Question 1

If Firm X is a competitive firm in the market for labor,it has little influence over the wage it pays its employees.

Accepted Answer

A) True 
 B)False  True

Question 2

Which term below refers to "the accumulation of goods produced in the past that are being used in the present to produce new goods and services?"

Accepted Answer

A) inventories 
B) products 
C) factors of production 
D) capital 
A) inventories 
B) products 
C) factors of production 
D) capital D

Question 3

Labor-augmenting technological advances decrease the marginal productivity of labor.

Accepted Answer

A) True 
 B)False  False

Question 4

Oil field workers' wages are directly tied to the world price of oil.

Accepted Answer

A) True 
 B)False

Question 5

Table 18-6
  
-Refer to Table 18-6.What is the marginal product of the third worker?

Accepted Answer

A) 7 
B) 8 
C) 25 
D) 75 
A) 7 
B) 8 
C) 25 
D) 75

Question 6

Consider the market for land.Suppose the value of the marginal product of land decreases.Holding all else constant,what will happen to the equilibrium rental price for land?

Accepted Answer

A) The equilibrium rental rate increases. 
B) The equilibrium rental rate decreases. 
C) The equilibrium rental rate does not change. 
D) It is not possible to determine what will happen to the equilibrium rental rate. 
A) The equilibrium rental rate increases. 
B) The equilibrium rental rate decreases. 
C) The equilibrium rental rate does not change. 
D) It is not possible to determine what will happen to the equilibrium rental rate.

Question 7

As a result of severe flooding,a farmer loses half of his productive farmland.If the property of diminishing returns applies to all factors of production,he should expect to see

Accepted Answer

A) an increase in the marginal productivity of his remaining land and an increase in the marginal productivity of his labor. 
B) an increase in the marginal productivity of his remaining land and a decrease in the marginal productivity of his labor. 
C) a decrease in the marginal productivity of his remaining land and an increase in the marginal productivity of his labor. 
D) a decrease in the marginal productivity of his remaining land and a decrease in the marginal productivity of his labor. 
A) an increase in the marginal productivity of his remaining land and an increase in the marginal productivity of his labor. 
B) an increase in the marginal productivity of his remaining land and a decrease in the marginal productivity of his labor. 
C) a decrease in the marginal productivity of his remaining land and an increase in the marginal productivity of his labor. 
D) a decrease in the marginal productivity of his remaining land and a decrease in the marginal productivity of his labor.

Question 8

Figure 18-3
  
-Refer to Figure 18-3.If the relevant labor supply curve is S₂ and the current wage is W₁,

Accepted Answer

A) there is a surplus of labor. 
B) the quantity of labor demanded exceeds the quantity of labor supplied. 
C) an increase in the minimum wage could be employed to restore equilibrium in the market. 
D) All of the above are correct. 
A) there is a surplus of labor. 
B) the quantity of labor demanded exceeds the quantity of labor supplied. 
C) an increase in the minimum wage could be employed to restore equilibrium in the market. 
D) All of the above are correct.

Question 9

Dave is the owner of Dave's Pizza Palace.Dave is a profit-maximizing owner whose firm operates in a competitive market.An additional worker costs Dave $200 and has a marginal productivity of 40 pizzas.Assuming no other variable costs,what is the marginal cost of a pizza?

Accepted Answer

A) $200 
B) $8 
C) $5 
D) There is insufficient information available to answer this question. 
A) $200 
B) $8 
C) $5 
D) There is insufficient information available to answer this question.

Question 10

Fred's hourly wage increases from $8 to $10.Which of the following describes a consequence of the increase in Fred's wage?

Accepted Answer

A) The opportunity cost of Fred's leisure time has decreased. 
B) Fred may choose to work fewer hours due to the increase in his wage. 
C) The tradeoff between work and leisure is now easier for Fred because he earns more money. 
D) Both a and b are correct. 
A) The opportunity cost of Fred's leisure time has decreased. 
B) Fred may choose to work fewer hours due to the increase in his wage. 
C) The tradeoff between work and leisure is now easier for Fred because he earns more money. 
D) Both a and b are correct.

Question 11

Table 18-2
Consider the following daily production data for Davis Golf Balls, Inc. Davis Golf Balls, Inc. sells golf balls for 50 cents each and pays the workers a wage of $30 a day.
  
-Refer to Table 18-2.What is the marginal profit of the sixth worker?

Accepted Answer

A) -$10 
B) -$5 
C) $7.50 
D) $25 
A) -$10 
B) -$5 
C) $7.50 
D) $25

Question 12

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. 
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.

Question 13

When deciding whether to hire an additional worker,firms look at how the additional worker would affect

Accepted Answer

A) costs only. 
B) revenue only. 
C) output only. 
D) profit. 
A) costs only. 
B) revenue only. 
C) output only. 
D) profit.

