   The equilibrium quantity of capital equipment increases.
B)   The equilibrium quantity of capital equipment decreases.
C)   The equilibrium quantity of capital equipment does not change.
D)   It is not possible to determine what will happen to the equilibrium quantity of capital equipment.E) C) and D)
F) B) and C)

Question 6

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 shape of the curve suggests the presence of

Accepted Answer

A)   an inverted production function.
B)   diminishing total product.
C)   increasing marginal product.
D)   diminishing marginal product.E) A) and B)
F) A) and C)

Question 7

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-augmenting technology
C)   a change in worker tastes so that workers want to retire later
D)   a decrease in the supply of other factors such as capitalE) B) and C)
F) A) and D) A

Question 8

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?

Accepted Answer

A)   The equilibrium wage increased and the equilibrium quantity of labor increased.
B)   The equilibrium wage increased and the equilibrium quantity of labor decreased.
C)   The equilibrium wage decreased and the equilibrium quantity of labor increased.
D)   The equilibrium wage decreased and the equilibrium quantity of labor decreased.E) C) and D)
F) B) and D)

Question 9

Who receives income from capital in the United States?

Accepted Answer

A)   Bank depositors
B)   Bondholders
C)   Stockholders
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 10

In the United States,technological advances help explain persistently rising employment in the face of rising wages.

Accepted Answer

A) True 
 B)False  True

Question 11

Technological advances can cause the labor demand curve to shift.

Accepted Answer

A) True 
 B)False

Question 12

Table 18-4
Consider the following daily production data for Wills Golf Balls.Wills sells golf balls for $2.50 cents each and pays the workers a wage of $325 per day.
 
-Refer to Table 18-4.Assume that Wills is a competitive,profit-maximizing firm.If the market price of golf balls decreases from $2.50 to $2.00,how many workers would the firm then hire?

Accepted Answer

A)   2 workers
B)   3 workers
C)   4 workers
D)   5 workersE) C) and D)
F) B) and C)

Question 13

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

Question 14

Suppose that the market for labor is initially in equilibrium.An increase in immigration will cause

Accepted Answer

A)   the equilibrium wage and the quantity of labor to both rise.
B)   the equilibrium wage and the quantity of labor to both fall.
C)   the equilibrium wage to rise and the quantity of labor to fall.
D)   the equilibrium wage to fall and the quantity of labor to rise.E) A) and B)
F) B) and C)

Question 15

Figure 18-4
This figure below shows the labor market for automobile workers.The curve labeled S is the labor supply curve,and the curves labeled D1 and D2 are the labor demand curves.On the horizontal axis,L represents the quantity of labor in the market. 1 and D2 are the labor demand curves.On the horizontal axis,L represents the quantity of labor in the market.   -Refer to Figure 18-4.Which of the following is a possible explanation of the shift of the labor-demand curve from D1 to D2? A)  The wage earned by automobile workers increased. B)  The price of automobiles increased. C)  The opportunity cost of leisure,as perceived by automobile workers,decreased. D)  Large segments of the population changed their tastes regarding leisure versus work." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 18-4.Which of the following is a possible explanation of the shift of the labor-demand curve from D1 to D2?

Accepted Answer

A)   The wage earned by automobile workers increased.
B)   The price of automobiles increased.
C)   The opportunity cost of leisure,as perceived by automobile workers,decreased.
D)   Large segments of the population changed their tastes regarding leisure versus work.E) B) and C)
F) None of the above

Question 16

Consider the market for university economics professors.Suppose the opportunity cost of going to graduate school to get a Ph.D.in economics decreases for many individuals.Since it generally takes about five years to get a Ph.D.in economics,holding all else constant,what will happen to the equilibrium wage for university economics professors in five years?

