Question 1

If the wage of the fifth worker is $20 and her value of the marginal product of labor is $5, the firm:

Accepted Answer

A)  benefits by stopping at this level of labor. 
B)  is likely to fire the fifth worker. 
C)  asks this fifth worker to work overtime. 
D)  benefits by hiring more workers. 
E)  is likely to lose profit by hiring more workers. 
A)  benefits by stopping at this level of labor. 
B)  is likely to fire the fifth worker. 
C)  asks this fifth worker to work overtime. 
D)  benefits by hiring more workers. 
E)  is likely to lose profit by hiring more workers. B

Question 2

Use the following information to answer the  questions.
Nicky L, owner of NLD Incorporated, knows that the marginal product of labor (MPL) for his workers can be defined as follows:
MPL = 32 - L
The total output a given level of workers can produce is found as:
Q = 32L - LS1U1P12S1S1P0
He also knows that the price of his output is $3. His profits can be found as:
Profit = P × Q - W × L
-What wage would be required to allow Nicky L to hire the twenty-fifth worker?

Accepted Answer

A)  $3 
B)  $7 
C)  $21 
D)  $125 
E)  $25 
A)  $3 
B)  $7 
C)  $21 
D)  $125 
E)  $25 C

Question 3

If workers become more productive in a given occupation, they will likely see their employment _________.

Accepted Answer

A)  fall 
B)  double 
C)  rise 
D)  stay the same 
E)  go into overtime 
A)  fall 
B)  double 
C)  rise 
D)  stay the same 
E)  go into overtime C

Question 4

Which of the following is NOT a factor of production?

Accepted Answer

A)  land 
B)  output 
C)  inputs 
D)  entrepreneurship 
E)  capital 
A)  land 
B)  output 
C)  inputs 
D)  entrepreneurship 
E)  capital

Question 5

What is the best economic explanation for the high pay earned by National Hockey League stars?

Accepted Answer

A)  There are many highly skilled players. 
B)  They have superior bargaining skills in contract negotiations. 
C)  Talent allows for higher pay. 
D)  Fans want to see really good players, and team owners are willing to pay more for good players. 
E)  The league is promoting these players. 
A)  There are many highly skilled players. 
B)  They have superior bargaining skills in contract negotiations. 
C)  Talent allows for higher pay. 
D)  Fans want to see really good players, and team owners are willing to pay more for good players. 
E)  The league is promoting these players.

Question 6

Mary recently opened her own styling salon. After the first month of operation, she looks at the mix of inputs she is using to see whether she should make any changes. The value of marginal product of her stylists is $125,000, and their wage is $20. Her equipment and salon space produces a value of $250,000, and it costs $400 to rent it. The land, which she rents at $800, produces a value of $300,000. Should she change her input mix or is she maximizing profit with her current arrangement?

Accepted Answer

Mary needs to calculate the bang per buc

Question 7

When the opportunity cost of leisure is high, people tend to work _________ hours. When it is low, people tend to work _________ hours.

Accepted Answer

A)  the same; fewer 
B)  more; fewer 
C)  fewer; more 
D)  more; the same 
E)  fewer; the same 
A)  the same; fewer 
B)  more; fewer 
C)  fewer; more 
D)  more; the same 
E)  fewer; the same

Question 8

A firm calculates that the marginal product of labor (MPL) can be found from the following equation:
MPL = 35 − 2L
where L is the number of workers hired.
The production function for this firm is as follows:
Q = 35L − L2
The firm knows it can find profits with the following equation:
Profit = P × Q − W × L
where P stands for the selling price of the good, Q stands for total output, and W represents the wage. Price is equal to $1.
a. If the wage is $11, how many workers will the firm hire? How much profit will it earn?
b. Compare this level of profits to those earned by the firm if it hired one fewer worker than L* and one worker more than L* to demonstrate that L* workers generate the most profit for the firm.

Accepted Answer

a. First, we need to find the equation f

Question 9

Graph the labor supply curves based on the statements below.
a. I hate working! I am never going to work!
b. I want to earn as much money as I possibly can so I can buy everything on my wish list. Every time I get a raise it makes me want to work more because I can earn even more money. I don't think I would ever work less, not even if the wage were a million dollars.
c. Money is necessary, but it's not the most important thing to me. If I received increased wages, I would probably work more for a while, but once my pay was high enough, I would work less.

Accepted Answer

a. There is no wage that can induce this

Question 10

The fact that workers must share a limited amount of space and equipment results in __________ marginal productivity.

