Question 1

Assuming labor is the only variable factor of production, production of a good will not occur

Accepted Answer

A)  as long as the marginal revenue product of labor is positive. 
B)  if society values a good less than it costs firms to hire the workers to produce the good. 
C)  as long as the productʹs price is less than the marginal revenue product of labor. 
D)  if the marginal cost of a unit of output equals the marginal revenue product of labor. 
A)  as long as the marginal revenue product of labor is positive. 
B)  if society values a good less than it costs firms to hire the workers to produce the good. 
C)  as long as the productʹs price is less than the marginal revenue product of labor. 
D)  if the marginal cost of a unit of output equals the marginal revenue product of labor.

Question 2

If land becomes more valuable in residential use than in commercial use,

Accepted Answer

A)  the supply of land available for commercial use should decrease and the supply of land for residential use should increase. 
B)  there can be no change in the allocation of land because land is fixed in supply. 
C)  there will be no change in the allocation of land, as there is no responsiveness to price changes by suppliers of land. 
D)  the supply of land for commercial use will become perfectly elastic, and the supply of land for residential use will become perfectly inelastic. 
A)  the supply of land available for commercial use should decrease and the supply of land for residential use should increase. 
B)  there can be no change in the allocation of land because land is fixed in supply. 
C)  there will be no change in the allocation of land, as there is no responsiveness to price changes by suppliers of land. 
D)  the supply of land for commercial use will become perfectly elastic, and the supply of land for residential use will become perfectly inelastic.

Question 3

The idea that the demand for auto workers stems from the demand for automobiles is

Accepted Answer

A)  the value of the marginal product of auto workers. 
B)  derived demand. 
C)  indirect demand. 
D)  output demand. 
A)  the value of the marginal product of auto workers. 
B)  derived demand. 
C)  indirect demand. 
D)  output demand.

Question 4

Related to the Economics in Practice on page 216: According to the survey discussed in the Economics in Practice,

Accepted Answer

A)  most people were not willing to give up wages to get flex time at work. 
B)  people were only willing to give up wages if they had 100 percent flex time at work. 
C)  more than 50 percent of people were willing to give up wages to get flex time at work. 
D)  almost everyone was willing to give up wages, but almost none were willing to give up other benefits, to get flex time at work. 
A)  most people were not willing to give up wages to get flex time at work. 
B)  people were only willing to give up wages if they had 100 percent flex time at work. 
C)  more than 50 percent of people were willing to give up wages to get flex time at work. 
D)  almost everyone was willing to give up wages, but almost none were willing to give up other benefits, to get flex time at work.

Question 5

The Ernie Egg Store hires workers to paint eggs. The store sells the eggs for $3. The marginal revenue product of this store's fifth worker is $21. The marginal product of the fifth worker is

Accepted Answer

A)  0.14 eggs. 
B)  7 eggs. 
C)  36 eggs. 
D)  indeterminate from this information. 
A)  0.14 eggs. 
B)  7 eggs. 
C)  36 eggs. 
D)  indeterminate from this information.

Question 6

Assume that labor is the only variable input and that the payment made to labor is denoted as W. The marginal product of labor can be stated as

Accepted Answer

A)  (W) × (M
C) . 
B)  W/MC. 
C)  MC/W. 
D)  TC/W. 
A)  (W) × (M
C) . 
B)  W/MC. 
C)  MC/W. 
D)  TC/W.

Question 7

When a large amount of output is produced per unit of the input, the input is said to exhibit

Accepted Answer

A)  high productivity. 
B)  low productivity. 
C)  marginal productivity. 
D)  derived productivity. 
A)  high productivity. 
B)  low productivity. 
C)  marginal productivity. 
D)  derived productivity.

Question 8

When a small amount of output is produced per unit of the input, the input is said to exhibit

Accepted Answer

A)  high productivity. 
B)  low productivity. 
C)  marginal productivity. 
D)  derived productivity. 
A)  high productivity. 
B)  low productivity. 
C)  marginal productivity. 
D)  derived productivity.

Question 9

Pookie's Pool Cleaning Service uses only one variable input, chlorine. Pookieʹs ________ curve for chlorine in the short run is the inputʹs marginal revenue product curve.

Accepted Answer

A)  total product 
B)  marginal product 
C)  demand 
D)  supply 
A)  total product 
B)  marginal product 
C)  demand 
D)  supply

Question 10

A firm is currently hiring capital and labor so that MPL/PL K/PK. If the firm wishes to maximize profits it should hire

Accepted Answer

A)  less labor and less capital. 
B)  more capital and more labor. 
C)  more labor and less capital. 
D)  less labor and more capital. 
A)  less labor and less capital. 
B)  more capital and more labor. 
C)  more labor and less capital. 
D)  less labor and more capital.