Accepted Answer

A)   The equilibrium wage will increase.
B)   The equilibrium wage will decrease.
C)   The equilibrium wage will not change.
D)   It is not possible to determine what will happen to the equilibrium wage.E) A) and D)
F) B) and C)

Question 17

Table 18-3
 
-When labor is the only input a firm uses,the marginal cost of a unit of output can be defined as

Accepted Answer

A)   the marginal revenue multiplied by the wage.
B)   the marginal product of labor multiplied by the wage.
C)   the wage divided by the marginal product of labor.
D)   the marginal product of labor divided by the wage.E) A) and D)
F) A) and C)

Question 18

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) C) and D)
F) A) and D)

Question 19

Suppose that in January a profit-maximizing firm has 25 employees.By February,the firm has decreased employment.One can infer that,when 25 employees are hired,the

Accepted Answer

A)   firm is losing market share.
B)   firm is minimizing losses.
C)   wage exceeds the value of the marginal product of labor.
D)   value of the marginal product of labor exceeds the wage.E) A) and D)
F) B) and C)

Question 20

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) A) and D)
F) B) and D)

Exam 18: The Markets for the Factors of Production

Suppose that the market for labor is initially in equilibrium.If the firm employs labor-saving technology,

Correct Answer
verified
B

A profit-maximizing competitive firm will hire workers up to the point at which the wage equals the marginal product of labor.

Correct Answer
verified

The labor supply curve is fundamentally a representation of the trade-off people face between which of the following?

Correct Answer
verified

Figure 18-6 -Refer to Figure 18-6.The shift of the labor demand curve from D₁ to D₂ could possibly be explained by

Correct Answer
verified

Consider the market for capital equipment.Suppose the market price of firms' output decreases.Holding all else constant,what will happen to the equilibrium quantity of capital equipment?

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 shape of the curve suggests the presence of

Correct Answer
verified

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

Correct Answer
verified
A

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?

Correct Answer
verified

Who receives income from capital in the United States?

Correct Answer
verified

In the United States,technological advances help explain persistently rising employment in the face of rising wages.

Correct Answer
verified
True

Technological advances can cause the labor demand curve to shift.

Correct Answer
verified

Correct Answer
verified

Owners of land are compensated according to the

Correct Answer
verified

Suppose that the market for labor is initially in equilibrium.An increase in immigration will cause

Correct Answer
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Correct Answer
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Correct Answer
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Table 18-3 -When labor is the only input a firm uses,the marginal cost of a unit of output can be defined as

Correct Answer
verified

The rental price of capital is

Correct Answer
verified

Suppose that in January a profit-maximizing firm has 25 employees.By February,the firm has decreased employment.One can infer that,when 25 employees are hired,the

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

Exam 18: The Markets for the Factors of Production

Suppose that the market for labor is initially in equilibrium.If the firm employs labor-saving technology,

Correct AnswerverifiedB

A profit-maximizing competitive firm will hire workers up to the point at which the wage equals the marginal product of labor.

Correct AnswerverifiedShow Answer

The labor supply curve is fundamentally a representation of the trade-off people face between which of the following?

Correct AnswerverifiedShow Answer

Figure 18-6 -Refer to Figure 18-6.The shift of the labor demand curve from D1 to D2 could possibly be explained by

Correct AnswerverifiedShow Answer

Consider the market for capital equipment.Suppose the market price of firms' output decreases.Holding all else constant,what will happen to the equilibrium quantity of capital equipment?

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 shape of the curve suggests the presence of

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedA

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?

Correct AnswerverifiedShow Answer

Who receives income from capital in the United States?

Correct AnswerverifiedShow Answer

In the United States,technological advances help explain persistently rising employment in the face of rising wages.

Correct AnswerverifiedTrue

Technological advances can cause the labor demand curve to shift.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Owners of land are compensated according to the

Correct AnswerverifiedShow Answer

Suppose that the market for labor is initially in equilibrium.An increase in immigration will cause

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 18-3 -When labor is the only input a firm uses,the marginal cost of a unit of output can be defined as

Correct AnswerverifiedShow Answer

The rental price of capital is

Correct AnswerverifiedShow Answer

Suppose that in January a profit-maximizing firm has 25 employees.By February,the firm has decreased employment.One can infer that,when 25 employees are hired,the

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

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B

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Figure 18-6 -Refer to Figure 18-6.The shift of the labor demand curve from D₁ to D₂ could possibly be explained by

Correct Answer
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Correct Answer
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A

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Correct Answer
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Correct Answer
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True

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Correct Answer
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