-
Chapter 18
The Markets for the
Factors of Production
Multiple Choice
1.
Most of the
total income earned in the U.S. economy is
ultimately paid to households in the form of
a.
profit.
b.
rent.
c.
interest.
d.
wages.
ANS: D
PTS: 1
DIF: 1
REF: 18-0
TOP: Factor
markets
MSC: Definitional
2.
In the United
States economy, which of the following factors of
production is considered to be the most important
in
terms of the magnitude of income
earned by that factor of production?
a.
land
b.
labor
c.
profit
d.
capital
ANS: B
PTS: 1
DIF: 1
REF: 18-0
TOP: Factor
markets
MSC: Definitional
3.
How much of
the income in the United States is earned by
workers in the form of wages and fringe benefits?
a.
more than 90 percent
b.
about 75 percent
c.
about 50 percent
d.
less than 75 percent
ANS: B
PTS: 1
DIF: 1
REF: 18-0
TOP: Factor markets
MSC: Definitional
4.
The factors of production
are best defined as the
a.
output produced from raw materials.
b.
inputs used to produce
goods and services.
c.
wages
paid to the workforce.
d.
goods and services sold in the market.
ANS: B
PTS: 1
DIF: 1
REF: 18-1
TOP: Factor markets
MSC: Definitional
5.
Economists refer to the
inputs that firms use to produce goods and
services as
a.
derived
factors.
b.
derived
resources.
c.
factors of
production.
d.
instruments
of revenue.
ANS: C
PTS: 1
DIF: 1
REF: 18-1
TOP: Factors of production
MSC: Definitional
6.
Because a firm's demand
for a factor of production is derived from its
decision to supply a good in the market, it is
called a
a.
differentiated demand.
b.
secondary demand.
c.
derived demand.
d.
hybrid demand-supply.
ANS: C
PTS: 1
DIF: 1
REF: 18-1
TOP: Factor
markets
MSC: Definitional
769
770
?
Chapter 18/The
Markets for the Factors of Production
7.
The term
a.
labor.
b.
capital.
c.
land.
d.
All of the above are
correct.
ANS: D
PTS: 1
DIF: 1
REF: 18-1
TOP: Factor markets
MSC: Definitional
8.
Factor markets are
different from product markets in an important way
because
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.
ANS: B
PTS: 1
DIF: 2
REF: 18-1
TOP: Factor markets
MSC: Interpretive
9.
Factor-market analysis
could not be complete without some
characterization of
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.
ANS: D
PTS: 1
DIF: 2
REF: 18-1
TOP: Factor markets
MSC: Interpretive
10.
The basic tools of
supply and demand apply to
a.
markets for goods and services and to
markets for labor services.
b.
markets for goods and services but not
to markets for labor services.
c.
markets for goods and services but not
to markets for factors of production.
d.
all markets except those
in which demand is derived demand.
ANS:
A
PTS: 1
DIF: 2
REF: 18-1
TOP: Factors of
production
MSC: Interpretive
11.
Labor
markets are different from most other markets
because labor demand is
a.
represented by a vertical line on a
supply-demand diagram.
b.
represented by an upward-sloping line
on a supply-demand diagram.
c.
such an elusive concept.
d.
derived.
ANS: D
PTS: 1
DIF: 1
REF: 18-1
TOP: Factors of
production
MSC: Interpretive
12.
Which of the
following best illustrates the concept of
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.
ANS: B
PTS: 1
DIF: 2
REF: 18-1
TOP: Labor demand
MSC: Interpretive
13.
When a firm is a profit
maximizer
a.
it is driven to
produce as much of its product as possible.
b.
it will measure its
success by the number of employees it has.
c.
its revenue will always
be maximized as well.
d.
it
does not care directly about the number of workers
it hires.
ANS: D
PTS: 1
DIF: 2
REF: 18-1
TOP: Labor demand
MSC: Interpretive
Chapter
18/The Markets for the Factors of Production
?
771
14.
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.
ANS: B
PTS: 1
DIF: 2
REF: 18-1
TOP: Labor demand
MSC: Analytical
15.
For a competitive firm
that finds it worthwhile to operate rather than
shut down, profit maximization requires that
a.
output price = marginal
cost.
b.
wage = value of
marginal product of labor.
c.
wage/marginal product of labor = P.
d.
All of the above are
correct.
ANS: D
PTS: 1
DIF: 2
REF: 18-1
TOP: Labor demand
MSC: Applicative
16.
What causes the labor
demand curve to shift?
(i)
changes in productivity
(ii)
changes in wages
(iii)
c
hanges in output prices
a.
(i) and (ii)
b.
(ii) and (iii)
c.
(i) and (iii)
d.
All of the above are
correct.
ANS: C
PTS: 1
DIF: 2
REF: 18-1
TOP: Labor demand
MSC: Applicative
17.
If the price of airline
tickets falls, what will happen to the demand
curve for flight attendants?
a.
It will shift to the right.
b.
It will shift to the
left.
c.
The direction of
the shift is ambiguous.
d.
It will remain unchanged.
ANS: B
PTS: 1
DIF: 2
REF: 18-1
TOP: Labor demand
MSC: Applicative
18.
If consumers demand more
genetically engineered foods, then the value of
genetic engineers' marginal product of
labor will
a.
rise.
b.
fall.
c.
remain unchanged.
d.
rise or fall; either is
possible.
ANS: A
PTS: 1
DIF: 2
REF: 18-1
TOP: Labor demand
MSC: Applicative
19.
Competitive firms decide
how much output to sell by producing output until
the price of the good equals
a.
marginal product.
b.
the value of marginal product.
c.
marginal cost.
d.
marginal profit.
ANS: C
PTS: 1
DIF: 2
REF: 18-1
TOP: Labor demand
MSC: Applicative
772
?
Chapter 18/The
Markets for the Factors of Production
20.
Competitive firms hire
workers until the additional benefit they receive
from the last worker hired is equal to
(i)
the additional cost of
that worker.
(ii) the wage paid to that
worker.
(iii)
t
he
marginal product of that worker.
a.
(i) only
b.
(iii)
only
c.
(i) and (ii)
d.
(ii) and (iii)
ANS: C
PTS: 1
DIF: 2
REF: 18-1
TOP: Labor demand
MSC: Analytical
21.
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?
(i)
The price of
muffins increases. (Muffins are Dan's specialty.)
(ii) Dan adds three new ovens to the
kitchen area to help the bakers work faster.