Question 14

Scenario 18-1
Gertrude Kelp owns three boats that participate in commercial fishing for fresh Pacific salmon off the coast of Alaska. As part of her business she hires a captain and several crew members for each boat. In the market for fresh Pacific salmon, there are thousands of firms like Gertrude's. While Gertrude usually catches a significant number of fish each year, her contribution to the entire harvest of salmon is negligible relative to the size of the market.
-Refer to Scenario 18-1.If Gertrude is a price taker in the labor market,she decides

Accepted Answer

A) the price for which she will sell the fish she catches. 
B) how many crew members she will hire. 
C) the wages that she will pay to her crew members. 
D) All of the above are correct. 
A) the price for which she will sell the fish she catches. 
B) how many crew members she will hire. 
C) the wages that she will pay to her crew members. 
D) All of the above are correct.

Question 15

The following table shows the number of calculators that can be assembled per week by various numbers of workers.If the price per calculator in a perfectly competitive product market is $20,how many workers would the firm employ if the weekly wage rate is $1000?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 16

When economists refers to a firm's capital,they are likely to be using the term to describe the

Accepted Answer

A) markets for final goods and services. 
B) stock of equipment and buildings used in production. 
C) amount of bank financing used by the firm. 
D) amount of financing provided by the equity markets. 
A) markets for final goods and services. 
B) stock of equipment and buildings used in production. 
C) amount of bank financing used by the firm. 
D) amount of financing provided by the equity markets.

Question 17

Which of the following accurately describes how earnings from capital eventually get paid to households?

Accepted Answer

A) Households can own a stock of capital and rent it to firms. 
B) Households lend money to firms, who then pay interest to the households. 
C) Households that own stock in firms receive dividends. 
D) All of the above are correct. 
A) Households can own a stock of capital and rent it to firms. 
B) Households lend money to firms, who then pay interest to the households. 
C) Households that own stock in firms receive dividends. 
D) All of the above are correct.

Question 18

Figure 18-2
  
-Refer to Figure 18-2.If the apple pickers start working fewer hours (by taking more vacation time),the equilibrium wage will

Accepted Answer

A) fall below w₁ due to a shift in demand. 
B) fall below w₁ due to a shift in supply. 
C) rise above w₁ due to a shift in demand. 
D) rise above w₁ due to a shift in supply. 
A) fall below w₁ due to a shift in demand. 
B) fall below w₁ due to a shift in supply. 
C) rise above w₁ due to a shift in demand. 
D) rise above w₁ due to a shift in supply.

Question 19

Table 18-3
  
-Refer to Table 18-3.The fact that the marginal product falls as the number of workers increases exemplifies a property called

Accepted Answer

A) diminishing marginal product. 
B) utility maximization. 
C) supply and demand. 
D) labor theory. 
A) diminishing marginal product. 
B) utility maximization. 
C) supply and demand. 
D) labor theory.

Question 20

Rent,interest,and profit are all forms of income paid to the owners of

Accepted Answer

A) aggregate stock. 
B) aggregate demand. 
C) firms and not-for-profit organizations. 
D) land and capital. 
A) aggregate stock. 
B) aggregate demand. 
C) firms and not-for-profit organizations. 
D) land and capital.

Exam 18: The Markets for the Factors of Production

If Firm X is a competitive firm in the market for labor,it has little influence over the wage it pays its employees.

Which term below refers to "the accumulation of goods produced in the past that are being used in the present to produce new goods and services?"

Labor-augmenting technological advances decrease the marginal productivity of labor.

Oil field workers' wages are directly tied to the world price of oil.

Table 18-6 -Refer to Table 18-6.What is the marginal product of the third worker?

Consider the market for land.Suppose the value of the marginal product of land decreases.Holding all else constant,what will happen to the equilibrium rental price for land?

As a result of severe flooding,a farmer loses half of his productive farmland.If the property of diminishing returns applies to all factors of production,he should expect to see

Figure 18-3 -Refer to Figure 18-3.If the relevant labor supply curve is S₂ and the current wage is W₁,

Dave is the owner of Dave's Pizza Palace.Dave is a profit-maximizing owner whose firm operates in a competitive market.An additional worker costs Dave $200 and has a marginal productivity of 40 pizzas.Assuming no other variable costs,what is the marginal cost of a pizza?

Fred's hourly wage increases from $8 to $10.Which of the following describes a consequence of the increase in Fred's wage?

Table 18-2 Consider the following daily production data for Davis Golf Balls, Inc. Davis Golf Balls, Inc. sells golf balls for 50 cents each and pays the workers a wage of $30 a day. -Refer to Table 18-2.What is the marginal profit of the sixth worker?

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

When deciding whether to hire an additional worker,firms look at how the additional worker would affect

The following table shows the number of calculators that can be assembled per week by various numbers of workers.If the price per calculator in a perfectly competitive product market is $20,how many workers would the firm employ if the weekly wage rate is $1000?

When economists refers to a firm's capital,they are likely to be using the term to describe the

Which of the following accurately describes how earnings from capital eventually get paid to households?

Figure 18-2 -Refer to Figure 18-2.If the apple pickers start working fewer hours (by taking more vacation time),the equilibrium wage will

Table 18-3 -Refer to Table 18-3.The fact that the marginal product falls as the number of workers increases exemplifies a property called

Rent,interest,and profit are all forms of income paid to the owners of

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Applications

Supply, demand, and Government Policies

Consumers, producers, and the Efficiency of Markets

Application: 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

Oligopoly

Monopolistic Competition

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

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 Trade Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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