Question 1

If the demand for labor in a particular industry increases, the equilibrium wage in that industry will also increase.

Accepted Answer

A) True 
 B)False  True

Question 2

Figure 18-8
This figure below shows the labor market for automobile workers. The curve labeled S is the labor supply curve, and the curves labeled DS1U1B11S1U1B0 and DS1U1B12S1U1B0 are the labor demand curves. On the horizontal axis, L represents the quantity of labor in the market.  
-Refer to Figure 18-8. Which of the following events would most likely explain the shift of the labor-demand curve from D1 to D2?

Accepted Answer

A) The price of automobiles decreased. 
B) A large number of immigrants entered the automobile-worker market. 
C) A technological advance increased the marginal product of automobile workers. 
D) All of the above are correct. 
A) The price of automobiles decreased. 
B) A large number of immigrants entered the automobile-worker market. 
C) A technological advance increased the marginal product of automobile workers. 
D) All of the above are correct. C

Question 3

Ellen receives a raise at her current part-time job from $8 to $10 per hour. If her labor supply curve is upward sloping, she will work fewer hours after receiving the pay raise.

Accepted Answer

A) True 
 B)False  False

Question 4

Capital owners are compensated according to the value of the marginal product of that capital.

Accepted Answer

A) True 
 B)False

Question 5

Table 18-7  
-Refer to Table 18-7. To maximize its profit, how many workers will the firm hire?

Accepted Answer

A) 2 
B) 3 
C) 4 
D) 5 
A) 2 
B) 3 
C) 4 
D) 5

Question 6

How does increased immigration affect the labor market? How would the equilibrium wage and the equilibrium quantity of labor be affected?

Accepted Answer

Increased immigration increase

Question 7

Consider the market for capital equipment. Suppose the value of the marginal product of capital equipment increases. Holding all else constant, the equilibrium quantity 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 quantity of capital equipment. 
A) increase. 
B) decrease. 
C) not change. 
D) It is not possible to determine what will happen to the equilibrium quantity of capital equipment.

Question 8

Table 18-B
Consider the following daily production data for MadeFromScratch, Inc. MadeFromScratch sells cupcakes for $3 each and pays the workers a wage of $325 per day.  
-Refer to Table 18-11. What is the marginal profit of the sixth worker?

Accepted Answer

A) $100 
B) −$50 
C) −$75 
D) −$125 
A) $100 
B) −$50 
C) −$75 
D) −$125

Question 9

Table 18-6  
-Refer to Table 18-6. What is the value for the cell labeled AA?

Accepted Answer

A) $600 
B) $500 
C) $400 
D) $300 
A) $600 
B) $500 
C) $400 
D) $300

Question 10

Table 18-10  
-Refer to Table 18-10. This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor. Each baseball sells for $5 in a competitive market and the firm pays each unit of labor a wage equal to $320 per day. How many units of labor should the firm hire to maximize profit?

Accepted Answer

A) 2 units 
B) 3 units 
C) 4 units 
D) 5 units 
A) 2 units 
B) 3 units 
C) 4 units 
D) 5 units

Question 11

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

Accepted Answer

A) and the equilibrium quantity of labor will rise. 
B) and the equilibrium quantity of labor will fall. 
C) will rise, and the equilibrium quantity of labor will fall. 
D) will fall, and the equilibrium quantity of labor will rise. 
A) and the equilibrium quantity of labor will rise. 
B) and the equilibrium quantity of labor will fall. 
C) will rise, and the equilibrium quantity of labor will fall. 
D) will fall, and the equilibrium quantity of labor will rise.

Question 12

Daryn is raking leaves to earn money for his university's economics club. In the first hour, he rakes 8 bags of leaves. In the second hour, he rakes 6 bags of leaves. If he earns $8 per hour, the value of the marginal product of the second hour of labor is $16.

Accepted Answer

A) True 
 B)False

Question 13

Suppose that in November a profit-maximizing firm has 100 employees. By December, the firm has decreased employment. One can infer that, when 100 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. 
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.

Question 14

The rental price of capital is determined by the

Accepted Answer

A) forces of supply and demand in capital markets. 
B) amount of equity that is generated in equity markets. 
C) amount of bond financing used by profit-maximizing firms. 
D) amount of dividends paid out to stockholders by profit-maximizing firms. 
A) forces of supply and demand in capital markets. 
B) amount of equity that is generated in equity markets. 
C) amount of bond financing used by profit-maximizing firms. 
D) amount of dividends paid out to stockholders by profit-maximizing firms.

Question 15

Figure 18-9  
-Refer to Figure 18-9. If the price of apples increases, the

Accepted Answer

A) demand for apple pickers will shift to the left. 
B) demand for apple pickers will shift to the right. 
C) supply of apple pickers will shift to the left. 
D) supply of apple pickers will shift to the right. 
A) demand for apple pickers will shift to the left. 
B) demand for apple pickers will shift to the right. 
C) supply of apple pickers will shift to the left. 
D) supply of apple pickers will shift to the right.

