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Exam 18: The Markets for the Factors of Production

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Question 211

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An increase in the demand for houses

A) increases the equilibrium wage of carpenters and increases the value of carpenters' marginal product of labor.
B) increases the equilibrium wage of carpenters and decreases the value of carpenters' marginal product of labor.
C) decreases the equilibrium wage of carpenters and increases the value of carpenters' marginal product of labor.
D) decreases the equilibrium wage of carpenters and decreases the value of carpenters' marginal product of labor.

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

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Question 212

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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. -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.

E) A) and D)
F) All of the above

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Question 213

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Table 18-10 -Refer to Table 18-10. This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor. Each baseball sells for $2.50 in a competitive market. What is the marginal revenue product of the fourth worker?

Figure 18-2 The figure below shows the production function for a particular firm. -Refer to Figure 18-2. Suppose the firm pays a wage equal to $160 per unit of labor and sells its output at $10 per unit. What is the value of the marginal product of labor for the fourth worker?

Scenario 18-3 Sam 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 $13 per hour. During the summer, he drives a tour bus around the ski resort, earning $11 per hour. -Refer to Scenario 18-3. During the summer months, what is Sam's opportunity cost of taking an hour off work to go hiking?

Table 18-A -Refer to Table 18-4. The price of output is

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.

Immigration is an important

Table 18-7 -Refer to Table 18-7. To maximize its profit, the firm will hire workers as long as the value of the marginal product of labor equals or exceeds

Consider the market for university economics professors. Suppose the opportunity cost of going to graduate school to get a Ph.D. in economics increases 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

Consider the labor market for short-order cooks. A labor-augmenting technological change such as a faster food processor will cause

Table 18-6 -Refer to Table 18-6. What is the value for the cell labeled BB?

A change in the supply of one factor of production

Suppose the prices of agricultural products such as corn and soybeans increase. What is the effect of these price increases on the marginal product of the 1,000^th farm worker? What is the effect on the value of the marginal product of the 1,000^th farm worker?

Suppose the supply of capital decreases. As a result, the quantity of capital used in production and the rental price of capital will both fall.

Tony is the owner of Tony's Taqueria. Tony is a profit-maximizing owner whose firm operates in a competitive market. An additional worker costs Tony $200 and has a marginal productivity of 40 tacos. Assuming no other variable costs, what is the marginal cost of a taco?

A competitive firm sells its output for $50 per unit. Assume that labor is the only input that varies for the firm. The marginal product of the 10th worker is 10 units of output per day; the marginal product of the 11th worker is 8 units of output per day. The firm pays its workers a wage of $160 per day. For the 10th worker, the value of the marginal product of labor is

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. Suppose the firm sells its output for $15 per unit, and it pays each of its workers $750 per week. When output increases from 210 units to 285 units, the

Fiona's hourly wage decreases from $10 to $8. Which of the following describes a consequence of the decrease in Fiona's wage?

Jessica receives a raise at her current part-time job from $9 to $11 per hour. If her labor supply curve is backward sloping, she will work fewer hours after receiving the pay raise.