Question 1

If the current wage is below the market equilibrium level in a competitive labor market:

Accepted Answer

A)  firms will demand more labor than workers are willing to supply.
B)  firms will have to offer higher wages to attract the workers they need.
C)  there won't be enough workers willing to work at that wage.
D)  All of these are true.E) B) and D)
F) B) and C)

Question 2

Derived demand:

Accepted Answer

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

Question 3

We can expect producers to pay _______ for land with _______ productivity.

Accepted Answer

A)  more; equal
B)  more; lower
C)  less; higher
D)  less; lowerE) None of the above
F) A) and B)

Question 4

The factor of production called "capital" refers to:

Accepted Answer

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 part of the earth.
D)  the amount of money a firm has access to when running its business.E) B) and C)
F) A) and B)

Question 5

The table shown displays the production schedule for a bakery in a competitive market that sells loaves of bread for $5 each.

What is the value of the marginal product of labor for the fifth worker?

Accepted Answer

A)  $250
B)  $7
C)  $25
D)  $35E) A) and D)
F) B) and C)

Question 6

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

Accepted Answer

A)  downward sloping.
B)  upward sloping.
C)  perfectly elastic for competitive firms.
D)  perfectly inelastic.E) All of the above
F) C) and D)

Question 7

If a firm adopts a labor-saving piece of technology, the

Accepted Answer

A)  marginal product of labor will increase.
B)  marginal product of labor will decrease.
C)  marginal supply of labor will increase.
D)  marginal supply of labor will decrease.E) A) and B)
F) None of the above

Question 8

If a producer who hires labor in a competitive labor market decides to purchase a new technology that allows each worker to produce twice as much output as before, we would expect the labor demand curve to shift to the _______ and wages to _______.

Accepted Answer

A)  left; increase
B)  left; decrease
C)  right; increase
D)  right; decreaseE) A) and B)
F) All of the above

Question 9

Sadie earns $70 a day at her job. Sadie's friend Caroline invites her to go swimming with sharks on a day that Sadie is scheduled to work. Sadie decides to call off work and swim with sharks instead. Sadie's choice implies that her opportunity cost of working is:

Accepted Answer

A)  less than $70.
B)  greater than $70.
C)  equal to $70.
D)  This cannot be answered without more information.E) B) and C)
F) All of the above

Question 10

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

Accepted Answer

A)  is always positive, nearing zero as quantity increases.
B)  is always negative, nearing zero as quantity increases.
C)  becomes zero when profits are maximized.
D)  eventually decreases as quantity increases.E) All of the above
F) C) and D)

Question 11

A market that consists of many sellers and only one buyer is a:

Accepted Answer

A)  monopsony.
B)  monopoly.
C)  oligopoly.
D)  monopolistically competitive market.E) A) and C)
F) C) and D)

Question 12

A slump in one industry could increase the relative attractiveness of another industry, thereby _______ the quantity of labor _______ in the more attractive industry.

Accepted Answer

A)  increasing; supplied
B)  decreasing; supplied
C)  increasing; demanded
D)  decreasing; demandedE) A) and C)
F) A) and B)

Question 13

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

Accepted Answer

A)  leather will decrease.
B)  skilled hand-sewers of leather will increase.
C)  needles and thread will decrease.
D)  other types of shoes will increase.E) All of the above
F) A) and D)

Question 14

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

Accepted Answer

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

Question 15

An individual labor demand curve represents:

Accepted Answer

A)  a worker's decisions about how many hours to work at each alternative wage.
B)  the decisions of all workers about how many hours to work at each alternative wage.
C)  a firm's decisions about how many workers to hire at each alternative wage.
D)  the decisions of all firms about how many workers to hire at each alternative wage.E) C) and D)
F) A) and D)

Question 16

When a rare skill contributes to the production of something that consumers value highly, the:

Accepted Answer

A)  value of the marginal product is high.
B)  marginal product is high.
C)  marginal cost per unit is low.
D)  total product is high.E) A) and B)
F) A) and C)

Question 17

If the U.S. experiences an enormous surge of immigration, we could predict it would make the labor supply:

Accepted Answer

A)  decrease and shift to the right.
B)  increase and shift to the right.
C)  increase and shift to the left.
D)  decrease and shift to the left.E) B) and C)
F) None of the above

