Question 1

The labor supply curve reflects how

Accepted Answer

A)   workers' decisions about the labor-leisure tradeoff respond to a change in the wage.
B)   workers' decisions about the opportunity cost of labor respond to a change in the quantity of labor supplied.
C)   firms' decisions about the labor-leisure tradeoff respond to the quantity of labor demanded.
D)   firms' decisions about how the quantity of labor they hire respond to changes in their opportunities to earn profits.E) A) and D)
F) B) and C)

Question 2

To maximize profit,a competitive firm hires workers up to the point of intersection of the

Accepted Answer

A)   marginal product curve and the wage line.
B)   value of marginal product curve and the wage line.
C)   value of marginal product curve and the marginal revenue curve.
D)   total revenue curve and the wage line.E) B) and D)
F) A) and B)

Question 3

Suppose that the market for labor is initially in equilibrium.A decrease in the price of output will cause

Accepted Answer

A)   the equilibrium wage and the quantity of labor to both rise.
B)   the equilibrium wage and the quantity of labor to both fall.
C)   the equilibrium wage to rise and the quantity of labor to fall.
D)   the equilibrium wage to fall and the quantity of labor to rise.E) All of the above
F) B) and C)

Question 4

If workers respond to an increase in the opportunity cost of leisure by taking more leisure,then their labor supply curve is

Accepted Answer

A)   upward sloping.
B)   backward sloping.
C)   horizontal.
D)   vertical.E) A) and B)
F) A) and C)

Question 5

The Black Death in fourteenth-century Europe resulted in

Accepted Answer

A)   a lower marginal product of labor of surviving workers.
B)   a higher marginal product of land.
C)   economic hardship for surviving peasants.
D)   economic hardship for surviving landowners.E) B) and D)
F) A) and C)

Question 6

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

Accepted Answer

A)   an attorney who earns $200 per hour and who plays golf during her leisure time
B)   a medical doctor who earns $210 per hour and who sleeps during his leisure time
C)   a retail clerk who earns $15 per hour and who watches TV during her leisure time
D)   a waiter who earns $12 per hour and who reads poetry during his leisure timeE) C) and D)
F) B) and D)

Question 7

Because of diminishing returns,a factor in abundant supply has

Accepted Answer

A)   a high marginal product and a high rental price.
B)   a high marginal product and a low rental price.
C)   a low marginal product and a high rental price.
D)   a low marginal product and a low rental price.E) A) and C)
F) None of the above

Question 8

The Black Death in fourteenth-century Europe resulted in

Accepted Answer

A)   a lower marginal product of land.
B)   a lower marginal product of labor of surviving workers.
C)   economic hardship for surviving peasants.
D)   economic prosperity for surviving landowners.E) None of the above
F) A) and D)

Question 9

Factor-market analysis could not be complete without some characterization of

Accepted Answer

A)   product-market demand.
B)   the marginal productivities of the different factors.
C)   market prices for final goods and services.
D)   All of the above are correct.E) None of the above
F) A) and C)

Question 10

Competitive firms decide how much output to sell by producing output until the price of the good equals

Accepted Answer

A)   marginal product.
B)   the value of marginal product.
C)   marginal cost.
D)   marginal profit.E) B) and D)
F) B) and C)

Question 11

Firms pay out a portion of their earnings in the form of interest and dividends,and those payments are a portion of the economy's capital income.

Accepted Answer

A) True 
 B)False

Question 12

The value of the marginal product is

Accepted Answer

A)   total revenue minus total cost.
B)   the change in total output divided by the change in an input.
C)   the marginal product of an input times the price of the output.
D)   total output divided by total inputs.E) B) and D)
F) B) and C)

Question 13

Economists refer to the inputs that firms use to produce goods and services as

Accepted Answer

A)   derived factors.
B)   derived resources.
C)   factors of production.
D)   instruments of revenue.E) C) and D)
F) A) and B)

Question 14

Table 18-8
 
-Refer to Table 18-8.Suppose that the firm pays its workers $45 per day.Each unit of output sells for $10.How many days of labor should the firm hire?

Accepted Answer

A)   1
B)   2
C)   3
D)   4E) B) and D)
F) All of the above

Question 15

A sandwich shop hires workers to make sandwiches and sell them to customers.If the firm is competitive in both the market for sandwiches and in the market for sandwich-makers,then it has

Accepted Answer

A)   some control over both the price of sandwiches and the wage it pays to its workers.
B)   no control over the price of sandwiches but some control over the wage it pays to its workers.
C)   some control over the price of sandwiches but no control over the wage it pays to its workers.
D)   no control over either the price of sandwiches or the wage it pays to its workers.E) All of the above
F) C) and D)

Question 16

Figure 18-1.On the graph,L represents the quantity of labor and Q represents the quantity of output per week. 
-Refer to Figure 18-1.The figure illustrates the

Accepted Answer

A)   demand for labor.
B)   supply of labor.
C)   production function.
D)   wage function.E) B) and C)
F) B) and D)

Question 17

If workers respond to an increase in the opportunity cost of leisure by taking less leisure,then their labor supply curve is

Accepted Answer

A)   horizontal.
B)   vertical.
C)   downward sloping.
D)   upward sloping.E) A) and D)
F) B) and C)

Question 18

The labor supply curve shifts when

Accepted Answer

A)   employers need to hire more people.
B)   employers develop new technology.
C)   workers change the number of hours that they want to work at any given wage.
D)   workers become more productive.E) A) and D)
F) All of the above

Question 19

Table 18-7
 
-Refer to Table 18-7.What is the value for the cell labeled AA?

Accepted Answer

A)   $600
B)   $500
C)   $400
D)   $300E) A) and D)
F) None of the above

Question 20

The opportunity cost of leisure is impossible to measure,since we can't measure leisure time in dollars.

Accepted Answer

A) True 
 B)False

Exam 18: The Markets for the Factors of Production

Suppose that the market for labor is initially in equilibrium.A decrease in the price of output will cause

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Competitive firms decide how much output to sell by producing output until the price of the good equals

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Table 18-7 -Refer to Table 18-7.What is the value for the cell labeled AA?

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The value of the marginal product is

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Table 18-8 -Refer to Table 18-8.Suppose that the firm pays its workers $45 per day.Each unit of output sells for $10.How many days of labor should the firm hire?

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Economists refer to the inputs that firms use to produce goods and services as

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A sandwich shop hires workers to make sandwiches and sell them to customers.If the firm is competitive in both the market for sandwiches and in the market for sandwich-makers,then it has

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Figure 18-1.On the graph,L represents the quantity of labor and Q represents the quantity of output per week. -Refer to Figure 18-1.The figure illustrates the

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The labor supply curve shifts when

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The Black Death in fourteenth-century Europe resulted in

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

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Firms pay out a portion of their earnings in the form of interest and dividends,and those payments are a portion of the economy's capital income.

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Because of diminishing returns,a factor in abundant supply has

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The opportunity cost of leisure is impossible to measure,since we can't measure leisure time in dollars.

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If workers respond to an increase in the opportunity cost of leisure by taking more leisure,then their labor supply curve is

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The Black Death in fourteenth-century Europe resulted in

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To maximize profit,a competitive firm hires workers up to the point of intersection of the

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The labor supply curve reflects how

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If workers respond to an increase in the opportunity cost of leisure by taking less leisure,then their labor supply curve is

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Factor-market analysis could not be complete without some characterization of

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