Accepted Answer

A)  increasing 
B)  constant 
C)  fluctuating 
D)  unpredictable 
E)  decreasing 
A)  increasing 
B)  constant 
C)  fluctuating 
D)  unpredictable 
E)  decreasing

Question 11

Your friend Sue tells you that if she gets a raise, she is going to start working less. Your other friend Emma says that the plan is crazy and that Sue should work more so she can earn more money. Which friend is right?

Accepted Answer

It depends on whether the income effect

Question 12

After World War II, social norms relating to women's participation in the labor force relaxed and women were more likely to be employed outside the home. We would expect to see the labor supply curve:

Accepted Answer

A)  stay the same. 
B)  shift left. 
C)  stay the same but move upward. 
D)  stay the same but move downward. 
E)  shift right. 
A)  stay the same. 
B)  shift left. 
C)  stay the same but move upward. 
D)  stay the same but move downward. 
E)  shift right.

Question 13

You have recently been trained as a highly specialized medical physician. There is only one hospital that needs your services. You can expect your wages to be _________ compared to what your wages would be in a situation of perfect competition.

Accepted Answer

A)  higher 
B)  double 
C)  half 
D)  the same 
E)  lower 
A)  higher 
B)  double 
C)  half 
D)  the same 
E)  lower

Question 14

If there is a massive wave of immigration, the wages of workers _________ and it is more profitable for firms to use more _________.

Accepted Answer

A)  drop; capital and fewer workers 
B)  increase; land and fewer workers 
C)  increase; capital and less land 
D)  drop; workers and less capital 
E)  increase; workers and less land 
A)  drop; capital and fewer workers 
B)  increase; land and fewer workers 
C)  increase; capital and less land 
D)  drop; workers and less capital 
E)  increase; workers and less land

Question 15

Lakeside Tubing knows that its total product schedule is as follows. It currently rents an inner tube for $5. Graph the labor demand curve. $\begin{array}{ll}&\text { Quantity of }\\text { Workers }&\text { Rentals }\
1 & 100 \
2 & 130 \
3 & 155 \
4 & 175 \
5 & 190 \
6 & 200 \
7 & 205
\end{array}$

Accepted Answer

The first thing we need to do is to find

Question 16

The backward-bending labor supply curve occurs because workers value leisure:

Accepted Answer

A)  and income differently as wages change. 
B)  consistently more than they do income at all wages. 
C)  consistently less than they do income at all wages. 
D)  and income by the same amount at all wages. 
E)  and income by fluctuating, unpredictable amounts at any wage. 
A)  and income differently as wages change. 
B)  consistently more than they do income at all wages. 
C)  consistently less than they do income at all wages. 
D)  and income by the same amount at all wages. 
E)  and income by fluctuating, unpredictable amounts at any wage.

Question 17

The following table includes information on the labor market for bakers. $\begin{array}{ccc}\text { Wage }&\text { Labor Demand }&\text { Labor Supply }\
\$ 10 & 50 & 10 \
\$ 15 & 45 & 20 \
\$ 20 & 40 & 40 \
\$ 25 & 35 & 70 \
\$ 30 & 30 & 110 \
\$ 35 & 25 & 160
\end{array}$ 
a. What is the equilibrium wage and quantity of bakers in this market?
b. With the invention of instant teleportation, baker positions can be outsourced to countries with cheaper labor without sacrificing freshly baked goods. This reduces the labor demand for bakers by four-fifths. What is the new equilibrium wage and quantity of bakers hired?
c. Who wins in this situation in the short run? Who loses? What needs to happen in the long run so that the economic losers can benefit from outsourcing?

Accepted Answer

a. The equilibrium wage in this labor ma

Question 18

Assume that the labor market for coffee roasters is in equilibrium.
a. Graph this labor market.
b. A new ad campaign by the coffee industry, "A coffee a day keeps the sleepies away," is successful and consumers prefer more coffee. Graph the effect of this on equilibrium wages W1 and quantity of labor L1 of workers. Label the new equilibrium W2 and L2.
c. At the old W1, what situation exists? How does the labor market adjust to the new W2?

Accepted Answer

@#IMG-DLM& b. This increase in consumer demand shi

Question 19

Donna owns a temp agency. She sees demand for her workers increase because firms prefer a more contingent workforce. The value of the marginal product of labor of her temps:

Accepted Answer

A)  stays the same. 
B)  increases because the temps produce more per hour. 
C)  decreases because the temps know they are going to get jobs. 
D)  increases because the price of their services is higher. 
E)  falls because job uncertainty lowers productivity. 
A)  stays the same. 
B)  increases because the temps produce more per hour. 
C)  decreases because the temps know they are going to get jobs. 
D)  increases because the price of their services is higher. 
E)  falls because job uncertainty lowers productivity.