Question 11

The demand for ________ is a ʺderived demand.ʺ

Accepted Answer

A)  hot chocolate on a cold day 
B)  U.S. Treasury bonds 
C)  a dog groomer by a grooming shop 
D)  hot dogs on the 4th of July 
A)  hot chocolate on a cold day 
B)  U.S. Treasury bonds 
C)  a dog groomer by a grooming shop 
D)  hot dogs on the 4th of July

Question 12

Refer to the data provided in Table 10.1 below to answer the following question(s).
Table 10.1 $$\begin{array}{l}
\text { Total Labor Units } \quad \text { Total Product } \quad \text { Marginal Product of Price per }\
\begin{array} { c c c c } 
\text { (employees) } & \text { (T-shirts per day) } & \text { Labor (per day) } & \text { T-shirt } \
\hline 0 & 0 & - & - \
1 & 20 & 20 & \$ 5 \
2 & 50 & 30 & 5 \
3 & 75 & 25 & 5 \
4 & 95 & 20 & 5 \
5 & 110 & 15 & 5
\end{array}
\end{array}$$
-Refer to Table 10.1. The marginal revenue product of the third worker is

Accepted Answer

A)  $5. 
B)  $25. 
C)  $125. 
D)  $375. 
A)  $5. 
B)  $25. 
C)  $125. 
D)  $375.

Question 13

The supply curve for land is vertical.

Accepted Answer

A) True 
 B)False

Question 14

Related to the Economics in Practice on page 216: According to the survey discussed in the Economics in Practice,

Accepted Answer

A)  workers were not willing to give up any of their wages to avoid employer discretion in hours. 
B)  workers were willing to give up other benefits, but not their wages, to avoid employer discretion in hours. 
C)  workers were willing to give up 20 percent of their wages to avoid employer discretion in hours. 
D)  almost all workers were willing to give up over 50 percent of their wages, but almost none were willing to give up other benefits, to avoid employer discretion in hours. 
A)  workers were not willing to give up any of their wages to avoid employer discretion in hours. 
B)  workers were willing to give up other benefits, but not their wages, to avoid employer discretion in hours. 
C)  workers were willing to give up 20 percent of their wages to avoid employer discretion in hours. 
D)  almost all workers were willing to give up over 50 percent of their wages, but almost none were willing to give up other benefits, to avoid employer discretion in hours.

Question 15

Demand for the services of Los Angeles Dodgers' pitcher Clayton Kershaw is

Accepted Answer

A)  horizontal. 
B)  unrelated to his true productivity. 
C)  an output demand. 
D)  derived from the demand for Los Angeles Dodgers' tickets when Kershaw plays. 
A)  horizontal. 
B)  unrelated to his true productivity. 
C)  an output demand. 
D)  derived from the demand for Los Angeles Dodgers' tickets when Kershaw plays.

Question 16

A soybean farmer sells soybeans in a perfectly competitive market and hires labor in a perfectly competitive market. The market price of soybeans is $10 a bushel, the wage rate is $15, the farmer employs eleven workers and the marginal product of the eleventh worker is 18. What would you advise this farmer to do?

Accepted Answer

A)  Do nothing because the wage rate and the marginal product of the last worker hired are equal. 
B)  Reduce employment because the wage paid is greater than the marginal revenue product. 
C)  Increase employment because the wage paid is less than the marginal revenue product. 
D)  Reduce the product price so that the wage and marginal revenue product will be equal. 
A)  Do nothing because the wage rate and the marginal product of the last worker hired are equal. 
B)  Reduce employment because the wage paid is greater than the marginal revenue product. 
C)  Increase employment because the wage paid is less than the marginal revenue product. 
D)  Reduce the product price so that the wage and marginal revenue product will be equal.

Question 17

Refer to the information provided in Figure 10.3 below to answer the question(s) that follow.   Figure 10.3
-Refer to Figure 10.3. The market wage is initially W0 and the firm is initially at Point A. Labor supply decreases from S0 to S1. After the firm is fully able to adjust all inputs, the firm will hire ________ units of labor to maximize profits.

Accepted Answer

A)  I0 
B)  I1 
C)  I2 
D)  I3 
A)  I0 
B)  I1 
C)  I2 
D)  I3

Question 18

Refer to the information provided in Figure 10.2 below to answer the question(s) that follow.   Figure 10.2
-Refer to Figure 10.2. This firm's marginal cost curve has shifted from MC0 to MC1. A profit-maximizing firm should ________ the amount of output produced and ________ its demand for labor.

