Deck 16: The Factors of Production

Question 1

The marginal product of any input into the production process:

A)is the increase in output that is generated by an additional unit of input.
B)is the decrease in input that is generated by an additional unit of output.
C)is the constant ratio of inputs to outputs.
D)None of these statements is true.

Answer 1

is the increase in output that is generated by an additional unit of input.

Question 2

Derived demand:

A)refers to the supply decisions of a final good influencing the demand for the inputs needed to make it.
B)is the sum total of all factors of production for a given good or service.
C)refers to the demand for variable inputs when at least one fixed input exists.
D)is only computed for the long-run demand decisions based on short-run marginal changes.

Answer 2

refers to the supply decisions of a final good influencing the demand for the inputs needed to make it.

Question 3

The increase in output that is generated by an additional unit of input is called the:

A)marginal product.
B)input-output relationship.
C)production function.
D)resource product.

Answer 3

marginal product.

Question 4

If the demand for hand-sewn leather shoes increases,it is likely the demand for:

A)leather will also increase.
B)leather will decrease slightly.
C)leather will stay the same.
D)leather will drop significantly and producers will use another material.

Question 5

The demand for factors of production is referred to as:

A)derived demand.
B)primary demand.
C)implied demand.
D)None of these statements is true.

Question 6

The demand for factor inputs:

A)depends upon the market for the good which it is used to produce.
B)is referred to as a derived demand.
C)depends on how much they contribute to the value of the end product.
D)All of these statements are true.

Question 7

If the demand for pizza increases,then as a result,it is highly likely that the demand for:

A)chicken nuggets will fall.
B)soda will increase.
C)mozzarella cheese will increase.
D)All of these are a likely result.

Question 8

The factor of production called "land" can be defined as:

A)the earth and anything in it used to produce goods and services.
B)that area of the earth exchanged in the real estate market by businesses.
C)the fraction of total costs spent on rent,lease,or mortgage.
D)the earth and any structures on it that are used to produce goods and services.

Question 9

If the demand for baseballs increases,then as a result,it is highly likely that the demand for:

A)leather will increase.
B)bats will decrease.
C)soccer balls will rise.
D)All of these are likely.

Question 10

If the demand for a good increases,it is likely that the demand for the factors of production used as inputs will:

A)increase.
B)decrease.
C)stay the same.
D)None of these statements is true.

Question 11

If the demand for hand-sewn leather shoes increases,it is highly likely the demand for:

A)leather will increase.
B)skilled sewers will increase.
C)needle and thread will increase.
D)All of these statements are true.

Question 12

Graphically,we can think of the marginal product of a factor as the:

A)slope of the total production curve,when output is plotted against the quantity of the input that is used.
B)slope of the total cost curve,when output is plotted against the costs of the quantity of the inputs used.
C)additional cost associated with producing one more unit of output.
D)additional inputs associated with producing one more unit of output.

Question 13

In general,we can place all factors of production into which three categories?

A)Land,labor,and capital
B)Technology,land,and capital
C)Land,labor,and technology
D)Technology,labor,and capital

Question 14

The ingredients that go into making any good or service are called the:

A)output makers.
B)factors of production.
C)factors of output.
D)production ingredients.

Question 15

The factors of production are:

A)the ingredients that go into making any good or service.
B)the outputs that society as a whole have chosen to produce.
C)the costs and benefits of a given production process.
D)the list of inputs required for a given durable good.

Question 16

If the demand for oranges falls,as a result,it is highly likely that the demand for:

A)orange juice will fall.
B)orange grove workers will fall.
C)apples will increase.
D)All of these are likely to happen.

Question 17

The factor of production called "capital" refers to:

A)manufactured goods that are used to produce new goods.
B)any piece of raw material that is used to produce goods and services.
C)any input that's not a human being or dirt.
D)None of these statements is true.

Question 18

The relationship between the quantity of inputs and the quantity of outputs is called:

A)a production function.
B)a cost function.
C)a profit function.
D)a resource function.

Question 19

The factor of production called "labor" can be defined as:

A)the number of employees a business employs at a given time.
B)the time spent by employees in the production of goods,but not services.
C)the fraction of total costs spent on people.
D)None of these statements is true.

Question 20

A production function represents:

A)the relationship between the quantity of inputs and the quantity of outputs.
B)the relative values of the inputs and modes of production.
C)the relative costs of the inputs across various modes of production.
D)the relationship between the cost of the inputs and the revenue generated by the outputs.

Question 21

All factors of production usually experience:

A)diminishing marginal productivity.
B)decreasing average variable cost.
C)decreasing average fixed costs.
D)None of these is common to all factors of production.

