Question 1

Table 18-5
 
-Refer to Table 18-5.What is the fourth worker's marginal revenue product?

Accepted Answer

A)   -$100
B)   $40
C)   $400
D)   $500E) B) and D)
F) None of the above

Question 2

The rental price of capital is the price a person pays to own the capital indefinitely.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements is correct?

Accepted Answer

A)   Neither economic theory nor evidence from the U.S.economy suggests that there is a close link between productivity and real wages.
B)   Economic theory suggests that there is a close link between productivity and real wages,but evidence from the U.S.economy fails to confirm that link.
C)   Evidence from the U.S.economy suggests a close link between productivity and real wages,but economic theory provides no basis for such a link.
D)   Both economic theory and evidence from the U.S.economy suggest that there is a close link between productivity and real wages.E) B) and D)
F) B) and C)

Question 4

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

Accepted Answer

A)   always rising.
B)   falling only when marginal product is rising.
C)   the labor supply curve.
D)   the labor demand curve.E) A) and B)
F) A) and C)

Question 5

The term Luddite refers to "tekkies" or people who are the first to adopt new technological advances.

Accepted Answer

A) True 
 B)False

Question 6

A profit-maximizing,competitive firm for which the marginal product of labor is diminishing also experiences

Accepted Answer

A)   a perfectly inelastic supply of labor.
B)   a perfectly elastic supply of labor.
C)   a downward-sloping demand for labor.
D)   an upward-sloping demand for labor.E) B) and C)
F) A) and B)

Question 7

Both theory and history point to a close relationship between increases in

Accepted Answer

A)   labor demand and increases in labor supply.
B)   labor demand and decreases in real wages.
C)   the productivity of labor and increases in real wages.
D)   interest rates and decreases in real wages.E) A) and B)
F) A) and C)

Question 8

An increase in population can be expected to

Accepted Answer

A)   increase the marginal product of land.
B)   decrease the supply of land.
C)   decrease the rents on land.
D)   decrease the demand for land.E) A) and C)
F) B) and C)

Question 9

For competitive firms,the curve that represents the value of marginal product of labor is the same as the demand for labor curve.

Accepted Answer

A) True 
 B)False

Question 10

Consider the labor market for computer programmers.Because of the dot.com boom in the late 1990s,a lot of workers went to school to learn how to write computer code for one of thousands of new dot.com companies.However,when these computer programming students graduated the dot.com bust took place.The dot.com bust decreased the value of the marginal product of computer programmers.Holding all else equal what effect did these two circumstances have on the equilibrium quantity in the labor market for computer programmers?

Accepted Answer

A)   The equilibrium quantity of labor increased.
B)   The equilibrium quantity of labor decreased.
C)   The equilibrium quantity of labor did not change.
D)   It is not possible to determine what happens to the equilibrium quantity of labor.E) B) and D)
F) A) and C)

Question 11

For a competitive firm experiencing diminishing marginal productivity,the value of the marginal product

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) A) and C)

Question 12

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.Suppose the firm sells its output for $15 per unit,and it pays each of its workers $750 per week.When output increases from 210 units to 285 units,

Accepted Answer

A)   the marginal cost is $10 per unit of output.
B)   the marginal revenue is $5 per unit of output.
C)   the value of the marginal product of labor is $4,275
D)   the firm's profit decreases.E) A) and B)
F) B) and C)

Question 13

Figure 18-2.The figure shows a particular firm's value-of-marginal-product (VMP) curve.On the horizontal axis,L represents the number of workers.The time frame is daily. 
-Refer to Figure 18-2.The firm would choose to hire three workers if

Accepted Answer

A)   the market wage for a day's work is $220.
B)   the market wage for a day's work is $260.
C)   the output price is $220.
D)   the output price is $260.E) B) and C)
F) A) and B)

Question 14

How much of the income in the United States is earned by workers in the form of wages and fringe benefits?

Accepted Answer

A)   about 25 percent
B)   about 50 percent
C)   about 75 percent
D)   about 87 percentE) None of the above
F) A) and C)

Question 15

Consider the market for capital equipment.Suppose the value of the marginal product of capital equipment increases.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) B) and C)
F) C) and D)

Question 16

Competitive firms that maximize profit will hire workers until the value of the marginal product of labor

Accepted Answer

A)   equals the wage.
B)   equals the price of the final good.
C)   begins to fall.
D)   begins to rise.E) A) and C)
F) None of the above

Question 17

Describe the difference between the purchase price of capital and the rental price of capital.If you know the value of marginal product from the flow of capital services,how would you determine the market price for the capital stock?

Accepted Answer

The purchase price of capital is a refle...

Question 18

When a firm maximizes profit,

Accepted Answer

A)   it will hire workers up to the point where the marginal product of labor is equal to the product price.
B)   it will hire workers up to the point where the marginal product of labor is equal to the wage.
C)   it will hire workers up to the point where the value of the marginal product of labor is equal to the product price.
D)   it will hire workers up to the point where the value of the marginal product of labor is equal to the wage.E) C) and D)
F) None of the above

Question 19

In a competitive market for labor,the equilibrium wage always equals the value of the marginal product.