(iii)
L
ocal
bakers form a union to protect themselves from low
wages.
a.
(i)
and (ii)
b.
(ii) and (iii)
c.
(i) and (iii)
d.
All of the above are
correct.
ANS: A
PTS: 1
DIF: 2
REF: 18-1
TOP: Labor demand
MSC: Applicative
22.
Charles owns one of the
many bakeries in New York City. Which of the
following events will lead to a decrease in
Charles's demand for the services of
bakers?
a.
Hollywood
glamorization of a new movie about a baker leads
hundreds of high-school students in New York
City to apply for a job at Dan's.
b.
The price of baked goods
falls.
c.
The local bakers
form a union.
d.
All of the
above are correct.
ANS: B
PTS: 1
DIF: 2
REF: 18-1
TOP: Labor demand
MSC: Applicative
23.
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
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.
ANS: D
PTS: 1
DIF: 1
REF: 18-1
TOP: Labor demand
MSC: Applicative
24.
Which of the
following events could increase the demand for
labor?
a.
a decrease in
output price
b.
a decrease
in the amount of capital available for workers to
use
c.
an increase in the
marginal productivity of workers
d.
All of the above are correct.
ANS: C
PTS: 1
DIF: 2
REF: 18-1
TOP: Labor demand
MSC: Applicative
25.
Which of the following
events could decrease the demand for labor?
a.
an increase in migrant
workers
b.
an increase in
the marginal productivity of workers
c.
a decrease in demand for the final
product produced by labor
d.
a decrease in the labor supply
ANS: C
PTS: 1
DIF: 2
REF: 18-1
TOP: Labor demand
MSC: Applicative
Chapter
18/The Markets for the Factors of Production
?
773
26.
When we focus on the
firm as a supplier of a good or a service, we
assume that the firm is a profit maximizer. When
we focus on the firm as a demander of
labor, we assume that the firm's objective is to
a.
minimize wages.
b.
minimize variable costs.
c.
maximize the number of
workers hired.
d.
maximize
profit.
ANS: D
PTS: 1
DIF: 1
REF: 18-1
TOP: Labor demand
MSC: Interpretive
27.
Suppose that a new
invention increases the marginal productivity of
labor, shifting labor demand to the right. Such an
invention would be an example of
a.
labor-saving technology.
b.
labor-augmenting
technology.
c.
Luddite
technology.
d.
supply-
shifting technology.
ANS: B
PTS: 1
DIF: 1
REF: 18-1
TOP: Labor demand
MSC: Definitional
28.
Suppose that
a new invention decreases the marginal
productivity of labor, shifting labor demand to
the left. Such an
invention would be an
example of
a.
labor-saving
technology.
b.
labor-
augmenting technology.
c.
Luddite technology.
d.
supply-shifting technology.
ANS: A
PTS: 1
DIF: 1
REF: 18-1
TOP: Labor demand
MSC: Definitional
29.
Labor-saving technology
causes which of the following?
(i)
The marginal productivity of labor
increases.
(ii) The marginal
productivity of labor decreases.
(iii)
L
abor demand shifts to the
right.
(iv)
L
abor
demand shifts to the left.
a.
(i) only
b.
(ii)
only
c.
(i) and (iii)
d.
(ii) and (iv)
ANS: D
PTS: 1
DIF: 2
REF: 18-1
TOP: Labor demand
MSC: Interpretive
30.
Labor-augmenting
technology causes which of the following?
(i)
The marginal
productivity of labor increases.
(ii)
The marginal productivity of labor decreases.
(iii)
L
abor
demand shifts to the right.
(iv)
L
abor demand shifts to the
left.
a.
(i) only
b.
(ii) only
c.
(i) and (iii)
d.
(ii) and (iv)
ANS: C
PTS: 1
DIF: 2
REF: 18-1
TOP: Labor demand
MSC: Interpretive
31.
The term
Luddite is used to describe
a.
a person who readily adopts the latest
technological advances.
b.
a
person who fears computers.
c.
a person who opposes technological
advances.
d.
any mythical
historical figure.
ANS: C
PTS: 1
DIF: 1
REF: 18-1
TOP: Labor demand
MSC: Definitional
774
?
Chapter 18/The Markets for the Factors
of Production
32.
A Luddite would be expected to fear
a.
labor-saving
technologies.
b.
labor-
augmenting technologies.
c.
supply-shifting technologies.
d.
the Chairman of the
Federal Reserve.
ANS: A
PTS:
1
DIF: 1
TOP: Labor demand
REF: 18-1
MSC:
Interpretive
33.
Along the vertical axis of the
production function we typically measure
a.
revenue.
b.
the marginal product of the input.
c.
the quantity of input.
d.
the quantity of output.
ANS: D
PTS: 1
DIF: 1
REF: 18-1
TOP: Production function
MSC: Definitional
34.
Along the horizontal
axis of the production function we typically
measure
a.
revenue.
b.
the marginal product of
the input.
c.
the quantity
of input.
d.
the quantity of
output.
ANS: C
PTS: 1
DIF: 1
REF: 18-1
TOP: Production function
MSC: Definitional
35.
A competitive firm sells
its output for $$45 per unit. The marginal product
of the 30th worker is 4 units of output per
day; the marginal product of the 31st
worker is 3 units of output per day. The firm pays
its workers a wage of $$150
per day.
a.
For the 31st worker, the
marginal profit is $$135.
b.
For the 30th worker, the value of the
marginal product of labor is $$600.
c.
For the 30th worker, the marginal
profit is $$180.
d.
None of
the above is correct.
ANS: D
PTS: 1
DIF: 3
REF: 18-1
TOP: Labor demand
MSC: Analytical
36.
Aurora Custom Cabinets
produces and sells custom kitchen cabinets. The
firm has determined that if it hires 10
workers, it can produce 4 sets of
cabinets per day. If it hires 11 workers, it can
produce 4.2 sets of cabinets per day. It
sells each set of cabinets for $$2,000,
and it pays each of its workers $$200 per day.
a.
For the 11th worker, the
value of the marginal product of labor is $$500.
b.
For the 11th worker, the
marginal revenue product is $$400.
c.
The firm is maximizing its profit.
d.
If the firm is employing
11 workers, then its profit would increase if it
cut back to 10 workers.
ANS: B
PTS: 1
DIF: 3
REF: 18-1
TOP: Labor demand
MSC: Analytical
37.
