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Exam 18: The Markets for the Factors of Production

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Question 211

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Scenario 18-2 Gertrude Kelp owns three boats that participate in commercial fishing for fresh Pacific salmon off the coast of Alaska. As part of her business she hires a captain and several crew members for each boat. In the market for fresh Pacific salmon, there are thousands of firms like Gertrude's. While Gertrude usually catches a significant number of fish each year, her contribution to the entire harvest of salmon is negligible relative to the size of the market. -Refer to Scenario 18-2. If Gertrude is a price taker in the labor market, she can choose

A) the price at which she will sell the fish she catches.
B) how many crew members she will hire.
C) the wages that she will pay to her crew members.
D) All of the above.

E) A) and C)
F) B) and D)

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Question 212

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If the wage exceeds the value of the marginal product of labor, then hiring another worker

A) decreases the firm's total revenue.
B) increases the firm's profit.
C) decreases the firm's total cost.
D) decreases the firm's profit.

E) A) and B)
F) A) and C)

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Question 213

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Consider the labor market for computer programmers. Because of the dot.com boom in the late 1990s, a lot of workers went to school to learn how to write computer code for one of thousands of new dot.com companies. However, when these computer programming students graduated the dot.com bust took place. The dot.com bust decreased the value of the marginal product of computer programmers. Holding all else equal what effect did these two circumstances have on the equilibrium quantity in the labor market for computer programmers?

Scenario 18-2 Gertrude Kelp owns three boats that participate in commercial fishing for fresh Pacific salmon off the coast of Alaska. As part of her business she hires a captain and several crew members for each boat. In the market for fresh Pacific salmon, there are thousands of firms like Gertrude's. While Gertrude usually catches a significant number of fish each year, her contribution to the entire harvest of salmon is negligible relative to the size of the market. -Refer to Scenario 18-2. Labor-market theory assumes that Gertrude's demand for crew members and her supply of fresh Pacific salmon result from her

Consider the market for university economics professors. Suppose the opportunity cost of going to graduate school to get a Ph.D. in economics decreases for many individuals. Suppose it generally takes about five years to get a Ph.D. in economics. Holding all else constant, in five years the equilibrium quantity of university economics professors will

Among the people who are characterized below, who has the highest opportunity cost of leisure?

Suppose XYZ Corporation is currently renting 300 units of capital at a rental price of $500 units per unit. The value of the marginal product of the 300^th unit of capital is $400. How can the corporation increase its profit?

Table 18-7 -Refer to Table 18-7. It is apparent from this table that increasing marginal product

The value of the marginal product is

Approximately how much of the income in the United States is earned by workers in the form of wages and fringe benefits?

A competitive, profit-maximizing firm hires workers up to the point where the

Land, labor, and capital are examples of factors of production.

Over the last 60 or so years, the percentage of women with paid jobs has increased significantly. Is this increase in female employment associated with an increase in the demand for labor, or is it associated with an increase in the supply of labor?

Does history suggest that most technological progress is labor-saving or labor-augmenting?

When we focus on labor as an input in the production process, we typically draw the production function by measuring the

Labor markets are different from most other markets because labor demand is

If the demand curve for wedding cakes shifts to the right, then the value of the marginal product of labor for bakers will

Omega Custom Cabinets produces and sells custom bathroom vanities. Assume that labor is the only input that varies for the firm. The firm has determined that if it hires 10 workers, it can produce and sell 20 vanities per week. If it hires 11 workers, it can produce and sell 22 vanities per week. It sells each vanity for $800, and it pays each of its workers $1,000 per week. Which of the following is correct?

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.

Table 18-12 The table displays data for a small, competitive, profit-maximizing firm that produces and sells envelopes. The time frame is one week. -Refer to Table 18-12. Suppose the firm sells each box of envelopes that it produces for $6. The firm would not be interested in hiring a third worker unless the wage fell from its current level of $600 to what level?