Question 1

In terms of contribution to total U.S.income, the least important factor of production is:

Accepted Answer

A) capital. 
B) labor. 
C) natural resources. 
D) entrepreneurship. 
A) capital. 
B) labor. 
C) natural resources. 
D) entrepreneurship.

Question 2

Firms will continue to hire workers as long as:

Accepted Answer

A) they make a profit. 
B) the value of the marginal product is greater than the marginal cost of hiring labor. 
C) the wage is below the product price. 
D) there are no diminishing returns. 
A) they make a profit. 
B) the value of the marginal product is greater than the marginal cost of hiring labor. 
C) the wage is below the product price. 
D) there are no diminishing returns.

Question 3

When a person becomes better educated and is able to produce a better product, the person's education is referred to as:

Accepted Answer

A) human capital. 
B) physical capital. 
C) land. 
D) labor. 
A) human capital. 
B) physical capital. 
C) land. 
D) labor.

Question 4

(Table: Value of the Marginal Product of Labor and Demand) In the figure Value of the Marginal Product of Labor and Demand, the total product of labor is shown for the hourly production of power cords.If the price of a power cord is $4 and the market wage rate is $80 per hour, the profit-maximizing quantity of labor is __ worker(s).

Accepted Answer

A) one 
B) three 
C) five 
D) seven 
A) one 
B) three 
C) five 
D) seven

Question 5

If a firm hires labor such that W > VMPL, then profit:

Accepted Answer

A) is maximized. 
B) can be increased by hiring less labor. 
C) can be increased by hiring more labor. 
D) can be increased by decreasing the price of the output. 
A) is maximized. 
B) can be increased by hiring less labor. 
C) can be increased by hiring more labor. 
D) can be increased by decreasing the price of the output.

Question 6

Figure: The Demand for Bricklayers
(Figure: The Demand for Bricklayers) Look at the figure The Demand for Bricklayers.The equilibrium market wage for bricklayers is $100.For a profit-maximizing firm at the equilibrium level of output, the VMPLbricklayers:

Accepted Answer

A) is $200. 
B) is equal to the market wage rate. 
C) is irrelevant, since the firm is a price-taker. 
D) cannot be determined from the information provided. 
A) is $200. 
B) is equal to the market wage rate. 
C) is irrelevant, since the firm is a price-taker. 
D) cannot be determined from the information provided.

Question 7

Figure: Equilibrium in the Labor Market
(Figure: Equilibrium in the Labor Market) In the figure Equilibrium in the Labor Market, a decrease in the price of the good produced, when everything else stays the same, will lead to a(n)
________ in the equilibrium quantity of labor and a(n) in the equilibrium price of labor.

Accepted Answer

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

Question 8

Suppose Billy Bud's Bucking Broncos employs 20 workers at a daily wage rate of $60 each.The average product of labor is 30 bucking broncos per day; the marginal product of the last worker is 12 bucking broncos per day; and total fixed cost is $3,600 for equipment.What is the marginal cost of the last bucking bronco produced?

Accepted Answer

A) $0.20 
B) $5.00 
C) $240.00 
D) $720.00 
A) $0.20 
B) $5.00 
C) $240.00 
D) $720.00

Question 9

Factor demand called derived demand because it:

Accepted Answer

A) requires the use of other factors. 
B) depends on product demand. 
C) has a downward-sloping demand curve. 
D) has a constant marginal factor cost. 
A) requires the use of other factors. 
B) depends on product demand. 
C) has a downward-sloping demand curve. 
D) has a constant marginal factor cost.

Question 10

(Table: Droids and Moisture Output) Luke Skywalker operates a moisture farm on the planet Tatooine.The moisture farm utilizes droids.Luke's production function is given in the table Droids and Moisture Output.A barrel of moisture sells for 50 republic credits.A droid costs 675 republic credits per month to rent.How many droids should Luke rent?

Accepted Answer

A) one 
B) two 
C) three 
D) four 
A) one 
B) two 
C) three 
D) four

Question 11

(Table: Framing Shop Production Function) Shaheer runs a framing shop that makes custom picture frames for his customers.The table Framing Shop Production Function shows the daily production function for his framing shop.He can hire a worker at a daily competitive wage of $70, and he sells a custom frame at a competitive price of $10.a) Complete the table by calculating the value of the marginal product of labor (VMPL) for each worker.b) How many workers should Shaheer hire to maximize his profit?

Accepted Answer

a) The student must first comp

Question 12

Although improved technology can either increase or decrease the demand for a factor of production, the usual effect of technological progress is to reduce demand for labor, holding everything else constant.True

Accepted Answer

A) True 
 B)False

Question 13

In the factor market for land, equilibrium rental prices will be the value of marginal product of land.

Accepted Answer

A) less than 
B) equal to 
C) greater than 
D) unrelated to 
A) less than 
B) equal to 
C) greater than 
D) unrelated to

Question 14

A profit-maximizing firm will hire workers up to the quantity of labor where:

Accepted Answer

A) VMPL > W. B) VMPL = W. C) VMPL < W. D) MP × MR = VMPL. A) VMPL > W. B) VMPL = W. C) VMPL < W. D) MP × MR = VMPL.