For a competitive,
profit-maximizing firm, the demand curve for labor
will shift in response to a change in the
a.
wage rate.
b.
quantity of labor demanded.
c.
price of the product that
the firm sells.
d.
All of
the above are correct.
ANS: C
PTS: 1
DIF: 2
REF: 18-1
TOP: Labor demand
MSC: Applicative
38.
Omega Custom
Cabinets produces and sells custom bathroom
vanities. The firm has determined that if it hires
10
workers, it can produce 20 vanities
per week. If it hires 11 workers, it can produce
22 vanities per week. It sells each
vanity for $$800, and it pays each of
its workers $$1,000 per week.
a.
For the 11th worker, the marginal
profit is $$600.
b.
For the
11th worker, the marginal revenue product is
$$2,000.
c.
The firm is
maximizing its profit.
d.
If
the firm is employing 11 workers, then its profit
would increase if it cut back to 10 workers.
ANS: A
PTS: 1
DIF: 3
REF: 18-1
TOP: Production function
MSC: Analytical
Chapter
18/The Markets for the Factors of Production
?
775
39.
Suppose that workers who
sort outgoing mail for a company use rubber bands
to group mail. If there were an increase
in the supply of rubber bands, which of
the following would happen in the market for
labor?
a.
Demand would
decrease.
b.
Demand would
increase.
c.
Supply would
decrease.
d.
Supply would
increase.
ANS: B
PTS: 1
DIF: 2
REF: 18-1
TOP: Labor demand
MSC: Applicative
Scenario
18-1
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.
40.
Refer to Scenario 18-1
.
Based on the given information, it is likely that
Gertrude's firm has
a.
some
influence over the wages paid to crew members but
no influence over the price of salmon.
b.
some influence over the
price of salmon but no influence over the wages
paid to crew members.
c.
some influence over both the price of
salmon and the wages paid to crew members.
d.
no influence over either
the price of salmon or the wages paid to crew
members.
ANS: D
PTS: 1
DIF: 2
REF: 18-1
TOP: Labor demand
MSC: Applicative
41.
Refer to Scenario
18-1
. When Gertrude participates in the
labor market to hire crew members for her boats,
she is
most likely considered a
a.
demander of labor
services.
b.
supplier of
labor services.
c.
demander
of capital.
d.
supplier of
capital.
ANS: A
PTS: 1
DIF: 1
REF: 18-1
TOP: Labor demand
MSC: Applicative
42.
Refer to Scenario
18-1
. If the price of fresh Pacific
salmon were to decrease significantly, it is most
likely that
Gertrude would
a.
reduce her demand for
crew members.
b.
hire more
boats.
c.
become a seller in
at least one factor market.
d.
hire more crew members.
ANS:
A
PTS: 1
DIF: 2
REF: 18-1
TOP: Labor demand
MSC: Applicative
43.
Refer to
Scenario 18-1
. If Gertrude is a
competitor in both the fresh Pacific salmon market
and in the market for
crew members, she
is called a price
a.
taker
in the salmon market and a wage setter in the crew
market.
b.
taker in the crew
market and a price setter in the salmon market.
c.
taker in both markets.
d.
setter in both markets.
ANS: C
PTS: 1
DIF: 2
REF: 18-1
TOP: Labor demand
MSC: Applicative
44.
Refer to Scenario
18-1
. In the fresh Pacific salmon
product market, Gertrude has some control over
a.
the price she charges for
her fresh salmon.
b.
the
quantity of fresh salmon that she catches and
supplies to the market.
c.
the competitive environment of the
market.
d.
All of the above
are correct.
ANS: B
PTS: 1
DIF: 1
REF: 18-1
TOP: Labor demand
MSC: Applicative
776
?
Chapter 18/The
Markets for the Factors of Production
45.
Refer to Scenario
18-1
. If Gertrude is a price taker in
the labor market, she decides
a.
the price for 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
are correct.
ANS: B
PTS: 1
DIF: 1
REF: 18-1
TOP: Labor demand
MSC: Applicative
46.
Refer to Scenario
18-1
. Labor-market theory assumes that
Gertrude's demand for crew members and her supply
of
fresh Pacific salmon result from her
a.
intrinsic desire to hire
crew members.
b.
primary
goal of maximizing profit.
c.
altruistic motives to provide fresh
salmon to consumers.
d.
desire to strike a balance between
environmental concerns and maximum profit.
ANS: B
PTS: 1
DIF: 1
REF: 18-1
TOP: Labor demand
MSC: Applicative
47.
The following table
shows the number of calculators that can be
assembled per week by various numbers of workers.
If the price per calculator in a
perfectly competitive product market is $$20, how
many workers would the firm employ
if
the weekly wage rate is $$1000?
Quantity of
Labor
0
1
2
3
4
5
a.
1
b.
2
c.
3
d.
4
ANS: C
PTS: 1
DIF: 3
REF: 18-1
TOP: Marginal
product of labor | Value of the marginal product
Number of Calculators
Per
Week
0
60
160
240
280
300
MSC: Analytical
48.
Bill is trying to
convince the owner of a pizza shop to hire him. He
argues that he could help the shop sell an
additional five pizzas per day at the
market price of $$8 each. If the facts are not in
dispute, but the owner does not hire
him, then
a.
the
wage rate must be less than $$40 per day.
b.
hiring Bill would involve
a negative marginal product.
c.
the wage rate must be more than $$40 per
day.
d.
the wage rate must
be less than $$8 per day.
ANS: C
PTS: 1
DIF: 2
REF: 18-1
TOP: Marginal
product of labor | Value of the marginal product
MSC: Analytical
49.
Suppose that eight
workers can manufacture 70 radios per day, and
nine workers can manufacture 90 radios per day.
If radios can be sold for $$10 each, the
value of marginal product of the ninth worker is
a.
20 radios.
b.
90 radios.
c.
$$200.
d.
$$900.
ANS: C
PTS: 1
DIF: 2
REF: 18-1
TOP: Value of the marginal product
MSC: Analytical
Chapter
18/The Markets for the Factors of Production
?
777
50.
Value of marginal
product is defined as the additional
a.
output a firm would receive after
hiring one more factor of production.
b.
cost of hiring one more
factor of production.
c.
revenue earned from selling one more
unit of product.
d.
revenue
earned from hiring one more factor of production.
ANS: D
PTS: 1
DIF: 1
REF: 18-1
TOP: Value of the marginal product
MSC: Definitional
51.
