Question 1

Figure 18-2
The figure below shows the production function for a particular firm. 
-Refer to Figure 18-2. Suppose the firm pays a wage equal to $160 per unit of labor and sells its output at $10 per unit. What is the value of the marginal product of labor for the third worker?

Accepted Answer

A)   20 units
B)   $200
C)   $2,720
D)   $3,200E) A) and B)
F) A) and C)

Question 2

Which of the following is not correct?

Accepted Answer

A)   High-skilled immigration has many economic benefits.
B)   Each year in the United States, about one-third of the people earning a PhD. in science or engineering are foreign born.
C)   Low-skilled immigration lowers the earnings of native-born workers by 10-20 percent.
D)   Illegal immigrants may pay less in taxes, but they also are ineligible for many government benefits.E) A) and D)
F) B) and D)

Question 3

The labor-supply curve is affected by the trade-off between labor and leisure.

Accepted Answer

A) True 
 B)False

Question 4

The marginal product of land depends on the quantity of land that is available.

Accepted Answer

A) True 
 B)False

Question 5

Consider the market for capital equipment. Suppose the price of firms' output increases. Holding all else constant, the equilibrium rental price of capital equipment will

Accepted Answer

A)   increase.
B)   decrease.
C)   not change.
D)   It is not possible to determine what will happen to the equilibrium rental price of capital equipment.E) C) and D)
F) A) and D)

Question 6

If your wage increases from $10 per hour to $15 per hour, then your

Accepted Answer

A)   opportunity cost of an hour of leisure decreases by $5 per hour.
B)   opportunity cost of an hour of leisure increases by $5 per hour.
C)   out-of-pocket cost of an hour of leisure decreases by $5 per hour.
D)   out-of-pocket cost of an hour of leisure increases by $5 per hour.E) C) and D)
F) None of the above

Question 7

Figure 18-4
The graph below illustrates the market for nurses who work in doctors' offices. 
-Refer to Figure 18-4. If doctors' offices adopt new labor­augmenting technologies, what happens in the market for nurses?

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) B) and D)
F) All of the above

Question 8

For profit-maximizing, competitive firms, the demand curve for each factor of production equals the value of the marginal product of that factor.

Accepted Answer

A) True 
 B)False

Question 9

Figure 18-6 
-Refer to Figure 18-6. The graph above illustrates the market for bakers who make homemade breads and breakfast pastries in Northern Minnesota. If Northern Minnesota experiences an increase in immigration from Canada, 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) All of the above
F) None of the above

Question 10

Because of diminishing returns, a factor in relatively low supply has a

Accepted Answer

A)   low marginal product and a low rental price.
B)   low marginal product and a high rental price.
C)   high marginal product and a low rental price.
D)   high marginal product and a high rental price.E) C) and D)
F) All of the above

Question 11

The value of the marginal product of labor is equal to the change in

Accepted Answer

A)   marginal cost caused by the addition of the last worker.
B)   total cost caused by the addition of the last worker.
C)   total revenue caused by the addition of the last worker.
D)   total profit caused by the addition of the last worker.E) B) and D)
F) A) and D)

Question 12

Figure 18-9 
-Refer to Figure 18-9. If the price of apples decreases, the equilibrium wage will

Accepted Answer

A)   increase, and more apple pickers will be hired.
B)   decrease, and more apple pickers will be hired.
C)   increase, and fewer apple pickers will be hired.
D)   decrease, and fewer apple pickers will be hired.E) B) and C)
F) A) and D)

Question 13

An event that changes the supply of any factor of production can alter the earnings of all the factors.

Accepted Answer

A) True 
 B)False

Question 14

A worker's contribution to a firm's revenue is measured directly by the worker's

Accepted Answer

A)   marginal product.
B)   value of marginal product.
C)   marginal product multiplied by the worker's wage.
D)   value of marginal product multiplied by the output price.E) None of the above
F) B) and C)

Question 15

A competitive, profit-maximizing firm hires workers up to the point where the

Accepted Answer

A)   marginal product equals zero.
B)   marginal revenue product equals zero.
C)   marginal product equals the wage.
D)   value of the marginal product equals the wage.E) A) and D)
F) None of the above

Question 16

Jessica receives a raise at her current part-time job from $9 to $11 per hour. If her labor supply curve is backward sloping, she will work fewer hours after receiving the pay raise.

Accepted Answer

A) True 
 B)False

Question 17

Table 18-3
 
-Refer to Table 18-3. Which firm's production function exhibits constant marginal product?

Accepted Answer

A)   Firm A
B)   Firm B
C)   Firm C
D)   Firm DE) All of the above
F) B) and D)

Question 18

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) A) and B)
F) A) and C)

Question 19

If a firm is able to charge a higher price for its output, all else equal, the value of the marginal product of labor will decrease to offset the higher price.

Accepted Answer

A) True 
 B)False

Question 20

A change in the supply of any one factor alters the earnings of all the other factors.

Accepted Answer

A) True 
 B)False

Exam 18: The Markets for the Factors of Production

For profit-maximizing, competitive firms, the demand curve for each factor of production equals the value of the marginal product of that factor.

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A competitive, profit-maximizing firm hires workers up to the point where the

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If your wage increases from $10 per hour to $15 per hour, then your

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Figure 18-4 The graph below illustrates the market for nurses who work in doctors' offices. -Refer to Figure 18-4. If doctors' offices adopt new labor­augmenting technologies, what happens in the market for nurses?

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Figure 18-2 The figure below shows the production function for a particular firm. -Refer to Figure 18-2. Suppose the firm pays a wage equal to $160 per unit of labor and sells its output at $10 per unit. What is the value of the marginal product of labor for the third worker?

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If a firm is able to charge a higher price for its output, all else equal, the value of the marginal product of labor will decrease to offset the higher price.

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A worker's contribution to a firm's revenue is measured directly by the worker's

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Jessica receives a raise at her current part-time job from $9 to $11 per hour. If her labor supply curve is backward sloping, she will work fewer hours after receiving the pay raise.

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Consider the market for capital equipment. Suppose the price of firms' output increases. Holding all else constant, the equilibrium rental price of capital equipment will

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Which of the following is not correct?

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Figure 18-9 -Refer to Figure 18-9. If the price of apples decreases, the equilibrium wage will

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The marginal product of land depends on the quantity of land that is available.

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Figure 18-6 -Refer to Figure 18-6. The graph above illustrates the market for bakers who make homemade breads and breakfast pastries in Northern Minnesota. If Northern Minnesota experiences an increase in immigration from Canada, what happens in the market for bakers?

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The value of the marginal product of labor is equal to the change in

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Because of diminishing returns, a factor in relatively low supply has a

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Which of the following statements is correct?

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A change in the supply of any one factor alters the earnings of all the other factors.

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The labor-supply curve is affected by the trade-off between labor and leisure.

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Table 18-3 -Refer to Table 18-3. Which firm's production function exhibits constant marginal product?

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An event that changes the supply of any factor of production can alter the earnings of all the factors.

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Figure 18-4 The graph below illustrates the market for nurses who work in doctors' offices. -Refer to Figure 18-4. If doctors' offices adopt new laboraugmenting technologies, what happens in the market for nurses?

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