Exam 9: Markets for Factors of Production and the Monetary System

Victoria Corp. makes running shoes by employing a robotics technology that requires at most a few, but highly skilled, workers for monitoring and maintenance of the robots. Each robot costs $240,000. The table below shows the marginal product of capital (MPK) per month when the firm employs one worker versus when it employs two workers. Each pair of Victoria shoes sells for $150. -Refer to the scenario above. If the firm decides to employ one worker, and the wage is $40,000 per month, the firm?s maximum profit is ________.

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Question 1

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In Major League Baseball, a player's WAR (wins above replacement) is a rough measure of the player's marginal product of labor. Specifically, WAR measures how many additional wins a player's performance would register for the team above the performance of the average player at his position. For 2015, center fielder Mike Trout of the Los Angeles Angels had a war of 7.55. (Assume that Trout's performance in 2016 is expected to be exactly the same as in 2015.) Suppose an additional win is worth $1.7 million to the Angels in 2016. What is Trout's value of marginal product of labor in 2016? Explain your answer.

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The table below lists salary and ?productivity? data for two Major League Baseball pitchers, Sandy Koufax and Clayton Kershaw. The players are not contemporaries; their careers were roughly a half-century apart. Nonetheless, each pitcher is/was considered the dominant pitcher of his era. Comparing productivity for Koufax?s 1963 season to Kershaw?s 2016 season, Koufax was more productive (in terms of wins, complete games, innings pitched and strikeouts), yet Kershaw?s salary was 126 times Koufax?s salary, adjusting for inflation. What is the most likely explanation for the salary differential between Koufax and Kershaw?

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Assuming players are paid the value of their marginal product, if marginal product was not greater, then marginal revenue must have been greater. Certainly, the value of a win was much greater to a team in 2016 than in 1963. As evidence that marginal revenues increased, both Koufax and Kershaw play/played for the Los Angeles Dodgers. In 1963, the Dodgers earned $1 million in local TV revenues; that amount was $200 million for 2016. For national TV revenues, Major League Baseball earned $5.2 million in 1963, and $1.5 billion in 2016. Even adjusting for inflation, there were clearly huge increases in TV (and hence total revenues), so the marginal revenue of a win increased greatly. In fairness, Koufax played during the reserve clause era, so the labor market during his playing time was not competitive.

The following table shows the demand and supply of labor in the steel manufacturing industry. a) What is the equilibrium wage rate and employment level in the industry? Illustrate graphically. b) If the labor demand shifts to the right, without any change in the labor supply curve, what is likely to happen to the equilibrium wage and the employment level? Explain your answer with the help of a suitable diagram. c) If the labor supply curve shifts to the left, without any change in the labor demand curve, what is likely to happen to the equilibrium wage and employment level? Explain your answer with the help of a suitable diagram.

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Question 4

Bookland is a country that produces only books. In 1990, Bookland produced 10,000 books at a market price of $10 each. In 1991, Bookland produced 11,000 books at a market price of $12 each. -Refer to the scenario above. The nominal GDP in Bookland in 1990 was ________.

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Question 5

Which of the following correctly identifies a difference between taste-based discrimination and statistical discrimination?

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Question 6

In 1986, Roger Clemens pitched 254 innings and finished with a 24-4 record during the regular season. He struck out 238 batters, recorded an earned run average of 2.148 and a WHIP (walks plus hits per inning pitched) of 0.969. He earned $340,000, which converts to $644,998 in 2007 dollars. In 2007, Roger Clemens pitched 99 innings and finished with a record of 6-6 during the regular season. He recorded 68 strikeouts, an ERA of 4.18 and a WHIP of 1.33. He was paid $17,690,413 for the 2007 season. Which of the following is the most likely explanation for the increase in Clemens? salary from 1986 to 2007?

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Question 7

An economy produces only cell phones. In 2015, the economy manufactured 275 cell phones, and each cell phone sold for $200. In 2016, the economy manufactured 280 cell phones, but the price of each cell phone fell to $180. -Refer to the scenario above. Using 2016 as the base year, what was the real GDP of the economy in 2015?

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Question 8

In an economy, if the money supply is $100,000, currency in circulation is $50,000, amount in savings accounts is $18,000, amount in travelers? checks is $12,000, and the amount in money market accounts is $9,000, then what is the amount held in checking accounts in the economy?