Accepted Answer

A)  increase; increase 
B)  increase; decrease 
C)  decrease; decrease 
D)  keep constant; increase 
A)  increase; increase 
B)  increase; decrease 
C)  decrease; decrease 
D)  keep constant; increase

Question 19

Which if the following is the best example of derived demand?

Accepted Answer

A)  Janice got a Samsung Galaxy Tab for her birthday, and now her best friend Tamika wants one for her birthday. 
B)  The demand for movie theater ushers increases when more consumers choose to go to movie theaters. 
C)  More peanut butter is demanded as the price of strawberry jam falls. 
D)  When the price of Honda Accords increased, the demand for Nissan Altimas went up. 
A)  Janice got a Samsung Galaxy Tab for her birthday, and now her best friend Tamika wants one for her birthday. 
B)  The demand for movie theater ushers increases when more consumers choose to go to movie theaters. 
C)  More peanut butter is demanded as the price of strawberry jam falls. 
D)  When the price of Honda Accords increased, the demand for Nissan Altimas went up.

Question 20

Productivity of an input is the amount of output produced per unit of input.

Accepted Answer

A) True 
 B)False

Assuming labor is the only variable factor of production, production of a good will not occur

If land becomes more valuable in residential use than in commercial use,

The idea that the demand for auto workers stems from the demand for automobiles is

Related to the Economics in Practice on page 216: According to the survey discussed in the Economics in Practice,

The Ernie Egg Store hires workers to paint eggs. The store sells the eggs for $3. The marginal revenue product of this store's fifth worker is $21. The marginal product of the fifth worker is

Assume that labor is the only variable input and that the payment made to labor is denoted as W. The marginal product of labor can be stated as

When a large amount of output is produced per unit of the input, the input is said to exhibit

When a small amount of output is produced per unit of the input, the input is said to exhibit

Pookie's Pool Cleaning Service uses only one variable input, chlorine. Pookieʹs ________ curve for chlorine in the short run is the inputʹs marginal revenue product curve.

A firm is currently hiring capital and labor so that MP_L/P_L < MP_K/P_K. If the firm wishes to maximize profits it should hire

The demand for ________ is a ʺderived demand.ʺ

The supply curve for land is vertical.

Related to the Economics in Practice on page 216: According to the survey discussed in the Economics in Practice,

Demand for the services of Los Angeles Dodgers' pitcher Clayton Kershaw is

Refer to the information provided in Figure 10.2 below to answer the question(s) that follow. Figure 10.2 -Refer to Figure 10.2. This firm's marginal cost curve has shifted from MC₀ to MC₁. A profit-maximizing firm should the amount of output produced and its demand for labor.

Which if the following is the best example of derived demand?

Productivity of an input is the amount of output produced per unit of input.

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

Exam 10: Input Demand: the Labor and Land Markets

Assuming labor is the only variable factor of production, production of a good will not occur

If land becomes more valuable in residential use than in commercial use,

The idea that the demand for auto workers stems from the demand for automobiles is

Related to the Economics in Practice on page 216: According to the survey discussed in the Economics in Practice,

The Ernie Egg Store hires workers to paint eggs. The store sells the eggs for $3. The marginal revenue product of this store's fifth worker is $21. The marginal product of the fifth worker is

Assume that labor is the only variable input and that the payment made to labor is denoted as W. The marginal product of labor can be stated as

When a large amount of output is produced per unit of the input, the input is said to exhibit

When a small amount of output is produced per unit of the input, the input is said to exhibit

Pookie's Pool Cleaning Service uses only one variable input, chlorine. Pookieʹs ________ curve for chlorine in the short run is the inputʹs marginal revenue product curve.

A firm is currently hiring capital and labor so that MPL/PL < MPK/PK. If the firm wishes to maximize profits it should hire

The demand for ________ is a ʺderived demand.ʺ

The supply curve for land is vertical.

Related to the Economics in Practice on page 216: According to the survey discussed in the Economics in Practice,

Demand for the services of Los Angeles Dodgers' pitcher Clayton Kershaw is

Refer to the information provided in Figure 10.2 below to answer the question(s) that follow. Figure 10.2 -Refer to Figure 10.2. This firm's marginal cost curve has shifted from MC0 to MC1. A profit-maximizing firm should ________ the amount of output produced and ________ its demand for labor.

Which if the following is the best example of derived demand?

Productivity of an input is the amount of output produced per unit of input.

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

A firm is currently hiring capital and labor so that MP_L/P_L < MP_K/P_K. If the firm wishes to maximize profits it should hire

Refer to the information provided in Figure 10.2 below to answer the question(s) that follow. Figure 10.2 -Refer to Figure 10.2. This firm's marginal cost curve has shifted from MC₀ to MC₁. A profit-maximizing firm should the amount of output produced and its demand for labor.