Question 20

Graph the following labor supply curves:
a. The substitution effect dominates the income effect until the wage reaches $200, after which the income effect dominates.
b. The income and substitution effects do not affect the worker's decision. She wants to work only 40 hours every week.

Accepted Answer

a. For wages below $200, an increase in

If the wage of the fifth worker is $20 and her value of the marginal product of labor is $5, the firm:

If workers become more productive in a given occupation, they will likely see their employment _________.

Which of the following is NOT a factor of production?

What is the best economic explanation for the high pay earned by National Hockey League stars?

When the opportunity cost of leisure is high, people tend to work _ hours. When it is low, people tend to work _ hours.

The fact that workers must share a limited amount of space and equipment results in __________ marginal productivity.

Your friend Sue tells you that if she gets a raise, she is going to start working less. Your other friend Emma says that the plan is crazy and that Sue should work more so she can earn more money. Which friend is right?

After World War II, social norms relating to women's participation in the labor force relaxed and women were more likely to be employed outside the home. We would expect to see the labor supply curve:

You have recently been trained as a highly specialized medical physician. There is only one hospital that needs your services. You can expect your wages to be _________ compared to what your wages would be in a situation of perfect competition.

If there is a massive wave of immigration, the wages of workers _ and it is more profitable for firms to use more _.

Lakeside Tubing knows that its total product schedule is as follows. It currently rents an inner tube for $5. Graph the labor demand curve. Quantity of Workers Rentals 1 100 2 130 3 155 4 175 5 190 6 200 7 205

The backward-bending labor supply curve occurs because workers value leisure:

Donna owns a temp agency. She sees demand for her workers increase because firms prefer a more contingent workforce. The value of the marginal product of labor of her temps:

Graph the following labor supply curves: a. The substitution effect dominates the income effect until the wage reaches $200, after which the income effect dominates. b. The income and substitution effects do not affect the worker's decision. She wants to work only 40 hours every week.

The Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Elasticity

Price Controls

The Efficiency of Markets and the Costs of Taxation

Market Inefficiencies: Externalities and Public Goods

Business Costs and Production

Firms in a Competitive Market

Understanding Monopoly

Price Discrimination

Monopolistic Competition and Advertising

Oligopoly and Strategic Behavior

Income, Inequality, and Poverty

Consumer Choice

Behavioral Economics and Risk Taking

Health Insurance and Health Care

Filters

Exam 14: The Demand and Supply of Resources

If the wage of the fifth worker is $20 and her value of the marginal product of labor is $5, the firm:

If workers become more productive in a given occupation, they will likely see their employment _________.

Which of the following is NOT a factor of production?

What is the best economic explanation for the high pay earned by National Hockey League stars?

When the opportunity cost of leisure is high, people tend to work _________ hours. When it is low, people tend to work _________ hours.

The fact that workers must share a limited amount of space and equipment results in __________ marginal productivity.

Your friend Sue tells you that if she gets a raise, she is going to start working less. Your other friend Emma says that the plan is crazy and that Sue should work more so she can earn more money. Which friend is right?

After World War II, social norms relating to women's participation in the labor force relaxed and women were more likely to be employed outside the home. We would expect to see the labor supply curve:

You have recently been trained as a highly specialized medical physician. There is only one hospital that needs your services. You can expect your wages to be _________ compared to what your wages would be in a situation of perfect competition.

If there is a massive wave of immigration, the wages of workers _________ and it is more profitable for firms to use more _________.

Lakeside Tubing knows that its total product schedule is as follows. It currently rents an inner tube for $5. Graph the labor demand curve. Quantity of Workers Rentals 1 100 2 130 3 155 4 175 5 190 6 200 7 205

The backward-bending labor supply curve occurs because workers value leisure:

Donna owns a temp agency. She sees demand for her workers increase because firms prefer a more contingent workforce. The value of the marginal product of labor of her temps:

Graph the following labor supply curves: a. The substitution effect dominates the income effect until the wage reaches $200, after which the income effect dominates. b. The income and substitution effects do not affect the worker's decision. She wants to work only 40 hours every week.

The Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Elasticity

Price Controls

The Efficiency of Markets and the Costs of Taxation

Market Inefficiencies: Externalities and Public Goods

Business Costs and Production

Firms in a Competitive Market

Understanding Monopoly

Price Discrimination

Monopolistic Competition and Advertising

Oligopoly and Strategic Behavior

Income, Inequality, and Poverty

Consumer Choice

Behavioral Economics and Risk Taking

Health Insurance and Health Care

Filters

When the opportunity cost of leisure is high, people tend to work _ hours. When it is low, people tend to work _ hours.

If there is a massive wave of immigration, the wages of workers _ and it is more profitable for firms to use more _.