The marginal product of
labor is defined as the change in
a.
output per additional unit of revenue.
b.
output per additional
unit of labor.
c.
revenue
per additional unit of labor.
d.
revenue per additional unit of output.
ANS: B
PTS: 1
DIF: 1
REF: 18-1
TOP: Marginal product of labor
MSC: Definitional
52.
The marginal product of
labor is
a.
the increase in
the amount of output from an additional unit of
labor.
b.
the total amount
of output divided by the total units of labor.
c.
total revenue minus total
cost.
d.
also called the
marginal profit.
ANS: A
PTS:
1
DIF: 1
REF: 18-1
TOP: Marginal product of labor
MSC: Definitional
Table 18-1
Quantity of
Labor
0
1
2
3
4
5
53.
Refer to Table
18-1
. This table describes the number
of baseballs a manufacturer can produce per day
with different
quantities of labor.
Each baseball sells for $$5 in a competitive
market. For which level of employment is the
marginal
product of labor greatest?
a.
1 worker
b.
2 workers
c.
3
workers
d.
4 workers
ANS: B
PTS: 1
DIF: 3
REF: 18-1
TOP: Marginal product of labor
MSC: Analytical
54.
Refer to Table
18-1
. This table describes the number
of baseballs a manufacturer can produce per day
with different
quantities of labor.
Each baseball sells for $$5 in a competitive
market. What is the total revenue per day that the
firm
will earn if it employs five
workers?
a.
$$500.
b.
$$300.
c.
$$2200.
d.
$$2500.
ANS: D
PTS: 1
DIF: 2
REF: 18-1
TOP: Marginal product of labor | Value
of the marginal product
MSC: Analytical
Number of
Baseballs
Per Day
0
100
240
360
440
500
778
?
Chapter 18/The
Markets for the Factors of Production
55.
Refer to Table
18-1
. This table describes the number
of baseballs a manufacturer can produce per day
with different
quantities of labor.
Each baseball sells for $$5 in a competitive
market. If the firm is maximizing the marginal
product
of labor, what is the firm’s
marginal revenue product?
a.
140 baseballs.
b.
$$300.
c.
$$400.
d.
$$700.
ANS: D
PTS: 1
DIF: 2
REF: 18-1
TOP: Value of the marginal product
MSC: Analytical
56.
When labor is the only
input a firm uses, the marginal cost of a unit of
output can be defined as
a.
marginal revenue multiplied by wage.
b.
marginal product of labor
multiplied by wage.
c.
wage
divided by marginal product of labor.
d.
marginal product of labor
divided by wage.
ANS: C
PTS:
1
DIF: 3
REF: 18-1
TOP: Labor demand
MSC: Analytical
Table 18-2
Consider the following daily production
data for Davis Golf Balls, Inc. Davis Golf Balls,
Inc. sells golf balls for 50 cents
each
and pays the workers a wage of $$30 a day.
Marginal Product
Value of the
Labor (number
of
Quantity (golf
of Labor
(golf
Marginal Product
workers)
balls per day)
balls per day)
of Labor
0
0
1
100
2
250
3
375
4
475
5
550
6
600
Wage
(per day)
Marginal
Profit
57.
Refer to Table 18-2
. What is
the third worker's marginal product of labor?
a.
75 golf balls
b.
100 golf balls
c.
125 golf balls
d.
150 golf balls
ANS: C
PTS: 1
DIF: 2
REF: 18-1
TOP: Marginal product of labor
MSC: Analytical
58.
Refer to Table
18-2
. What is the fourth worker's
marginal product of labor?
a.
50 golf balls
b.
75 golf balls
c.
100 golf balls
d.
125 golf balls
ANS: C
PTS: 1
DIF: 2
REF: 18-1
TOP: Marginal
product of labor
MSC: Analytical
59.
Refer to
Table 18-2
. What is the sixth worker's
marginal product of labor?
a.
37.5 golf balls
b.
50 golf balls
c.
75 golf balls
d.
100 golf balls
ANS: B
PTS: 1
DIF: 2
REF: 18-1
TOP: Marginal
product of labor
MSC: Analytical
Chapter 18/The Markets for the Factors
of Production
?
779
60.
Refer to Table 18-2
. What is
the value of the marginal product of the second
worker?
a.
$$50
b.
$$62.50
c.
$$75
d.
$$150
ANS: C
PTS: 1
DIF: 3
REF: 18-1
TOP: Value of the
marginal product
MSC: Analytical
61.
Refer to
18-2
. What is the value of the marginal
product of the fifth worker?
a.
$$7.50
b.
$$25
c.
$$37.50
d.
$$75
ANS: C
PTS: 1
DIF: 3
REF: 18-1
TOP: Value of the marginal product
MSC: Analytical
62.
Refer to Table
18-2
. What is the value of the marginal
product of the first worker?
a.
$$25
b.
$$50
c.
$$75
d.
$$100
ANS: B
PTS:
1
DIF: 3
REF: 18-1
TOP: Value of the marginal product
MSC: Analytical
63.
Refer to Table
18-2
. The marginal product of labor
begins to diminish with the addition of which
worker?
a.
the 1st worker
b.
the 2nd worker
c.
the 3rd worker
d.
the 4th worker
ANS: C
PTS: 1
DIF: 3
REF: 18-1
TOP: Diminishing marginal product
MSC: Analytical
64.
Refer to Table
18-2
. What is the marginal profit of
the fourth worker?
a.
$$7.50
b.
$$20
c.
$$50
d.
$$100
ANS: B
PTS: 1
DIF: 3
REF: 18-1
TOP: Marginal product of labor | Value
of the marginal product
65.
Refer to Table
18-2
. What is the marginal profit of
the sixth worker?
a.
-$$10
b.
-$$5
c.
$$7.50
d.
$$25
ANS: B
PTS: 1
DIF: 3
REF: 18-1
TOP: Marginal product of labor | Value
of the marginal product
MSC: Analytical
MSC:
Analytical
66.
Refer to Table 18-2
.
Assuming Davis Golf Balls, Inc. is a competitive,
profit-maximizing firm, how many workers
will the firm hire?
a.
3 workers
b.
4
workers
c.
5 workers
d.
6 workers
ANS:
C
PTS: 1
DIF: 3
REF: 18-1
TOP: Marginal
product of labor | Value of the marginal product
MSC: Analytical
780
?
Chapter 18/The Markets for the Factors
of Production
67.