Question 22

In the graph of supply and demand in the market for labor:

A)individuals make up the demand curve.
B)the equilibrium price of labor is generally denoted as L*.
C)firms provide the demand.
D)None of these statements is true.

Question 23

Which of the following industries has the option to be labor or capital intensive in its production process?

A)Fishing
B)Baking
C)Teaching
D)All of these production processes could be either capital or labor intensive.

Question 24

Which of the following industries would be considered to have a capital intensive production process?

A)Auto manufacturing
B)Farming in a rich country
C)Carbonated beverages (soda)
D)All of these industries are capital intensive.

Question 25

Which of the following industries would be considered to have a labor intensive production process?

A)Writing a novel
B)Farming in a poor country
C)Art restoration
D)All of these industries are labor intensive.

Question 26

A profit-seeking firm will choose the combination of inputs that maximizes profit,based on the:

A)local price of each factor of production.
B)ratio of each factor of production.
C)substitutability of each factor of production.
D)All of these statements are true.

Question 27

A profit-seeking firm will choose the combination of inputs that:

A)maximizes profit.
B)maximizes costs.
C)has the lowest average variable cost.
D)has the lowest average total cost.

Question 28

In the market for the factor of production "labor":

A)individuals are the sellers of the good.
B)firms are the buyers of the good.
C)the equilibrium price is called the wage.
D)All of these statements are true.

Question 29

A labor intensive production process is one in which:

A)a lot of labor is hired relative to the total inputs needed to produce the good.
B)highly skilled labor is needed to produce the good.
C)a part of the production process must be done by labor and cannot be substituted.
D)total costs will be minimized if labor is the primary factor of production used.

Question 30

A capital intensive production process is one in which:

A)highly specialized capital is needed to produce the good.
B)a part of the production process must be done by capital and cannot be substituted.
C)a lot of capital is hired relative to the total inputs needed to produce the good.
D)total costs will be minimized if capital is the primary factor of production used.

Question 31

In the market for labor:

A)individuals make up the demand.
B)firms create the supply.
C)the price in the market is the wage.
D)All of these statements are true.

Question 32

Which of the following has a production process that would be considered labor intensive?

A)Hairstyling services
B)Farming in a rich country
C)T-shirt production
D)All of these would be considered labor intensive.

Question 33

Which of the following has a production process that would be considered labor intensive?

A)Hairstyling services
B)Swimming instruction
C)Physical therapy services
D)All of these production processes are labor intensive.

Question 34

Farming in poor countries is considered to be ___________ intensive because __________.

A)labor;labor is typically relatively cheaper than machinery in poor countries
B)capital;the labor used is concentrated,spread thinly across a lot of capital
C)labor;the tools in poor countries are more plentiful than the people
D)capital;the tools in poor countries are relatively cheaper than the cost of using people in poor countries

Question 35

The marginal product generated by an additional unit of input times the price of the output is called:

A)the value of the marginal product.
B)the marginal revenue product.
C)Both of these statements are true.
D)Neither of these statements are true.

Question 36

The question of how much labor a firm will hire comes down to:

A)whether added workers are going to generate more revenue than what it costs to hire them.
B)if the added workers are going to add profits to the firm.
C)whether the value of the marginal product is greater than,less than,or equal to the marginal cost.
D)All of these statements are true.

Question 37

The production of a Broadway show:

A)cannot choose what combination of inputs to use,in general.
B)is capital poor.
C)is labor rich.
D)None of these statements is true.

Question 38

Farming in poor countries is considered to be:

A)labor intensive.
B)capital intensive.
C)production intensive.
D)cost intensive.

Question 39

Which of the following has a production process that would be considered capital intensive?

A)Auto manufacturing
B)A chorale
C)Police detective work
D)All of these production processes are capital intensive.

Question 40

Holding other things constant,diminishing marginal productivity happens:

A)to any input,the more the input is hired.
B)to labor,the more labor is hired,but not to land or capital.
C)to capital inputs,the more is hired,but not to labor or land.
D)to all inputs with the exception of land,the more those inputs are hired.

Question 41

For a competitive firm,the value of output ___________ and the marginal product of labor ___________ with each additional worker hired.

A)stays constant;decreases
B)increases;decreases
C)increases;increases
D)decreases;stays constant

Question 42

A person will choose to work another hour if the benefit of another hour of work is:

A)greater than the opportunity cost.
B)exactly equal to the opportunity cost.
C)less than the opportunity cost.
D)The supply of labor is unique and does not involve weighing costs and benefits.