Accepted Answer

A) True 
 B)False

Question 20

"The firm hires the factor up to the point where the value of the factor's marginal product is equal to the factor's price." This statement applies to which factor of production?

Accepted Answer

A)   Labor
B)   Land
C)   Capital
D)   All of the above are correct.E) A) and D)
F) A) and B)

Exam 18: The Markets for the Factors of Production

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

Correct Answer
verified

"The firm hires the factor up to the point where the value of the factor's marginal product is equal to the factor's price." This statement applies to which factor of production?

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

Correct Answer
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For a competitive firm experiencing diminishing marginal productivity,the value of the marginal product

Correct Answer
verified

Both theory and history point to a close relationship between increases in

Correct Answer
verified

Figure 18-2.The figure shows a particular firm's value-of-marginal-product (VMP) curve.On the horizontal axis,L represents the number of workers.The time frame is daily. -Refer to Figure 18-2.The firm would choose to hire three workers if

Correct Answer
verified

In a competitive market for labor,the equilibrium wage always equals the value of the marginal product.

Correct Answer
verified

An increase in population can be expected to

Correct Answer
verified

The rental price of capital is the price a person pays to own the capital indefinitely.

Correct Answer
verified

Consider the market for capital equipment.Suppose the value of the marginal product of capital equipment increases.Holding all else constant,what will happen to the equilibrium quantity of capital equipment?

Correct Answer
verified

When a firm maximizes profit,

Correct Answer
verified

Describe the difference between the purchase price of capital and the rental price of capital.If you know the value of marginal product from the flow of capital services,how would you determine the market price for the capital stock?

Correct Answer
verified
The purchase price of capital is a refle...
View 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.Suppose the firm sells its output for $15 per unit,and it pays each of its workers $750 per week.When output increases from 210 units to 285 units,

Correct Answer
verified

The term Luddite refers to "tekkies" or people who are the first to adopt new technological advances.

Correct Answer
verified

Table 18-5 -Refer to Table 18-5.What is the fourth worker's marginal revenue product?

Correct Answer
verified

For competitive firms,the curve that represents the value of marginal product of labor is the same as the demand for labor curve.

Correct Answer
verified

A profit-maximizing,competitive firm for which the marginal product of labor is diminishing also experiences

Correct Answer
verified

Competitive firms that maximize profit will hire workers until the value of the marginal product of labor

Correct Answer
verified

How much of the income in the United States is earned by workers in the form of wages and fringe benefits?

Correct Answer
verified

Exam 18: The Markets for the Factors of Production

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

Correct AnswerverifiedShow Answer

"The firm hires the factor up to the point where the value of the factor's marginal product is equal to the factor's price." This statement applies to which factor of production?

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

For a competitive firm experiencing diminishing marginal productivity,the value of the marginal product

Correct AnswerverifiedShow Answer

Both theory and history point to a close relationship between increases in

Correct AnswerverifiedShow Answer

Figure 18-2.The figure shows a particular firm's value-of-marginal-product (VMP) curve.On the horizontal axis,L represents the number of workers.The time frame is daily. -Refer to Figure 18-2.The firm would choose to hire three workers if

Correct AnswerverifiedShow Answer

In a competitive market for labor,the equilibrium wage always equals the value of the marginal product.

Correct AnswerverifiedShow Answer

An increase in population can be expected to

Correct AnswerverifiedShow Answer

The rental price of capital is the price a person pays to own the capital indefinitely.

Correct AnswerverifiedShow Answer

Consider the market for capital equipment.Suppose the value of the marginal product of capital equipment increases.Holding all else constant,what will happen to the equilibrium quantity of capital equipment?

Correct AnswerverifiedShow Answer

When a firm maximizes profit,

Correct AnswerverifiedShow Answer

Describe the difference between the purchase price of capital and the rental price of capital.If you know the value of marginal product from the flow of capital services,how would you determine the market price for the capital stock?

Correct AnswerverifiedThe purchase price of capital is a refle...View AnswerShow 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.Suppose the firm sells its output for $15 per unit,and it pays each of its workers $750 per week.When output increases from 210 units to 285 units,

Correct AnswerverifiedShow Answer

The term Luddite refers to "tekkies" or people who are the first to adopt new technological advances.

Correct AnswerverifiedShow Answer

Table 18-5 -Refer to Table 18-5.What is the fourth worker's marginal revenue product?

Correct AnswerverifiedShow Answer

For competitive firms,the curve that represents the value of marginal product of labor is the same as the demand for labor curve.

Correct AnswerverifiedShow Answer

A profit-maximizing,competitive firm for which the marginal product of labor is diminishing also experiences

Correct AnswerverifiedShow Answer

Competitive firms that maximize profit will hire workers until the value of the marginal product of labor

Correct AnswerverifiedShow Answer

How much of the income in the United States is earned by workers in the form of wages and fringe benefits?

Correct AnswerverifiedShow Answer

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The purchase price of capital is a refle...
View Answer

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