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Question 9

An economy produces only cell phones. In 2015, the economy manufactured 275 cell phones, and each cell phone sold for $200. In 2016, the economy manufactured 280 cell phones, but the price of each cell phone fell to $180. -Refer to the scenario above. What is the nominal GDP of the economy in 2015?

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Question 10

An economy produces only cell phones. In 2015, the economy manufactured 275 cell phones, and each cell phone sold for $200. In 2016, the economy manufactured 280 cell phones, but the price of each cell phone fell to $180. -Refer to the scenario above. Using 2015 as the base year, what was the real GDP of the economy in 2015?

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Question 11

The Federal Reserve is relatively independent. Which U.S. institution largely controls the Federal Reserve?

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Question 12

The labor market in Delaware is depicted in the following figure. Suppose 10,000 out-of-state workers move to Delaware. -Refer to the scenario above. Before this migration, the employment in Delaware was equal to , and after this migration the employment will equal .

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Question 13

Which of the following correctly identifies the difference between the demand for factors of production and the demand for final goods?

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Question 14

Suppose a firm sells its product in a competitive market. If the ongoing wage rate in a competitive labor market is $30 and the market price of a firm's product is $2, then which of the following statements is true?

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Question 15

Suppose a firm uses land, labor, and capital for its production process. If it is renting the equilibrium quantity of all three factors of production, then which of the following conditions will be true?

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Question 16

Meryl works 10 hours a day in an hourly job that pays $15 per hour. Suppose her wage rate increases to a really high rate of $10,000 per hour. In this case, Meryl will ________.

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Question 17

Bookland is a country that produces only books. In 1990, Bookland produced 10,000 books at a market price of $10 each. In 1991, Bookland produced 11,000 books at a market price of $12 each. -Refer to the scenario above. The nominal GDP in Bookland in 1991 was ________.

(Multiple Choice)

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Question 18

Victoria Corp. makes running shoes by employing a robotics technology that requires at most a few, but highly skilled, workers for monitoring and maintenance of the robots. Each robot costs $240,000. The table below shows the marginal product of capital (MPK) per month when the firm employs one worker versus when it employs two workers. Each pair of Victoria shoes sells for $150. -Refer to the scenario above. If the firm decides to employ two workers, and the wage for each worker is $40,000 per month, the firm's maximum profit is ________.

(Multiple Choice)

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Question 19

In Oettinger's paper studying the labor supply decisions of stadium vendors, he considered the following complication. For games played on weekends, for games played in good weather, and for games where the Rangers' opponent was popular and/or enjoying on-field success, the potential to earn more during the game increased, but all other vendors realized this as well. In essence, a vendor might actually make less during a "high total revenue potential" game if lots of other vendors decided to work that game as well. The likelihood of finding that vendors were more likely to "participate"for high total revenue potential games ________ by accounting for the strategic behavior of other vendors. Explain your answer.

(Multiple Choice)

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Question 20

Showing 1 - 20 of 21

Bookland is a country that produces only books. In 1990, Bookland produced 10,000 books at a market price of $10 each. In 1991, Bookland produced 11,000 books at a market price of $12 each. -Refer to the scenario above. The nominal GDP in Bookland in 1990 was ________.

Which of the following correctly identifies a difference between taste-based discrimination and statistical discrimination?

In an economy, if the money supply is $100,000, currency in circulation is $50,000, amount in savings accounts is $18,000, amount in travelers? checks is $12,000, and the amount in money market accounts is $9,000, then what is the amount held in checking accounts in the economy?

An economy produces only cell phones. In 2015, the economy manufactured 275 cell phones, and each cell phone sold for $200. In 2016, the economy manufactured 280 cell phones, but the price of each cell phone fell to $180. -Refer to the scenario above. What is the nominal GDP of the economy in 2015?

The Federal Reserve is relatively independent. Which U.S. institution largely controls the Federal Reserve?

The labor market in Delaware is depicted in the following figure. Suppose 10,000 out-of-state workers move to Delaware. -Refer to the scenario above. Before this migration, the employment in Delaware was equal to , and after this migration the employment will equal .

Which of the following correctly identifies the difference between the demand for factors of production and the demand for final goods?

Suppose a firm sells its product in a competitive market. If the ongoing wage rate in a competitive labor market is $30 and the market price of a firm's product is $2, then which of the following statements is true?

Suppose a firm uses land, labor, and capital for its production process. If it is renting the equilibrium quantity of all three factors of production, then which of the following conditions will be true?

