Question 1

Competitive firms decide how much output to sell by producing output until the price of the good equals which of the following

Accepted Answer

A) marginal product 
B) the value of marginal product 
C) marginal cost 
D) marginal profit 
A) marginal product 
B) the value of marginal product 
C) marginal cost 
D) marginal profit C

Question 2

If hiring more workers results in each additional worker contributing successively smaller amounts of output,then which of the following applies

Accepted Answer

A) diminishing profitability 
B) diminishing marginal cost 
C) diminishing marginal product 
D) diminishing average product 
A) diminishing profitability 
B) diminishing marginal cost 
C) diminishing marginal product 
D) diminishing average product C

Question 3

If Emma's individual labour supply curve is upward sloping,which of the following increases would Emma respond to,and how

Accepted Answer

A) the wage, by working more hours per week 
B) the opportunity cost of leisure, by working fewer hours per week 
C) the opportunity cost of leisure, by taking vacations without pay 
D) the wage, by enjoying more leisure 
A) the wage, by working more hours per week 
B) the opportunity cost of leisure, by working fewer hours per week 
C) the opportunity cost of leisure, by taking vacations without pay 
D) the wage, by enjoying more leisure A

Question 4

Figure 18-4
  
-Refer to Figure 18-4.Assume that W₁
= $20 and W₂
= $22 and that the market stays in equilibrium.What would happen to the marginal product of labour if the labour demand curve shifts from D₁ to D₂

Accepted Answer

A) The shift decreases the value of the marginal product of labour by more than $2. 
B) The shift decreases the value of the marginal product of labour by $2. 
C) The shift increases the value of the marginal product of labour by less than $2. 
D) The shift increases the value of the marginal product of labour by $2. 
A) The shift decreases the value of the marginal product of labour by more than $2. 
B) The shift decreases the value of the marginal product of labour by $2. 
C) The shift increases the value of the marginal product of labour by less than $2. 
D) The shift increases the value of the marginal product of labour by $2.

Question 5

Which example best illustrates the concept of "derived demand"

Accepted Answer

A) An increase in the wages of autoworkers will lead to an increase in the demand for robots in automobile factories. 
B) An automobile producer's decision to supply more cars will lead to an increase in the demand for automobile production workers. 
C) An automobile producer's decision to supply more minivans results from a decrease in the demand for station wagons. 
D) A decrease in the wages of autoworkers will lead to an increase in the demand for robots in automobile factories. 
A) An increase in the wages of autoworkers will lead to an increase in the demand for robots in automobile factories. 
B) An automobile producer's decision to supply more cars will lead to an increase in the demand for automobile production workers. 
C) An automobile producer's decision to supply more minivans results from a decrease in the demand for station wagons. 
D) A decrease in the wages of autoworkers will lead to an increase in the demand for robots in automobile factories.

Question 6

When a firm decides to retain its earnings instead of paying dividends,the shareholders necessarily suffer.

Accepted Answer

A) True 
 B)False

Question 7

Scenario 18-2
George has two jobs, one for the winter and one for the summer.In the winter, he works as a lift operator at a ski resort where he earns $15 per hour.During the summer, George drives a tour bus from the resort to a nearby town and back several times a day, earning $18 per hour.
-Refer to Scenario 18-2.During the summer months,what is George's opportunity cost of taking an hour off work to go hiking

Accepted Answer

A) less than $15 
B) $15 
C) between $15 and $18 
D) $18 
A) less than $15 
B) $15 
C) between $15 and $18 
D) $18

Question 8

Movements of workers from country to country can cause shifts in the labour supply curves for both countries.

Accepted Answer

A) True 
 B)False

Question 9

What term 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

Question 10

What effect does diminishing marginal product have on the shape of the production function

Accepted Answer

A) The slope of the production function decreases as the quantity of input increases. 
B) The production function becomes steeper as the quantity of input increases. 
C) The production function slopes downward. 
D) The production function is horizontal beyond a certain quantity of input. 
A) The slope of the production function decreases as the quantity of input increases. 
B) The production function becomes steeper as the quantity of input increases. 
C) The production function slopes downward. 
D) The production function is horizontal beyond a certain quantity of input.

Question 11

Which event could decrease the demand for labour

Accepted Answer

A) an increase in migrant workers 
B) an increase in the marginal productivity of workers 
C) a decrease in demand for the final product produced by labour 
D) a decrease in the labour supply 
A) an increase in migrant workers 
B) an increase in the marginal productivity of workers 
C) a decrease in demand for the final product produced by labour 
D) a decrease in the labour supply

Question 12

A firm's demand for a factor of production is linked to its decision to supply a good in the market.What do we call this type of demand

Accepted Answer

A) differentiated demand 
B) secondary demand 
C) derived demand 
D) hybrid demand-supply 
A) differentiated demand 
B) secondary demand 
C) derived demand 
D) hybrid demand-supply

Question 13

When a firm is a profit maximizer,what will be the effect on the labour market

Accepted Answer

A) It is driven to have the workers to produce as much product as possible. 
B) It will measure its success by the number of employees it has. 
C) Its labour cost will be minimized. 
D) It does not care directly about the number of workers it hires. 
A) It is driven to have the workers to produce as much product as possible. 
B) It will measure its success by the number of employees it has. 
C) Its labour cost will be minimized. 
D) It does not care directly about the number of workers it hires.