Question 16

Table 18-10  
-Refer to Table 18-10. This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor. Each baseball sells for $5 in a competitive market. What is the marginal revenue product of the third worker?

Accepted Answer

A) 120 baseballs. 
B) $300 
C) $400 
D) $600 
A) 120 baseballs. 
B) $300 
C) $400 
D) $600

Question 17

The labor supply curve reflects how

Accepted Answer

A) workers' decisions about the labor-leisure tradeoff respond to a change in the wage. 
B) workers' decisions about the opportunity cost of labor respond to a change in the quantity of labor supplied. 
C) firms' decisions about the labor-leisure tradeoff respond to the quantity of labor demanded. 
D) firms' decisions about how the quantity of labor they hire respond to changes in their opportunities to earn profits. 
A) workers' decisions about the labor-leisure tradeoff respond to a change in the wage. 
B) workers' decisions about the opportunity cost of labor respond to a change in the quantity of labor supplied. 
C) firms' decisions about the labor-leisure tradeoff respond to the quantity of labor demanded. 
D) firms' decisions about how the quantity of labor they hire respond to changes in their opportunities to earn profits.

Question 18

A consultant interviews the hiring manager of a small, profit-maximizing firm. The manager explains that the firm used to have 15 employees but decided not to rehire when the most-recently-hired employee left the company, so the firm now has 14 employees. We can infer that

Accepted Answer

A) for the 15th employee, the wage exceeded the value of the marginal product of labor. 
B) for the 15th employee, the value of the marginal product of labor exceeded the wage. 
C) the firm is too small and should rehire to replace the 15th employee. 
D) the firm is no longer attempting to maximize profits. 
A) for the 15th employee, the wage exceeded the value of the marginal product of labor. 
B) for the 15th employee, the value of the marginal product of labor exceeded the wage. 
C) the firm is too small and should rehire to replace the 15th employee. 
D) the firm is no longer attempting to maximize profits.

Question 19

According to the neoclassical theory of distribution, the wages paid to workers

Accepted Answer

A) reflect the market prices of the goods those workers produce. 
B) reflect the degree of market power held by the firms that pay those wages. 
C) fail to reflect those workers' opportunity costs of leisure. 
D) are unrelated to the forces of supply and demand. 
A) reflect the market prices of the goods those workers produce. 
B) reflect the degree of market power held by the firms that pay those wages. 
C) fail to reflect those workers' opportunity costs of leisure. 
D) are unrelated to the forces of supply and demand.

Question 20

Which of the following statements is correct? An individual worker's labor supply curve

Accepted Answer

A) can never be backward sloping. 
B) slopes backward if that person responds to a higher wage by taking fewer hours of leisure per week. 
C) slopes backward if that person responds to a higher opportunity cost of leisure by working fewer hours per week. 
D) slopes upward if that person works the same number of hours per week, regardless of the opportunity cost of leisure. 
A) can never be backward sloping. 
B) slopes backward if that person responds to a higher wage by taking fewer hours of leisure per week. 
C) slopes backward if that person responds to a higher opportunity cost of leisure by working fewer hours per week. 
D) slopes upward if that person works the same number of hours per week, regardless of the opportunity cost of leisure.

Exam 18: The Markets for the Factors of Production

If the demand for labor in a particular industry increases, the equilibrium wage in that industry will also increase.

Ellen receives a raise at her current part-time job from $8 to $10 per hour. If her labor supply curve is upward sloping, she will work fewer hours after receiving the pay raise.

Capital owners are compensated according to the value of the marginal product of that capital.

Table 18-7 -Refer to Table 18-7. To maximize its profit, how many workers will the firm hire?

How does increased immigration affect the labor market? How would the equilibrium wage and the equilibrium quantity of labor be affected?

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

Table 18-B Consider the following daily production data for MadeFromScratch, Inc. MadeFromScratch sells cupcakes for $3 each and pays the workers a wage of $325 per day. -Refer to Table 18-11. What is the marginal profit of the sixth worker?

Table 18-6 -Refer to Table 18-6. What is the value for the cell labeled AA?

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

Daryn is raking leaves to earn money for his university's economics club. In the first hour, he rakes 8 bags of leaves. In the second hour, he rakes 6 bags of leaves. If he earns $8 per hour, the value of the marginal product of the second hour of labor is $16.

Suppose that in November a profit-maximizing firm has 100 employees. By December, the firm has decreased employment. One can infer that, when 100 employees are hired, the

The rental price of capital is determined by the

Figure 18-9 -Refer to Figure 18-9. If the price of apples increases, the

Table 18-10 -Refer to Table 18-10. This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor. Each baseball sells for $5 in a competitive market. What is the marginal revenue product of the third worker?

The labor supply curve reflects how

A consultant interviews the hiring manager of a small, profit-maximizing firm. The manager explains that the firm used to have 15 employees but decided not to rehire when the most-recently-hired employee left the company, so the firm now has 14 employees. We can infer that

According to the neoclassical theory of distribution, the wages paid to workers

Which of the following statements is correct? An individual worker's labor supply curve

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Applications: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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