Question 18

If a firm adopts a labor-saving piece of technology:

Accepted Answer

A)  labor demand will increase.
B)  labor supply will increase.
C)  labor demand will decrease.
D)  labor supply will decrease.E) A) and B)
F) None of the above

Question 19

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

Accepted Answer

A)  increase.
B)  decrease.
C)  remain constant.
D)  drop to zero.E) None of the above
F) B) and C)

Question 20

Suhani works at a call center where she can choose her hours, earning $12 per hour worked. Suhani is planning to spend three hours working on Friday, but a friend calls and invites her to go bungee jumping instead. If Suhani decides to go bungee jumping instead of working, we know that her opportunity cost of working for three hours is:

Accepted Answer

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

Exam 16: The Facts of Production

The table shown displays the production schedule for a bakery in a competitive market that sells loaves of bread for $5 each. What is the value of the marginal product of labor for the fifth worker?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

If a firm adopts a labor-saving piece of technology:

Correct Answer
verified

When a rare skill contributes to the production of something that consumers value highly, the:

Correct Answer
verified

If a producer who hires labor in a competitive labor market decides to purchase a new technology that allows each worker to produce twice as much output as before, we would expect the labor demand curve to shift to the _ and wages to _.

Correct Answer
verified

A market that consists of many sellers and only one buyer is a:

Correct Answer
verified

Sadie earns $70 a day at her job. Sadie's friend Caroline invites her to go swimming with sharks on a day that Sadie is scheduled to work. Sadie decides to call off work and swim with sharks instead. Sadie's choice implies that her opportunity cost of working is:

Correct Answer
verified

We can expect producers to pay _ for land with _ productivity.

Correct Answer
verified

The factor of production called "capital" refers to:

Correct Answer
verified

If the U.S. experiences an enormous surge of immigration, we could predict it would make the labor supply:

Correct Answer
verified

If a firm adopts a labor-saving piece of technology, the

Correct Answer
verified

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

Correct Answer
verified

A slump in one industry could increase the relative attractiveness of another industry, thereby _ the quantity of labor _ in the more attractive industry.

Correct Answer
verified

If the current wage is below the market equilibrium level in a competitive labor market:

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

An individual labor demand curve represents:

Correct Answer
verified

Derived demand:

Correct Answer
verified

Exam 16: The Facts of Production

The table shown displays the production schedule for a bakery in a competitive market that sells loaves of bread for $5 each. What is the value of the marginal product of labor for the fifth worker?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a firm adopts a labor-saving piece of technology:

Correct AnswerverifiedShow Answer

When a rare skill contributes to the production of something that consumers value highly, the:

Correct AnswerverifiedShow Answer

If a producer who hires labor in a competitive labor market decides to purchase a new technology that allows each worker to produce twice as much output as before, we would expect the labor demand curve to shift to the _______ and wages to _______.

Correct AnswerverifiedShow Answer

A market that consists of many sellers and only one buyer is a:

Correct AnswerverifiedShow Answer

Sadie earns $70 a day at her job. Sadie's friend Caroline invites her to go swimming with sharks on a day that Sadie is scheduled to work. Sadie decides to call off work and swim with sharks instead. Sadie's choice implies that her opportunity cost of working is:

Correct AnswerverifiedShow Answer

We can expect producers to pay _______ for land with _______ productivity.

Correct AnswerverifiedShow Answer

The factor of production called "capital" refers to:

Correct AnswerverifiedShow Answer

If the U.S. experiences an enormous surge of immigration, we could predict it would make the labor supply:

Correct AnswerverifiedShow Answer

If a firm adopts a labor-saving piece of technology, the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A slump in one industry could increase the relative attractiveness of another industry, thereby _______ the quantity of labor _______ in the more attractive industry.

Correct AnswerverifiedShow Answer

If the current wage is below the market equilibrium level in a competitive labor market:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An individual labor demand curve represents:

Correct AnswerverifiedShow Answer

Derived demand:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

If a producer who hires labor in a competitive labor market decides to purchase a new technology that allows each worker to produce twice as much output as before, we would expect the labor demand curve to shift to the _ and wages to _.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

We can expect producers to pay _ for land with _ productivity.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

A slump in one industry could increase the relative attractiveness of another industry, thereby _ the quantity of labor _ in the more attractive industry.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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