Question 1

Which of the following best illustrates the concept of "derived demand?"

Accepted Answer

A)  An increase in the wages of auto workers will lead to an increase in the demand for robots in automobile factories.
B)  An automobile producer's decision to supply more cars will lead to an increase in the demand for automobile production workers.
C)  An automobile producer's decision to supply more minivans results from a decrease in the demand for station wagons.
D)  An increase in the price of gasoline will lead to an increase in the demand for small cars.E) A) and B)
F) None of the above

Question 2

Figure 18-4 
-Refer to Figure 18-4.The graph above illustrates the market for bakers who make homemade breads and breakfast pastries.If the price of breakfast pastries falls,what happens in the market for bakers?

Accepted Answer

A)  Demand increases from D1 to D2.
B)  Demand decreases from D2 to D1.
C)  Supply increases from S1 to S2.
D)  Supply decreases from S2 to S1.E) A) and B)
F) A) and C)

Question 3

Factor markets are different from product markets in an important way because

Accepted Answer

A)  equilibrium is the exception,and not the rule,in factor markets.
B)  the demand for a factor of production is a derived demand.
C)  the demand for a factor of production is likely to be upward sloping,in violation of the law of demand.
D)  All of the above are correct.E) A) and D)
F) None of the above

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Figure 18-8
This figure below shows the labor market for automobile workers.The curve labeled S is the labor supply curve,and the curves labeled D1 and D2 are the labor demand curves.On the horizontal axis,L represents the quantity of labor in the market. 1 and D2 are the labor demand curves.On the horizontal axis,L represents the quantity of labor in the market.    -Refer to Figure 18-8.Which of the following is a possible explanation of the shift of the labor-demand curve from D1 to D2? A) The wage earned by automobile workers increased. B) The price of automobiles increased. C) The opportunity cost of leisure,as perceived by automobile workers,decreased. D) Large segments of the population changed their tastes regarding leisure versus work." class="answers-bank-image d-inline" rel="preload" >

-Refer to Figure 18-8.Which of the following is a possible explanation of the shift of the labor-demand curve from D1 to D2?

Accepted Answer

A)  The wage earned by automobile workers increased.
B)  The price of automobiles increased.
C)  The opportunity cost of leisure,as perceived by automobile workers,decreased.
D)  Large segments of the population changed their tastes regarding leisure versus work.E) B) and C)
F) A) and D)

Question 6

In economics,the term capital refers to

Accepted Answer

A)  money.
B)  stocks and bonds.
C)  equipment and structures used in production.
D)  All of the above are correct.E) A) and B)
F) C) and D)

Question 7

Let L represent the quantity of labor,and let Q represent the quantity of output.Suppose a certain production function includes the points (L = 7,Q = 27),(L = 8,Q = 35),and
(L = 9,Q = 45).Based on these three points,this production function exhibits diminishing marginal product.

Accepted Answer

A) True 
 B)False

Question 8

As a result of a fire,a small business owner loses some of her computers and other equipment.If the property of diminishing returns applies to all factors of production,she should expect to see

Accepted Answer

A)  an increase in the marginal productivity of her remaining capital and an increase in the marginal productivity of her labor.
B)  an increase in the marginal productivity of her remaining capital and a decrease in the marginal productivity of her labor.
C)  a decrease in the marginal productivity of her remaining capital and an increase in the marginal productivity of her labor.
D)  a decrease in the marginal productivity of her remaining capital and a decrease in the marginal productivity of her labor.E) A) and B)
F) None of the above

Question 9

Figure 18-8
This figure below shows the labor market for automobile workers.The curve labeled S is the labor supply curve,and the curves labeled D1 and D2 are the labor demand curves.On the horizontal axis,L represents the quantity of labor in the market. 1 and D2 are the labor demand curves.On the horizontal axis,L represents the quantity of labor in the market.    -Refer to Figure 18-8.What is measured along the vertical axis on the graph? A) the quantity of automobiles produced B) the price of automobiles C) the wage paid to automobile workers D) time spent by workers producing automobiles" class="answers-bank-image d-inline" rel="preload" >

-Refer to Figure 18-8.What is measured along the vertical axis on the graph?

