Exam 10: Input Demand: the Labor and Land Markets

Related to the Economics in Practice on page 226: Because land is demand determined, an acre of land in downtown San Francisco, California ________ an acre of land in downtown Knoxville, Tennessee.

If the marginal revenue product of land is greater than its price, a firm should

You have been hired by a data processing firm to provide economic advice. The owner of the firm tells you that the firm's only variable input is the number of data-entry operators. The hourly wage for data-entry operators is $10.00. The marginal revenue product curve for data-entry operators reaches its maximum at three workers with a marginal revenue product of $12.00. What advice would you give this firm?

A soybean farmer sells soybeans in a perfectly competitive market and hires labor in a perfectly competitive market. The market price of soybeans is $1 a bushel, the wage rate is $12, the farmer employs six workers and the marginal product of the sixth worker is 10. What would you advise this farmer to do?

Liu's Potato Chips is a perfectly competitive firm currently employing 30 workers. The marginal revenue product of the 30th worker is $7.00 per hour. The wage rate is $8.00 per hour. To increase profits, this firm should

Refer to the data provided in Table 10.2 below to answer the following questions. Table 10.2 Total Labor Units (employees) Total Product (frames per day) Price per Frame 0 0 \ 10 1 10 \ 10 2 30 \ 10 3 55 \ 10 4 70 \ 10 5 82 \ 10 -Refer to Table 10.2. If workers are paid $150 per day, then the firm is profit maximizing when it hires ________ workers.

Refer to the information provided in Figure 10.3 below to answer the questions that follow. Figure 10.3 -Refer to Figure 10.3. If labor supply is given by S0 and the firm is using K1 units of capital, this firm should hire ________ units of labor to maximize profit.

Related to the Economics in Practice on page 222: If labor productivity increases and the supply of labor increases, the equilibrium wage rate

Refer to the data provided in Table 10.1 below to answer the following questions. Table 10.1 Total Labor Units Total Product Marginal Product of Price per (employees) (T-shirts per day) Labor (per day) T-shirt 0 0 -- -- 1 20 20 \ 5 2 50 30 5 3 75 25 5 4 95 20 5 5 110 15 5 -Refer to Table 10.1. The maximum payment to labor per day that this profit-maximizing T-shirt manufacturer would be willing to pay to hire three workers per day is

The price of a good will be demand determined if

A firm will use land up to the point at which the MRP of land is equal to the price of land.

Assuming labor is the only variable factor of production, production of a good will occur

When a large amount of output is produced per unit of the input, the input is said to exhibit

The owner of Instant Printing, a firm that prints business cards, tells you that as a result of an increase in the wage rate of printer operators he has reduced the amount of output he produces and the amount of capital he uses. How would you respond to this?

ʺDemand determinedʺ means that price is set by buyers' demand and a fixed supply.

According to the output effect of a factor price change, if supply of labor increases, then once the firm fully adjusts to the labor supply change it

You have been hired by a data processing firm to provide economic advice. The owner of the firm tells you that the firm's only variable input is the number of data-entry operators. The hourly wage for data-entry operators is $15.00. The marginal revenue product curve for data-entry operators reaches its maximum at three workers with a marginal revenue product of $12.00. What advice would you give this firm?

The infusion of capital into an industry raises the productivity of the other inputs in that industry.

The demand curve for an input will slope downward because of

Which of the following would be the most likely result if high-speed rail service were introduced to an area and made commuting from that area easier?