Refer to Table 18-2
. Assume
that Davis Golf Balls, Inc. is a competitive,
profit-maximizing firm. If the market price
of golf balls increases from 50 cents
to 60 cents, how many workers would the firm then
hire?
a.
3 workers
b.
4 workers
c.
5 workers
d.
6
workers
ANS: D
PTS: 1
DIF: 3
REF: 18-1
TOP: Marginal product of labor | Value
of the marginal product
MSC: Analytical
68.
Refer to Table
18-2
. Suppose that there is a
technological advance that allows Davis Golf
Balls, Inc. employees to
produce more
golf balls than they could before. Because of this
change,
a.
the firm’s
demand for labor shifts right.
b.
the firm’s demand for
labor shifts left.
c.
the firm’s supply of labor
shi
fts right.
d.
the firm’s supply of labor shifts
left.
ANS: A
PTS:
1
DIF: 2
REF: 18-1
TOP: Labor demand
MSC: Analytical
69.
For maximum profit, a
firm hires labor up to the point at which the wage
equals
(i)
the value of the
marginal product of labor.
(ii) the
marginal cost of an additional unit of output.
(iii)
o
utput
price multiplied by the marginal product of labor.
a.
(i) and (ii)
b.
(i) and (iii)
c.
(ii) and (iii)
d.
All of the above are
correct.
ANS: B
PTS: 1
DIF: 2
REF: 18-1
TOP: Labor demand | Value of the
marginal product
MSC: Analytical
Table 18-3
Number of
Workers
0
1
2
3
4
5
Output
0
100
280
Marginal Product
of Labor
80
60
20
Value of Marginal
Product of
Labor
$$1,000
$$
800
$$ 400
Wage
$$500
$$500
$$500
$$500
$$500
Marginal
Profit
$$500
$$100
70.
Refer to Table 18-3
. What is
the market price of the final good?
a.
$$5
b.
$$6
c.
$$8
d.
$$10
ANS: D
PTS: 1
DIF: 2
REF: 18-1
TOP: Marginal product of labor | Value
of the marginal product
MSC: Analytical
71.
Refer to Table
18-3
. It is apparent from this table
that increasing marginal product
a.
occurs only after the first worker is
hired.
b.
occurs only after
the second worker is hired.
c.
occurs only after the third worker is
hired.
d.
never occurs.
ANS: D
PTS: 1
DIF: 2
REF: 18-1
TOP: Marginal product of labor
MSC: Analytical
Chapter
18/The Markets for the Factors of Production
?
781
72.
Refer to Table
18-3
. If the firm hires two workers,
the two workers together produce
a.
80 units.
b.
100
units.
c.
180 units.
d.
200 units.
ANS: C
PTS: 1
DIF: 2
REF: 18-1
TOP: Marginal product of labor | Value
of the marginal product
MSC: Analytical
73.
Refer to Table
18-3
. What is the marginal product of
the fourth worker?
a.
30
b.
40
c.
100
d.
400
ANS: B
PTS: 1
DIF: 2
REF: 18-1
TOP: Marginal product of labor
MSC: Analytical
74.
Refer to Table
18-3
. The fact that the marginal
product falls as the number of workers increases
exemplifies a
property called
a.
diminishing marginal
product.
b.
utility
maximization.
c.
supply and
demand.
d.
labor theory.
ANS: A
PTS: 1
DIF: 1
REF: 18-1
TOP: Diminishing marginal product
MSC: Definitional
75.
Refer to Table
18-3
. The fact that the production
function exhibits diminishing marginal
productivity implies that
a.
total production decreases beyond a
certain level of output.
b.
labor markets are not always
competitive.
c.
the
additions to total output get smaller as more
workers are hired.
d.
marginal profit is negative.
ANS: C
PTS: 1
DIF: 1
REF: 18-1
TOP: Diminishing marginal product
MSC: Definitional
76.
Refer to Table
18-3
. What is the marginal profit of
the fourth worker?
a.
$$400
b.
$$100
c.
$$0
d.
$$-100
ANS: D
PTS: 1
DIF: 1
REF: 18-1
TOP: Marginal product of labor | Value
of the marginal product
77.
Refer to Table
18-3
. What is the fourth worker's
contribution to total revenue?
a.
$$-100
b.
$$40
c.
$$400
d.
$$500
ANS: C
PTS:
1
DIF: 2
REF: 18-1
TOP: Marginal product of labor | Value
of the marginal product
MSC: Analytical
MSC:
Analytical
78.
Refer to Table 18-3
. To
maximize its profit, how many workers will the
firm hire?
a.
2
b.
3
c.
4
d.
5
ANS: B
PTS: 1
DIF: 2
REF: 18-1
TOP: Marginal product of labor | Value
of the marginal product
MSC: Analytical
782
?
Chapter 18/The
Markets for the Factors of Production
79.
Refer to Table
18-3
. To maximize its profit, the firm
will hire workers as long as the value of the
marginal product of
labor equals or
exceeds
a.
$$100.
b.
$$200.
c.
$$400.
d.
$$500.
ANS: D
PTS: 1
DIF: 2
REF: 18-1
TOP: Value of the marginal product
MSC: Analytical
80.
Which of the following
statements is correct?
a.
The value of the marginal product curve
is the labor demand curve for competitive, profit-
maximizing firms.
b.
A
competitive, profit-maximizing firm hires workers
up to the point where the value of the marginal
product of
labor equals the wage.
c.
By hiring labor up to the
point where the value of the marginal product of
labor equals the wage, the firm is
producing where price equals marginal
cost.
d.
All of the above
are correct.
ANS: D
PTS: 1
DIF: 2
REF: 18-1
TOP: Marginal product of labor | Value
of the marginal product
MSC: Interpretive
81.
Dave is the owner of
Dave's Pizza Palace. Dave is a profit-maximizing
owner whose firm operates in a competitive
market. An additional worker costs Dave
$$200 and has a marginal productivity of 40 pizzas.
Assuming no other
variable costs, what
is the marginal cost of a pizza?
a.
$$200
b.
$$8
c.
$$5
d.
There is insufficient information
available to answer this question.
ANS:
C
PTS: 1
DIF: 3
REF: 18-1
TOP: Marginal
product of labor | Value of the marginal product
MSC: Analytical
82.
Sally runs a hair
styling salon. Sally is a profit-maximizing owner
whose firm operates in a competitive market. The
marginal cost of a haircut is $$7. What
is the maximum wage that Sally will pay her
stylists?
a.
less than $$7
per haircut
b.
$$7 per
haircut
c.
more than $$7
haircut
d.