Question 14

What happens to the labour supply curves when Mexican workers leave Mexico and move to Canada

Accepted Answer

A) Labour supply decreases in both Mexico and Canada. 
B) Labour supply increases in both Canada and Mexico. 
C) Labour supply increases in Canada and decreases in Mexico. 
D) Labour supply increases in Mexico and decreases Canada. 
A) Labour supply decreases in both Mexico and Canada. 
B) Labour supply increases in both Canada and Mexico. 
C) Labour supply increases in Canada and decreases in Mexico. 
D) Labour supply increases in Mexico and decreases Canada.

Question 15

As the rental price of capital decreases,more capital is used in production and the marginal product of capital increases.

Accepted Answer

A) True 
 B)False

Question 16

Describe the process by which the market for capital and the market for land reach equilibrium.As part of your description,elaborate on the role of the stock of the resource versus the flow of services from the resource.

Accepted Answer

Equilibrium in the markets for land and

Question 17

Figure 18-1
The figure represents the value of marginal product for a firm that sells its product in a competitive market.
  
-Refer to Figure 18-1.If a firm were employing fewer than Q* workers,what would hiring more workers do

Accepted Answer

A) It would increase marginal product. 
B) It would decrease the price of the final good. 
C) It would increase profit. 
D) It would decrease marginal revenue. 
A) It would increase marginal product. 
B) It would decrease the price of the final good. 
C) It would increase profit. 
D) It would decrease marginal revenue.

Question 18

Figure 18-2
  
-Refer to Figure 18-2.What happens to the profit earned by apple producers and the wage earned by apple pickers when the price of apples falls

Accepted Answer

A) Both profit and the wage will fall. 
B) Both profit and the wage will rise. 
C) Profit will rise, and the wage will fall. 
D) Profit will fall, and the wage will rise. 
A) Both profit and the wage will fall. 
B) Both profit and the wage will rise. 
C) Profit will rise, and the wage will fall. 
D) Profit will fall, and the wage will rise.

Question 19

Figure 18-4
  
-Refer to Figure 18-4.If the relevant labour demand curve is D₂ and the current wage is W₁
,which statement explains the condition of the labour market

Accepted Answer

A) There is a surplus of labour. 
B) There is a shortage of labour. 
C) The quantity of labour supplied exceeds the quantity of labour demanded. 
D) Workers are failing to take into account the work-leisure trade-off in deciding what quantity of labour to supply at alternative wages. 
A) There is a surplus of labour. 
B) There is a shortage of labour. 
C) The quantity of labour supplied exceeds the quantity of labour demanded. 
D) Workers are failing to take into account the work-leisure trade-off in deciding what quantity of labour to supply at alternative wages.

Question 20

What is most likely if a profit-maximizing firm starts with 50 employees and then decreases employment

Accepted Answer

A) The firm is losing market share. 
B) The firm is not likely to be minimizing losses. 
C) The wage exceeds the value of the marginal product of labour. 
D) The value of the marginal product of labour exceeds the wage. 
A) The firm is losing market share. 
B) The firm is not likely to be minimizing losses. 
C) The wage exceeds the value of the marginal product of labour. 
D) The value of the marginal product of labour exceeds the wage.

Exam 18: The Markets for the Factors of Production

Competitive firms decide how much output to sell by producing output until the price of the good equals which of the following

If hiring more workers results in each additional worker contributing successively smaller amounts of output,then which of the following applies

If Emma's individual labour supply curve is upward sloping,which of the following increases would Emma respond to,and how

Figure 18-4 -Refer to Figure 18-4.Assume that W₁ = $20 and W₂ = $22 and that the market stays in equilibrium.What would happen to the marginal product of labour if the labour demand curve shifts from D₁ to D₂

Which example best illustrates the concept of "derived demand"

When a firm decides to retain its earnings instead of paying dividends,the shareholders necessarily suffer.

Movements of workers from country to country can cause shifts in the labour supply curves for both countries.

What term refers to the accumulation of goods produced in the past that are being used in the present to produce new goods and services

What effect does diminishing marginal product have on the shape of the production function

Which event could decrease the demand for labour

A firm's demand for a factor of production is linked to its decision to supply a good in the market.What do we call this type of demand

When a firm is a profit maximizer,what will be the effect on the labour market

What happens to the labour supply curves when Mexican workers leave Mexico and move to Canada

As the rental price of capital decreases,more capital is used in production and the marginal product of capital increases.

Describe the process by which the market for capital and the market for land reach equilibrium.As part of your description,elaborate on the role of the stock of the resource versus the flow of services from the resource.

Figure 18-1 The figure represents the value of marginal product for a firm that sells its product in a competitive market. -Refer to Figure 18-1.If a firm were employing fewer than Q* workers,what would hiring more workers do

Figure 18-2 -Refer to Figure 18-2.What happens to the profit earned by apple producers and the wage earned by apple pickers when the price of apples falls

Figure 18-4 -Refer to Figure 18-4.If the relevant labour demand curve is D₂ and the current wage is W₁ ,which statement explains the condition of the labour market

What is most likely if a profit-maximizing firm starts with 50 employees and then decreases employment

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

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

Monopolistic Competition

Oligopoly

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Filters