Accepted Answer

A)  the quantity of automobiles produced
B)  the price of automobiles
C)  the wage paid to automobile workers
D)  time spent by workers producing automobilesE) None of the above
F) All of the above

Question 10

In a representative labor market,

Accepted Answer

A)  the wage adjusts to balance the supply and demand for labor.
B)  the wage equals the value of the marginal product of labor.
C)  an increase in the supply of labor increases the equilibrium wage.
D)  Both a and b are correct.E) A) and B)
F) A) and C)

Question 11

Figure 18-7 1 to S2? A) technological progress B) a decrease in the price of the firm's output C) a change in workers' attitudes toward the work-leisure tradeoff D) an increase in the price of the firm's output" class="answers-bank-image d-inline" rel="preload" >

-Refer to Figure 18-7.Which of the following would shift the labor supply curve from S1 to S2?

Accepted Answer

A)  technological progress
B)  a decrease in the price of the firm's output
C)  a change in workers' attitudes toward the work-leisure tradeoff
D)  an increase in the price of the firm's outputE) B) and C)
F) A) and C)

Question 12

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

Accepted Answer

A)  wage rate.
B)  quantity of labor demanded.
C)  price of the product that the firm sells.
D)  an increase in the supply of labor.E) A) and D)
F) All of the above

Question 13

If the output price of a product rises,the demand for capital will increase,raising the rental price of capital.

Accepted Answer

A) True 
 B)False

Question 14

The value of the marginal product of labor can be calculated as the price of the final good minus the marginal product of labor.

Accepted Answer

A) True 
 B)False

Question 15

An event that changes the supply of any factor of production can alter the earnings of all the factors.

Accepted Answer

A) True 
 B)False

Question 16

Because of diminishing returns,a factor in abundant supply has a

Accepted Answer

A)  high marginal product and a high rental price.
B)  high marginal product and a low rental price.
C)  low marginal product and a high rental price.
D)  low marginal product and a low rental price.E) A) and D)
F) C) and D)

Question 17

Explain how a firm values the contribution of workers to its profitability.Would a profit-maximizing competitive firm ever stop increasing employment as long as marginal product is rising?
 Explain your answer.

Accepted Answer

A firm values the contribution of a work...

Question 18

Figure 18-7 2 and the current wage is W1, A) there is a surplus of labor. B) the quantity of labor demanded exceeds the quantity of labor supplied. C) an increase in the minimum wage could restore equilibrium in the market. D) firms will need to raise the wage to restore equilibrium." class="answers-bank-image d-inline" rel="preload" >

-Refer to Figure 18-7.If the relevant labor supply curve is S2 and the current wage is W1,

Accepted Answer

A)  there is a surplus of labor.
B)  the quantity of labor demanded exceeds the quantity of labor supplied.
C)  an increase in the minimum wage could restore equilibrium in the market.
D)  firms will need to raise the wage to restore equilibrium.E) A) and D)
F) None of the above

Question 19

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 marginal product of the second worker is

Accepted Answer

A)  90 units of output.
B)  105 units of output.
C)  210 units of output.
D)  330 units of output.E) All of the above
F) C) and D)

Question 20

Describe the difference between the purchase price of capital and the rental price of capital.If you know the value of marginal product from the flow of capital services,how would you determine the market price for the capital stock?

Accepted Answer

The purchase price of capital is a refle...

Exam 18: The Market for the Factors of Production

As a result of a fire,a small business owner loses some of her computers and other equipment.If the property of diminishing returns applies to all factors of production,she should expect to see

Correct Answer
verified

In economics,the term capital refers to

Correct Answer
verified

Figure 18-4 -Refer to Figure 18-4.The graph above illustrates the market for bakers who make homemade breads and breakfast pastries.If the price of breakfast pastries falls,what happens in the market for bakers?

Correct Answer
verified

Factor markets are different from product markets in an important way because

Correct Answer
verified

Explain how a firm values the contribution of workers to its profitability.Would a profit-maximizing competitive firm ever stop increasing employment as long as marginal product is rising? Explain your answer.

