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Exam 18: The Markets for the Factors of Production

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Question 21

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Figure 18-5 -Refer to Figure 18-5.If the marginal product of labor falls and the price of apples remains unchanged,

A) (i) and (ii)
B) (ii) and (iii)
C) (i) and (iii)
D) All of the above are correct.

E) None of the above
F) C) and D)

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Question 22

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For a competitive,profit-maximizing firm,the labor demand curve is the same as the

A) marginal cost curve.
B) value of marginal product curve.
C) production function.
D) profit function.

E) None of the above
F) B) and D)

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Question 23

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Suppose the following events occur in the market for university economics professors. Event 1: A recession in the U.S.economy lowers the opportunity cost of going to graduate school in economics to become a university economics professor. Event 2: An increasing number of students in U.S.primary and secondary schools increases the number of students entering college,increasing the output price of university economics professors' services. As a result of these two events,holding all else constant,what will likely happen to the equilibrium quantity of university economics professors?

Immigration is an important

Scenario 18-3 Jerry has two jobs,one for the winter and one for the summer.In the winter,he works as a lift attendant at a ski resort where he earns $10 per hour.During the summer,he drives a tour bus around the ski resort,earning $12 per hour. -Refer to Scenario 18-3.Assume that Jerry has an upward-sloping labor supply curve.If the opportunity cost of Jerry's leisure time increases,he will respond by working

As a result of severe flooding,a farmer loses half of his productive farmland.He should expect to see the marginal productivity of his remaining land

Table 18-5 -Refer to Table 18-5.What is the market price of the final good?

If the value of the marginal product of labor exceeds the wage,then hiring another worker increases the firm's

The value of the marginal product of labor is equal to the change in

Suppose that the market for labor is initially in equilibrium.If the firm employs labor-augmenting technology,

For a competitive,profit-maximizing firm,the demand curve for labor will shift in response to a change in the

Describe the difference between a diminishing marginal product of labor and a negative marginal product of labor.Why would a profit-maximizing firm always choose to operate where the marginal product of labor is decreasing (but not negative)?

Table 18-2 The following table shows the production function for a particular business.The numbers represent the various labor and output combinations the firm may choose for its output on a daily basis. -Refer to Table 18-2.Suppose this firm charges a price of $5 per unit of output and pays workers a wage equal to $160 per day.What is the value of the marginal product of labor for the fourth worker?

In order to calculate the value of the marginal product of labor,a manager must know the marginal product of labor and the wage rate of the worker.

Labor-augmenting technological advances increase the marginal productivity of labor.

Table 18-5 -Refer to Table 18-5.To maximize its profit,how many workers will the firm hire?

Table 18-5 -Refer to Table 18-5.The fact that the marginal product falls as the number of workers increases illustrates a property called

Dan owns one of the many bakeries in New York City.Which of the following events will lead to an increase in Dan's demand for the services of bakers?

Figure 18-2.The figure shows a particular firm's value-of-marginal-product (VMP) curve.On the horizontal axis,L represents the number of workers.The time frame is daily. -Refer to Figure 18-2.The value-of-marginal-product curve that is drawn could be relabeled as the firm's

Along the horizontal axis of the production function we typically measure