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Exam 18: The Markets for the Factors of Production

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Question 31

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Juanita is trying to convince the owner of a jewelry store to hire her. She argues that she could help the shop sell an additional three rings per day for a profit of $20 each. If the facts are not in dispute, but the owner does not hire her, then

A) the wage rate must be less than $60 per day.
B) hiring Juanita would involve a negative marginal product.
C) the wage rate must be more than $60 per day.
D) the wage rate must be less than $20 per day.

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

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Question 32

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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.

E) All of the above
F) B) and C)

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Question 33

Multiple Choice

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Which of the following is not correct? Using data from 2014,

A decrease in population can be expected to

Table 18-5 -Refer to Table 18-5. The price of output is

Table 18-12 The table displays data for a small, competitive, profit-maximizing firm that produces and sells envelopes. The time frame is one week. -Refer to Table 18-12. Let Q represent the number of boxes of envelopes produced per week. One point on this firm's production function is

Scenario 18-2 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. -Refer to Scenario 18-2. If Gertrude is a price taker in the labor market, she can choose

A competitive, profit-maximizing pays its workers a wage of $294 per day. The marginal product of the last worker is 35 units of output. What is the firm's marginal cost of producing its last unit of output?

Scenario 18-2 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. -Refer to Scenario 18-2. Based on the given information, it is likely that Gertrude's firm has

Technological advances can cause the labor demand curve to shift.

Figure 18-5 The figure shows a particular profit-maximizing, competitive 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 18-5. The value-of-marginal-product curve that is drawn could be relabeled as the firm's

As the number of concrete workers in the United States falls, the wage paid to the remaining concrete workers will necessarily fall as well.

The current value of the marginal product of land influences the

Consider the market for medical doctors. Suppose the opportunity cost of going to medical school decreases for many individuals. Suppose it generally takes about ten years to become a practicing doctor. Holding all else constant, in ten years the equilibrium wage for doctors will

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 $5 in a competitive market. What is the marginal revenue product of the third worker?

Suppose that the market for labor is initially in equilibrium. An increase in immigration will cause the equilibrium wage

Along the horizontal axis of the production function we typically measure

Scenario 18-2 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. -Refer to Scenario 18-2. If the price of fresh Pacific salmon were to increase significantly, it is most likely that Gertrude would

Table 18-B Consider the following daily production data for MadeFromScratch, Inc. MadeFromScratch sells cupcakes for $3 each and pays the workers a wage of $325 per day. -Refer to Table 18-11. What is the third worker's marginal product of labor?

Consider the labor market for short-order cooks. A shortage in the availability of frying pans will cause