Question 43

When the benefit of another hour of work is greater than the opportunity cost,we would expect the worker to:

A)work another hour.
B)work an hour less.
C)work exactly that amount.
D)Cannot be determined without more information.

Question 44

Graphing the value of marginal product against the quantity of a given input hired looks like which of the following curves?

A)The total product curve
B)The total revenue curve
C)The demand curve
D)The value product curve

Question 45

The competitive firm's profit-maximizing quantity of labor is the quantity where:

A)the value of the marginal product of labor is equal to the market wage.
B)the quantity of the marginal product of labor is equal to the market wage.
C)the quantity of the marginal product of labor is equal to zero.
D)the value of the marginal product of labor is equal to the profit.

Question 46

Claire is on her way to her job at a call center where she was planning on spending three hours.She can drop in and work any hour she wants to and earn $12 per hour.Her friend calls and invites her to spend the next three hours bungee jumping.Claire decides to go with her friend,which tells us Claire's opportunity cost of working for three hours is:

A)greater than $36.
B)greater than $12.
C)less than $36.
D)less than $12.

Question 47

When individuals are debating whether to supply labor,they must think about:

A)the cost in terms of forgone leisure.
B)the benefit of more income for each hour worked.
C)whether the benefits outweigh the costs.
D)All of these statements are true.

Question 48

Sadie is getting ready to go to work where she earns $70 a day as a day laborer.Her friend Caroline calls her and asks her to go swimming with sharks for the day.Sadie decides to go with her.Sadie's choice implies that her opportunity cost of working:

A)is greater than $70.
B)is less than $70.
C)is equal to $70.
D)Cannot say without more information.

Question 49

At the competitive firm's profit-maximizing quantity of labor:

A)the value of the last worker's marginal product is greater than or equal to marginal cost of that input.
B)the value of the last worker's marginal product is less than the marginal cost of that input.
C)marginal profits are always positive.
D)None of these statements is true.

Question 50

The value of the marginal product is:

A)the marginal product generated by and additional unit of input times the price of output.
B)the marginal revenue generated by additional units of output times the number of workers hired.
C)the additional inputs required to produce one more additional unit of output.
D)None of these statements is true.

Question 51

By comparing the value of marginal product with the marginal cost per input,a firm:

A)can find the cost-maximizing quantity to hire.
B)can find the profit-maximizing quantity to hire.
C)can find the revenue-maximizing quantity to hire.
D)can find the output-maximizing quantity to hire.

Question 52

For a competitive firm,the value of the marginal product:

A)decreases for each additional worker.
B)increases for each additional worker.
C)remains constant across workers.
D)is zero when profits are maximized.

Question 53

The curve formed by plotting the value of the marginal product for workers is:

A)downward sloping.
B)upward sloping.
C)perfectly elastic,for competitive firms.
D)perfectly inelastic.

Question 54

When the competitive firm's value of the marginal product of labor intersects the market-wage level,the firm:

A)has found the profit-maximizing quantity of labor to hire.
B)can increase its profits by hiring any amount less than this point.
C)can increase its profits by hiring any amount greater than that point.
D)None of these statements is true.

Question 55

A worker will become indifferent between spending the next hour on work or leisure if the benefit of another hour of work is:

A)greater than the opportunity cost.
B)exactly equal to the opportunity cost.
C)less than the opportunity cost.
D)The supply of labor is unique and does not involved weighing costs and benefits.

Question 56

Eli is headed to his job harvesting grapes at a local vineyard.He earns $8 every hour he works there.His friend calls him and asks him to go mountain biking for the next 2 hours instead.Eli cannot decide between the two activities.His indecision implies he values riding his mountain bike for two hours:

A)more than $16.
B)less than $16.
C)at exactly $16.
D)at no more than $8.

Question 57

Grace is headed to work at a catering business as a waitress for $100.Her sister Paige calls and asks her to go horseback riding instead.Grace decides to go to work,which implies Grace's opportunity cost of working is:

A)greater than $100.
B)less than $100.
C)equal to $100.
D)Cannot be determined without more information.

Question 58

For a competitive firm,the marginal revenue product is:

A)always positive and nears zero as quantity increases.
B)always negative and nears zero as quantity increases.
C)zero when profits are maximized.
D)None of these statements is true.

Question 59

We think about the cost of supplying labor as:

A)the opportunity cost of the individual's time.
B)the input costs that go into producing a unit of labor.
C)the average wage in the labor market.
D)All of these statements are true.