There is
insufficient information to answer this question.
ANS: D
PTS: 1
DIF: 3
REF: 18-1
TOP: Marginal product of labor | Value
of the marginal product
MSC: Analytical
83.
Diane's Auto World
installs tires on automobiles, light trucks, and
sport utility vehicles. She is a profit-maximizing
business owner whose firm operates in a
competitive market. The marginal cost of
installing a tire is $$10. The
marginal
productivity of the last worker that Diane hired
was 2 tires per hour. What is the maximum hourly
wage that
Diane was willing to pay the
last worker hired?
a.
$$5
b.
$$10
c.
$$20
d.
There is
insufficient information to answer this question.
ANS: C
PTS: 1
DIF: 3
REF: 18-1
TOP: Marginal product of labor | Value
of the marginal product
MSC: Analytical
Table 18-4
Labor
0
1
2
3
4
Output
0
400
700
950
1050
Marginal Product
of Labor
---
400
300
250
100
Value of
Marginal
Product of Labor
---
$$1200
$$ 900
$$ 750
$$ 300
Wage
---
$$400
$$400
$$400
$$400
Marginal
Profit
---
$$800
$$500
$$350
-$$100
Chapter 18/The Markets for the Factors
of Production
?
783
84.
Refer to Table 18-4.
The
price of output is
a.
$$1.
b.
$$2.
c.
$$3.
d.
$$400.
ANS: C
PTS: 1
DIF: 2
TOP: Value of the
marginal product
REF: 18-1
MSC: Analytical
85.
Refer to Table 18-4.
How many workers should the firm hire?
a.
1
b.
2
c.
3
d.
4
ANS: C
PTS: 1
DIF: 2
REF: 18-1
TOP: Value of the
marginal product | Marginal product of labor
MSC: Analytical
Table 18-5
Labor
0
1
2
3
4
86.
Refer to Table 18-5.
What is the value for the cell labeled
AA?
a.
$$600
b.
$$500
c.
$$400
d.
$$300
ANS: C
PTS: 1
DIF: 2
REF: 18-1
TOP: Value of the
marginal product
MSC: Analytical
87.
Refer to
Table 18-5.
What is the value for the
cell labeled BB?
a.
$$300
b.
$$200
c.
$$100
d.
-$$100
ANS: D
PTS: 1
DIF: 2
REF: 18-1
TOP: Value of the marginal product
MSC: Analytical
88.
Refer to Table 18-5.
What is the value for the cell labeled
CC?
a.
650
b.
600
c.
100
d.
50
ANS: D
PTS: 1
DIF: 3
REF: 18-1
TOP: Marginal
product of labor
MSC: Analytical
89.
Refer to
Table 18-5.
What is the value for the
cell labeled DD?
a.
-$$100
b.
$$300
c.
$$100
d.
$$50
ANS: C
PTS: 1
DIF: 3
REF: 18-1
TOP: Value of the marginal product
MSC: Analytical
Output
0
300
500
600
650
Marginal
Product
of Labor
---
300
200
100
CC
Value of Marginal
Product of Labor
---
$$600
AA
$$200
DD
Wage
---
$$300
$$300
$$300
$$300
Marginal
Profit
---
$$300
$$100
BB
-$$200
784
?
Chapter 18/The Markets for the Factors
of Production
Table 18-6
Days of Labor
0
1
2
3
4
5
6
Units of Output
0
10
18
25
30
33
34
90.
Refer to
Table 18-6.
What is the marginal
product of the third worker?
a.
7
b.
8
c.
25
d.
75
ANS: A
PTS: 1
DIF: 2
REF: 18-1
TOP: Marginal product of labor
MSC: Analytical
91.
Refer to Table
18-6.
Suppose that the firm pays its
workers $$75 per day. Each unit of output sells for
$$10. How
many days of labor should the
firm hire?
a.
1
b.
2
c.
3
d.
4
ANS: B
PTS: 1
DIF: 3
REF: 18-1
TOP: Marginal product of labor | Value
of the marginal product
MSC: Analytical
92.
Refer to Table
18-6.
Suppose that the firm pays its
workers $$55 per day. Each unit of output sells for
$$12. How
many days of labor should the
firm hire?
a.
3
b.
4
c.
5
d.
6
ANS: B
PTS: 1
DIF: 3
REF: 18-1
TOP: Marginal product of labor | Value
of the marginal product
MSC: Analytical
93.
If hiring more workers
results in each additional worker contributing
successively smaller amounts of output, then
a.
diminishing profitability
is present.
b.
diminishing
marginal cost is present.
c.
diminishing marginal product is
present.
d.
diminishing
total product is present.
ANS: C
PTS: 1
DIF: 1
REF: 18-1
TOP: Diminishing
marginal product
MSC: Definitional
94.
Diminishing
marginal product affects the shape of the
production function in what way?
a.
The slope of the production function
decreases as the quantity of input increases.
b.
The production function
becomes steeper as the quantity of input
increases.
c.
The production
function slopes downward.
d.
The production function is horizontal
beyond a certain quantity of input.
ANS: A
PTS: 1
DIF: 2
REF: 18-1
TOP: Diminishing marginal product |
Production function
MSC: Applicative
Chapter 18/The Markets for the Factors
of Production
?
785
95.
Diminishing marginal product is closely
related to
a.
diminishing
total cost.
b.
diminishing
marginal cost.
c.
increasing
price.
d.
increasing
marginal cost.
ANS: D
PTS: 1
DIF: 2
REF: 18-1
TOP: Diminishing marginal product
MSC: Interpretive
96.
Diminishing marginal
product occurs when
a.
the
marginal product of an input increases as the
quantity of the input increases.
b.
the marginal product of an input
decreases as the quantity of the input increases.
c.
total output increases as
the quantity of an input increases.
d.
total output decreases as the quantity
of an input increases.
ANS: B
PTS: 1
DIF: 1
REF: 18-1
TOP: Diminishing
marginal product
MSC: Definitional
97.
Diminishing
marginal product occurs when
a.
the increases to total output are
declining.
b.
marginal
product is decreasing.
c.
total output is decreasing.
d.
Both a and b are correct.
ANS: D
PTS: 1
DIF: 2
REF: 18-1
TOP: Diminishing marginal product
MSC: Interpretive
98.
When a production
function exhibits a diminishing, but positive,
marginal product of labor,
a.
output increases, but at an increasing
rate, as more workers are employed.
b.
output increases, but at a decreasing
rate, as more workers are employed.
c.
output declines as more workers are
employed.
d.
the effects on
marginal product are ambiguous.