Question 15

Figure: Equilibrium in the Labor Market
(Figure: Equilibrium in the Labor Market) In the figure Equilibrium in the Labor Market, an increase in the productivity of labor, when everything else stays the same, will lead to a(n) in the
Equilibrium quantity of labor and a(n) in the equilibrium price of labor.

Accepted Answer

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

Question 16

If the demand for orange juice increases, the derived demand for orange grove workers will decrease.True

Accepted Answer

A) True 
 B)False

Question 17

Figure: The Demand for Bricklayers     (Figure: The Demand for Bricklayers) Look at the figure The Demand for Bricklayers.The equilibrium market wage for bricklayers was determined by:

Accepted Answer

A) the firm hiring the bricklayers. 
B) demand and supply in the market for bricklayers. 
C) the government. 
D) where VMPLbricklayers = MPbricklayers × P of output. 
A) the firm hiring the bricklayers. 
B) demand and supply in the market for bricklayers. 
C) the government. 
D) where VMPLbricklayers = MPbricklayers × P of output.

Question 18

Figure: The Demand for Bricklayers     (Figure: The Demand for Bricklayers) Look at the figure The Demand for Bricklayers.If a shortage in the market for another factor of production that bricklayers use lowers bricklayers' productivity, then the value of the marginal product of the eighth bricklayer will be than (to)
________.

Accepted Answer

A) less; $80 
B) greater; $100 
C) equal; $100 
D) greater; $80 
A) less; $80 
B) greater; $100 
C) equal; $100 
D) greater; $80

Question 19

The amount that an additional unit of a factor adds to a firm's total revenue is called the:

Accepted Answer

A) marginal revenue. 
B) marginal cost. 
C) additional revenue product. 
D) value of the marginal product. 
A) marginal revenue. 
B) marginal cost. 
C) additional revenue product. 
D) value of the marginal product.

Question 20

Using standard economic theory, Scientific Superconductors should continue hiring workers until:

Accepted Answer

A) MPL × P = demand. 
B) the quantity of labor supplied = the quantity of labor demanded. 
C) MPL × P = wage. 
D) MPL × W = P. 
A) MPL × P = demand. 
B) the quantity of labor supplied = the quantity of labor demanded. 
C) MPL × P = wage. 
D) MPL × W = P.

In terms of contribution to total U.S.income, the least important factor of production is:

Firms will continue to hire workers as long as:

When a person becomes better educated and is able to produce a better product, the person's education is referred to as:

If a firm hires labor such that W > VMPL, then profit:

Figure: The Demand for Bricklayers (Figure: The Demand for Bricklayers) Look at the figure The Demand for Bricklayers.The equilibrium market wage for bricklayers is $100.For a profit-maximizing firm at the equilibrium level of output, the VMPLbricklayers:

Factor demand called derived demand because it:

Although improved technology can either increase or decrease the demand for a factor of production, the usual effect of technological progress is to reduce demand for labor, holding everything else constant.True

In the factor market for land, equilibrium rental prices will be the value of marginal product of land.

A profit-maximizing firm will hire workers up to the quantity of labor where:

If the demand for orange juice increases, the derived demand for orange grove workers will decrease.True

Figure: The Demand for Bricklayers (Figure: The Demand for Bricklayers) Look at the figure The Demand for Bricklayers.The equilibrium market wage for bricklayers was determined by:

The amount that an additional unit of a factor adds to a firm's total revenue is called the:

Using standard economic theory, Scientific Superconductors should continue hiring workers until:

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Uncertainty, Risk, and Private Information

Filters

Exam 19: Factor Markets and the Distribution of Income

In terms of contribution to total U.S.income, the least important factor of production is:

Firms will continue to hire workers as long as:

When a person becomes better educated and is able to produce a better product, the person's education is referred to as:

If a firm hires labor such that W > VMPL, then profit:

Figure: The Demand for Bricklayers (Figure: The Demand for Bricklayers) Look at the figure The Demand for Bricklayers.The equilibrium market wage for bricklayers is $100.For a profit-maximizing firm at the equilibrium level of output, the VMPLbricklayers:

Factor demand called derived demand because it:

Although improved technology can either increase or decrease the demand for a factor of production, the usual effect of technological progress is to reduce demand for labor, holding everything else constant.True

In the factor market for land, equilibrium rental prices will be the value of marginal product of land.

A profit-maximizing firm will hire workers up to the quantity of labor where:

If the demand for orange juice increases, the derived demand for orange grove workers will decrease.True

Figure: The Demand for Bricklayers (Figure: The Demand for Bricklayers) Look at the figure The Demand for Bricklayers.The equilibrium market wage for bricklayers was determined by:

The amount that an additional unit of a factor adds to a firm's total revenue is called the:

Using standard economic theory, Scientific Superconductors should continue hiring workers until:

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Uncertainty, Risk, and Private Information

Filters