Meryl works 10 hours a day in an hourly job that pays $15 per hour. Suppose her wage rate increases to a really high rate of $10,000 per hour. In this case, Meryl will ________.

Bookland is a country that produces only books. In 1990, Bookland produced 10,000 books at a market price of $10 each. In 1991, Bookland produced 11,000 books at a market price of $12 each. -Refer to the scenario above. The nominal GDP in Bookland in 1991 was ________.

Economic Methods and Optimization: Doing the Best You Can

Demand, Supply, and Equilibrium

Consumers and Incentives,the Wealth of Nations: Defining and Measuring Macroeconomic Aggregates

Sellers and Incentives,aggregate Incomes

Perfect Competition and the Invisible Hand, Economic Growth

Trade and Why Isnt the Whole World Developed

Externalities and Public Goods, Employment and Unemployment

The Government in the Economy: Taxation and Regulation, Credit Markets

Monopoly and Short-Run Fluctuations

Game Theory and Strategic Play

Oligopoly and Monopolistic Competition

Trade-Offs Involving Time and Risk and Open Economy Macroeconomics

Social Economics and Auctions and Bargaining

Web: Financial Decision Making

Web: Economics of Life, Health, and the Environment

Web: Political Economy

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Exam 9: Markets for Factors of Production and the Monetary System

Bookland is a country that produces only books. In 1990, Bookland produced 10,000 books at a market price of $10 each. In 1991, Bookland produced 11,000 books at a market price of $12 each. -Refer to the scenario above. The nominal GDP in Bookland in 1990 was ________.

Which of the following correctly identifies a difference between taste-based discrimination and statistical discrimination?

In an economy, if the money supply is $100,000, currency in circulation is $50,000, amount in savings accounts is $18,000, amount in travelers? checks is $12,000, and the amount in money market accounts is $9,000, then what is the amount held in checking accounts in the economy?

An economy produces only cell phones. In 2015, the economy manufactured 275 cell phones, and each cell phone sold for $200. In 2016, the economy manufactured 280 cell phones, but the price of each cell phone fell to $180. -Refer to the scenario above. What is the nominal GDP of the economy in 2015?

The Federal Reserve is relatively independent. Which U.S. institution largely controls the Federal Reserve?

The labor market in Delaware is depicted in the following figure. Suppose 10,000 out-of-state workers move to Delaware. -Refer to the scenario above. Before this migration, the employment in Delaware was equal to ________, and after this migration the employment will equal ________.

Which of the following correctly identifies the difference between the demand for factors of production and the demand for final goods?

Suppose a firm sells its product in a competitive market. If the ongoing wage rate in a competitive labor market is $30 and the market price of a firm's product is $2, then which of the following statements is true?

Suppose a firm uses land, labor, and capital for its production process. If it is renting the equilibrium quantity of all three factors of production, then which of the following conditions will be true?

Meryl works 10 hours a day in an hourly job that pays $15 per hour. Suppose her wage rate increases to a really high rate of $10,000 per hour. In this case, Meryl will ________.

Bookland is a country that produces only books. In 1990, Bookland produced 10,000 books at a market price of $10 each. In 1991, Bookland produced 11,000 books at a market price of $12 each. -Refer to the scenario above. The nominal GDP in Bookland in 1991 was ________.

Economic Methods and Optimization: Doing the Best You Can

Demand, Supply, and Equilibrium

Consumers and Incentives,the Wealth of Nations: Defining and Measuring Macroeconomic Aggregates

Sellers and Incentives,aggregate Incomes

Perfect Competition and the Invisible Hand, Economic Growth

Trade and Why Isnt the Whole World Developed

Externalities and Public Goods, Employment and Unemployment

The Government in the Economy: Taxation and Regulation, Credit Markets

Monopoly and Short-Run Fluctuations

Game Theory and Strategic Play

Oligopoly and Monopolistic Competition

Trade-Offs Involving Time and Risk and Open Economy Macroeconomics

Social Economics and Auctions and Bargaining

Web: Financial Decision Making

Web: Economics of Life, Health, and the Environment

Web: Political Economy

Filters

The labor market in Delaware is depicted in the following figure. Suppose 10,000 out-of-state workers move to Delaware. -Refer to the scenario above. Before this migration, the employment in Delaware was equal to , and after this migration the employment will equal .