Question 60

In economics,the term "leisure" refers to:

A)all nonwork activities.
B)nonwork activities that individuals enjoy doing.
C)those activities that individuals enjoy doing.
D)None of these activities would be considered leisure.

Question 61

The increase in the quantity of labor supplied in response to a higher wage is called the:

A)price effect.
B)labor effect.
C)income effect.
D)substitution effect.

Question 62

Which of the following would be considered a "leisure" activity by economists?

A)Making dinner
B)Going skiing
C)Cleaning the bathroom floor
D)All of these are considered leisure activities.

Question 63

The labor-supply curve will be downward sloping if:

A)the income effect outweighs the price effect.
B)the price effect outweighs the income effect.
C)the substitution effect outweighs the income effect.
D)The labor-supply curve is never downward sloping.

Question 64

Which of the following would be considered a "leisure" activity by economists?

A)Driving an on-duty taxi
B)Driving to the movies
C)Driving a forklift for work
D)None of these is considered leisure by economists.

Question 65

If the price effect outweighs the income effect of a wage increase,the labor-supply curve will:

A)slope downward.
B)slope upward.
C)be perfectly horizontal.
D)be perfectly flat.

Question 66

If the income effect outweighs the price effect of a wage increase,the quantity of labor supplied will:

A)increase.
B)decrease.
C)remain constant.
D)drop to zero.

Question 67

The market labor-supply curve is:

A)upward sloping.
B)downward sloping.
C)perfectly elastic.
D)perfectly inelastic.

Question 68

A decrease in the quantity of labor supplied in response to a higher wage would be due to the:

A)income effect.
B)substitution effect.
C)price effect.
D)This type of occurrence would never happen.

Question 69

The market labor-supply curve:

A)is upward sloping.
B)reflects people's willingness to work more when wages are higher.
C)shows the relationship between the price of labor and the quantity supplied.
D)All of these statements are true.

Question 70

Sadie works at a factory for $15 an hour and typically works 40 hours a week.Sadie gets a pay raise and now earns $20 an hour.She decides to work 45 hours a week at $20 an hour.Her response:

A)tells us the price effect outweighed the income effect of her pay raise.
B)implies her labor-supply curve is upward sloping.
C)is typically what is observed.
D)All of these statements are true.

Question 71

The income effect describes:

A)the increase in the quantity of labor supplied response to a higher wage.
B)the decrease in the quantity of labor supplied due to the greater demand for leisure caused by a higher income.
C)the decrease in the quantity of labor supplied in response to a lower wage.
D)the increase in the quantity of labor supplied due to the greater demand for leisure caused by a higher income.

Question 72

If the price effect outweighs the income effect of a wage increase,the quantity of labor supplied will:

A)increase.
B)decrease.
C)remain the same.
D)be negative.

Question 73

The price effect describes:

A)the increase in the quantity of labor supplied in response to a higher wage.
B)the decrease in the quantity of labor supplied in response to a higher wage.
C)the increase in the quantity of supplied in response to a lower wage.
D)None of these statements is true.

Question 74

Which of the following would be considered a "leisure" activity by economists?

A)Mopping the floor at McDonald's for minimum wage
B)Mopping your kitchen floor
C)Folding sweaters while working at the Gap
D)None of these activities would be considered leisure.

Question 75

Sadie works at a factory for $15 an hour and typically works 40 hours a week.Sadie gets a pay raise and now earns $20 an hour.She decides to work 45 hours a week at $20 an hour.Her response to the pay increase demonstrates the:

A)income effect outweighing the price effect.
B)price effect outweighing the income effect.
C)income effect outweighing the substitution effect.
D)labor effect outweighing the price effect.

Question 76

In general,as wages go up:

A)people are willing to work less.
B)the opportunity cost of leisure goes up.
C)the opportunity cost of leisure goes down.
D)None of these statements is true.

Question 77

The decrease in the quantity of labor supplied due to the greater demand for leisure caused by a higher income is called the:

A)income effect.
B)price effect.
C)substitution effect.
D)labor effect.

Question 78

In general,as wages increase:

A)people are willing to work less.
B)people are willing to work more.
C)it does not affect people's willingness to work.
D)the benefit of working goes down.

Question 79

If the income effect outweighs the price effect of a wage increase,the labor-supply curve will:

A)slope upward.
B)slope downward.
C)be perfectly flat.
D)be perfectly horizontal.

Question 80

The labor supply could decrease when wages increase only if:

A)the price effect outweighs the income effect.
B)the income effect outweighs the price effect.
C)the substitution effect outweighs the income effect.
D)the price effect outweighs the substitution effect.