Correct Answer
verified
A firm values the contribution of a work...
View Answer

Because of diminishing returns,a factor in abundant supply has a

Correct Answer
verified

Figure 18-7 -Refer to Figure 18-7.If the relevant labor supply curve is S₂ and the current wage is W₁,

Correct Answer
verified

Which of the following best illustrates the concept of "derived demand?"

Correct Answer
verified

Describe the difference between the purchase price of capital and the rental price of capital.If you know the value of marginal product from the flow of capital services,how would you determine the market price for the capital stock?

Correct Answer
verified
The purchase price of capital is a refle...
View Answer

Correct Answer
verified

The value of the marginal product of labor can be calculated as the price of the final good minus the marginal product of labor.

Correct Answer
verified

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

Correct Answer
verified

Figure 18-7 -Refer to Figure 18-7.Which of the following would shift the labor supply curve from S₁ to S₂?

Correct Answer
verified

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 marginal product of the second worker is

Correct Answer
verified

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

Correct Answer
verified

Let L represent the quantity of labor,and let Q represent the quantity of output.Suppose a certain production function includes the points (L = 7,Q = 27),(L = 8,Q = 35),and (L = 9,Q = 45).Based on these three points,this production function exhibits diminishing marginal product.

Correct Answer
verified

An event that changes the supply of any factor of production can alter the earnings of all the factors.

Correct Answer
verified

If the output price of a product rises,the demand for capital will increase,raising the rental price of capital.

Correct Answer
verified

In a representative labor market,

Correct Answer
verified

Correct Answer
verified

Exam 18: The Market for the Factors of Production

As a result of a fire,a small business owner loses some of her computers and other equipment.If the property of diminishing returns applies to all factors of production,she should expect to see

Correct AnswerverifiedShow Answer

In economics,the term capital refers to

Correct AnswerverifiedShow Answer

Figure 18-4 -Refer to Figure 18-4.The graph above illustrates the market for bakers who make homemade breads and breakfast pastries.If the price of breakfast pastries falls,what happens in the market for bakers?

Correct AnswerverifiedShow Answer

Factor markets are different from product markets in an important way because

Correct AnswerverifiedShow Answer

Explain how a firm values the contribution of workers to its profitability.Would a profit-maximizing competitive firm ever stop increasing employment as long as marginal product is rising? Explain your answer.

Correct AnswerverifiedA firm values the contribution of a work...View AnswerShow Answer

Because of diminishing returns,a factor in abundant supply has a

Correct AnswerverifiedShow Answer

Figure 18-7 -Refer to Figure 18-7.If the relevant labor supply curve is S2 and the current wage is W1,

Correct AnswerverifiedShow Answer

Which of the following best illustrates the concept of "derived demand?"

Correct AnswerverifiedShow Answer

Describe the difference between the purchase price of capital and the rental price of capital.If you know the value of marginal product from the flow of capital services,how would you determine the market price for the capital stock?

Correct AnswerverifiedThe purchase price of capital is a refle...View AnswerShow Answer

Correct AnswerverifiedShow Answer

The value of the marginal product of labor can be calculated as the price of the final good minus the marginal product of labor.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 18-7 -Refer to Figure 18-7.Which of the following would shift the labor supply curve from S1 to S2?

Correct AnswerverifiedShow Answer

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 marginal product of the second worker is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Let L represent the quantity of labor,and let Q represent the quantity of output.Suppose a certain production function includes the points (L = 7,Q = 27),(L = 8,Q = 35),and (L = 9,Q = 45).Based on these three points,this production function exhibits diminishing marginal product.

Correct AnswerverifiedShow Answer

An event that changes the supply of any factor of production can alter the earnings of all the factors.

Correct AnswerverifiedShow Answer

If the output price of a product rises,the demand for capital will increase,raising the rental price of capital.

Correct AnswerverifiedShow Answer

In a representative labor market,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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A firm values the contribution of a work...
View Answer

Correct Answer
verified

Figure 18-7 -Refer to Figure 18-7.If the relevant labor supply curve is S₂ and the current wage is W₁,

Correct Answer
verified

Correct Answer
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Correct Answer
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The purchase price of capital is a refle...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Figure 18-7 -Refer to Figure 18-7.Which of the following would shift the labor supply curve from S₁ to S₂?

Correct Answer
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Correct Answer
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Correct Answer
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