ANS: B
PTS: 1
DIF: 2
REF: 18-1
TOP: Marginal
product of labor
MSC: Applicative
99.
If a firm
experiences diminishing marginal productivity of
labor, the marginal product
a.
increases as total product increases.
b.
decreases as total
product increases.
c.
increases as total product decreases.
d.
decreases as total
product decreases.
ANS: B
PTS: 1
DIF: 1
REF: 18-1
TOP: Diminishing
marginal product
MSC: Definitional
100.
A profit-maximizing,
competitive firm for which the marginal product of
labor is diminishing also experiences
a.
a perfectly inelastic
supply of labor.
b.
a
perfectly elastic supply of labor.
c.
a downward-sloping demand for labor.
d.
an upward-sloping demand
for labor.
ANS: C
PTS: 1
DIF: 2
REF: 18-1
TOP: Diminishing marginal product |
Labor demand
MSC: Applicative
101.
Typically, as a firm
hires additional workers, the marginal product of
labor
a.
and the value of
the marginal product of labor both decrease.
b.
stays constant and the
value of the marginal product of labor decreases.
c.
decreases and the value
of the marginal product of labor stays constant.
d.
decreases and the value
of the marginal product of labor increases.
ANS: A
PTS: 1
DIF: 2
REF: 18-1
TOP: Diminishing marginal product |
Value of the marginal product
MSC:
Applicative
786
?
Chapter 18/The Markets for the Factors
of Production
102.
When
deciding whether to hire an additional worker,
firms look at how the additional worker would
affect
a.
costs only.
b.
revenue only.
c.
output only.
d.
profit.
ANS: D
PTS: 1
DIF: 2
REF: 18-1
TOP: Value of the
marginal product
MSC: Interpretive
103.
The value of the
marginal product of any input is equal to the
marginal product of that input multiplied by the
a.
additional revenue.
b.
marginal cost of the
output.
c.
change in total
profit.
d.
market price of
the output.
ANS: D
PTS: 1
DIF: 2
REF: 18-1
TOP: Value of the marginal product
MSC: Definitional
104.
The value of the marginal product of
labor is equal to the change in
a.
marginal cost caused by the addition of
the last worker.
b.
total
cost caused by the addition of the last worker.
c.
total revenue caused by
the addition of the last worker.
d.
total profit caused by the addition of
the last worker.
ANS: C
PTS:
1
DIF: 2
REF: 18-1
TOP: Value of the marginal product
MSC: Definitional
105.
When a firm experiences diminishing
marginal product, what is the shape of the curve
that represents the value of the
marginal product of labor?
a.
U-shaped
b.
flat
c.
downward
sloping
d.
upward sloping
ANS: C
PTS: 1
DIF: 2
REF: 18-1
TOP: Value of the marginal product
MSC: Interpretive
106.
To maximize profit, a competitive firm
hires workers up to the point of intersection of
the
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.
ANS: B
PTS: 1
DIF: 2
REF: 18-1
TOP: Value of the
marginal product
MSC: Interpretive
107.
The negative slope of
the value of marginal product curve is most easily
explained by
a.
tight labor
markets.
b.
a surplus of
workers.
c.
diminishing
marginal product.
d.
diminishing marginal cost.
ANS: C
PTS: 1
DIF: 2
REF: 18-1
TOP: Value of the marginal product
MSC: Applicative
108.
If the value of the marginal product of
labor exceeds the wage, then hiring another worker
increases the firm's
a.
profit.
b.
total
cost.
c.
total revenue.
d.
All of the above are
correct.
ANS: D
PTS: 1
DIF: 2
REF: 18-1
TOP: Value of the marginal product
MSC: Analytical
Chapter
18/The Markets for the Factors of Production
?
787
109.
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.
increases the firm's
total cost.
d.
All of the
above are correct.
ANS: C
PTS: 1
DIF: 2
REF: 18-1
TOP: Value of the
marginal product
MSC: Analytical
110.
A competitive, profit-
maximizing firm hires workers up to the point
where the
a.
marginal
product equals zero.
b.
marginal revenue product equals zero.
c.
marginal product equals
the wage.
d.
value of the
marginal product equals the wage.
ANS:
D
PTS: 1
DIF: 2
REF: 18-1
TOP: Labor demand
MSC: Analytical
111.
A worker's contribution to a
firm's revenue is measured directly by the
worker's
a.
marginal
product.
b.
value of
marginal product.
c.
marginal product multiplied by the
worker’s wage.
d.
value of marginal product multiplied by
the output price.
ANS: B
PTS: 1
DIF: 2
REF: 18-1
TOP: Value of the
marginal product
MSC: Interpretive
112.
We observes a profit-
maximizing firm hiring its 51st employee. It is
possible to infer that, when 50 employees are
hired, the
a.
wage exceeds the value of the marginal
product of labor.
b.
value
of the marginal product of labor exceeds the wage.
c.
marginal product of labor
is increasing.
d.
firm is
attempting to increase its market share.
ANS: B
PTS: 1
DIF: 2
REF: 18-1
TOP: Value of the marginal product
MSC: Analytical
113.
A profit-maximizing, competitive firm
will always hire an additional worker when the
additional worker makes a
positive
contribution to
a.
total
revenue.
b.
total profit.
c.
the value of the marginal
product of labor.
d.
marginal revenue.
ANS: B
PTS: 1
DIF: 2
REF: 18-1
TOP: Value of the
marginal product
MSC: Analytical
114.
Suppose that in
January a profit-maximizing firm has 25 employees.
By February, the firm has decreased
employment. One can infer that, when 25
employees are hired, the
a.
firm is losing market share.
b.
firm is minimizing
losses.
c.
wage exceeds the
value of the marginal product of labor.
d.
value of the marginal
product of labor exceeds the wage.
ANS:
C
PTS: 1
DIF: 2
REF: 18-1
TOP: Value of the
marginal product
MSC: Analytical
115.
A competitive firm
will hire workers up to the point at which the
value of the marginal product of labor equals the
a.
average total cost.
b.
average variable cost.
c.
wage.
d.
price per unit of output.
ANS: C
PTS: 1
DIF: 2
REF: 18-1
TOP: Value of the marginal product
MSC: Applicative
788
?
Chapter 18/The
Markets for the Factors of Production
116.
Competitive firms that maximize
profit will hire workers until the value of the
marginal product of labor
a.
equals the wage.
b.
equals the price of the final good.
c.
begins to fall.
d.
begins to rise.
ANS: A
PTS: 1
DIF: 2
REF: 18-1
TOP: Value of the marginal product
MSC: Analytical
117.
For the profit-maximizing competitive
firm, the value of marginal product curve is
a.
always rising.
b.
falling only when
marginal product is rising.
c.
the labor supply curve.
d.
the labor demand curve.
ANS:
D
PTS: 1
DIF: 2
REF: 18-1
TOP: Value of the
marginal product
MSC: Interpretive
The figure represents the value of
marginal product for a firm that sells its product
in a competitive market.
Figure 18-1
118.
Refer to Figure 18-1
.
The value of the marginal product curve shown in
this figure is the same as which of the
following?
a.
the
labor supply curve
b.
the
labor demand curve
c.
the
marginal revenue curve
d.
the total revenue curve
ANS:
B
PTS: 1
DIF: 2
REF: 18-1
TOP: Value of the
marginal product
MSC: Interpretive
119.
Refer to Figure
18-1
. The shape of the curve suggests
the presence of
a.
an
inverted production function.
b.
diminishing total product.
c.
increasing marginal
product.
d.
diminishing
marginal product.
ANS: D
PTS: 1
DIF: 2
REF: 18-1
TOP: Diminishing
marginal product
MSC: Analytical
120.
Refer to Figure
18-1
. To maximize profit, a firm will
hire a quantity of labor
a.
less than Q*.
b.
greater than Q*.
c.
equal to Q*.
d.
that cannot be determined from the
diagram. The labor supply curve is needed to make
this determination.
ANS: C
PTS: 1
DIF: 1
REF: 18-1
TOP: Labor demand
MSC: Analytical
Chapter 18/The Markets for the Factors
of Production
?
789
121.
Refer
to Figure 18-1
. If a firm were
employing fewer than Q* workers, hiring more
workers would
a.
increase
marginal product.
b.
decrease the price of the final good.
c.
increase profit.
d.
decrease profit.
ANS: C
PTS: 1
DIF: 2
REF: 18-1
TOP: Labor demand
MSC: Analytical
122.
For a competitive firm experiencing
diminishing marginal productivity, the value of
the marginal product
(i)
increases when the price of output
decreases.
(ii) changes when marginal
product changes.
(iii)
d
iminishes as the number of
workers rises.
a.
(i) and (ii)
b.
(i) and (iii)
c.
(ii) and (iii)
d.
All of the above are correct.
ANS: C
PTS: 1
DIF: 2
REF: 18-1
TOP: Value of the marginal product
MSC: Analytical
123.
The value of the marginal product of
labor is calculated by multiplying the
a.
price of output by the
quantity of labor.
b.
price
of output by the marginal product of labor.
c.
wage by the quantity of
labor.
d.
wage by the
marginal product of labor.
ANS: B
PTS: 1
DIF: 1
REF: 18-1
TOP: Value of the
marginal product
MSC: Definitional
124.
When a firm hires
labor up to the point where the wage is equal to
the value of the marginal product of labor, it is
a.
minimizing labor costs.
b.
guaranteeing that labor
costs do not exceed fixed costs.
c.
maximizing the number of workers it can
hire and still experience a positive profit.
d.
maximizing profit.
ANS: D
PTS: 1
DIF: 2
REF: 18-1
TOP: Value of the marginal product
MSC: Applicative
125.
Which of the following events would
bring about a change in the value of the marginal
product of labor?
a.
technological progress
b.
a change in the marginal product of
labor
c.
a change in the
price of the product that the firm sells
d.
All of the above are
correct.
ANS: D
PTS: 1
DIF: 2
REF: 18-1
TOP: Value of the marginal product
MSC: Applicative
126.
The value of the marginal product is
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.
ANS: C
PTS: 1
DIF: 1
REF: 18-1
TOP: Value of the marginal product
MSC: Definitional
Scenario
18-2
Jerry has two jobs, one for the
winter and one for the summer. In the winter, he
workers as a lift attendant at a ski resort
where he earns $$10 per hour. During the
summer, Jerry drives a tour bus around the ski
resort, earning $$12 per hour.
790
?
Chapter 18/The
Markets for the Factors of Production
127.
Refer to Scenario 18-2
.
During the winter months, what is Jerry's
opportunity cost of taking an hour off work to go
skiing?
a.
$$12
b.
between $$10 and $$12
c.
$$10
d.
less than $$10
ANS: C
PTS: 1
DIF: 1
REF: 18-2
TOP: Labor supply
MSC: Interpretive
128.
Refer to Scenario
18-2
. During the summer months, what is
Jerry's opportunity cost of taking an hour off
work to go
hiking?
a.
$$12
b.
between
$$10 and $$12
c.
$$10
d.
less than $$10
ANS: A
PTS: 1
DIF: 1
REF: 18-2
TOP: Labor supply
MSC: Interpretive
129.
Refer to Scenario 18-2
.
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
a.
more
hours.
b.
fewer hours.
c.
an equal number of hours.
d.
a number of hours that
cannot be determined from the information. The
labor demand curve is needed to make
this determination.
ANS: A
PTS: 1
DIF: 2
REF: 18-2
TOP: Labor supply
MSC: Interpretive
130.
Refer to Scenario
18-2
. If Jerry takes fewer hours of
leisure in the summer than in the winter, we can
assume that his
labor supply curve
a.
is horizontal.
b.
is vertical.
c.
slopes upward.
d.
slopes downward.
ANS: C
PTS: 1
DIF: 2
REF: 18-2
TOP: Labor supply
MSC: Interpretive
131.
Which of the following events would
shift the labor supply curve?
a.
changes in the number of women willing
to work
b.
immigration of
workers
c.
changing
attitudes towards work
d.
All of the above are correct.
ANS: D
PTS: 1
DIF: 2
REF: 18-2
TOP: Labor supply
MSC: Applicative
132.
The labor supply curve shifts when
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.
ANS: C
PTS: 1
DIF: 2
REF: 18-2
TOP: Labor supply
MSC: Applicative
133.
The labor supply curve is fundamentally
a representation of the trade-off people face
between which of the
following?
a.
work and wage
b.
work and leisure
c.
wage and productivity
d.
technology and wage
ANS: B
PTS: 1
DIF: 2
REF: 18-2
TOP: Labor supply
MSC: Interpretive
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