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Exam 18: The Markets for the Factors of Production

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Question 211

True/False

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If a firm is able to charge a higher price for its output, all else equal, the value of the marginal product of labor will decrease to offset the higher price.

A) True
B) False

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Question 212

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Scenario 18-7 Suppose the following events occur in the market for university economics professors. Event 1: A recession in the U.S. economy lowers the opportunity cost of going to graduate school in economics to become a university economics professor. Event 2: An increasing number of students in U.S. primary and secondary schools increases the number of students entering college, increasing the output price of university economics professors' services. -Refer to Scenario 18-7. As a result of these two events, holding all else constant, the equilibrium quantity of university economics professors will

A) increase.
B) decrease.
C) not change.
D) It is not possible to determine what will happen to the equilibrium quantity.

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

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Question 213

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Figure 18-11 -Refer to Figure 18-11. Suppose the intersection of the supply and demand curves matches with a value of $200 on the vertical axis. Then

In order to calculate the value of the marginal product of labor, a manager must know the marginal product of labor and the wage rate of the worker.

Table 18-5 -Refer to Table 18-5. How many workers should the firm hire?

Suppose that the labor market for high school chemistry teachers is initially in equilibrium. Chemistry teachers use laboratory chemicals as an important part of their jobs. New environmental regulations ban the use of many chemicals, which means that fewer laboratory chemicals are available for high school chemistry teachers to use in their jobs. In the market for high school chemistry teachers, the equilibrium wage

The quantity available of one factor of production can affect the marginal product of other factors.

The demand for rocket scientists is inseparably linked to the supply of .

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

The negative slope of the value of marginal product curve is most easily explained by

Figure 18-5 The figure shows a particular profit­maximizing, competitive firm's value­of­marginal­product (VMP) curve. On the horizontal axis, L represents the number of workers. The time frame is daily. -Refer to Figure 18-5. Suppose one point on the firm's production function is (L = 3, Q = 180) , where L = number of workers and Q = quantity of output. If the firm sells its output for $5 per unit, then

Consider the market for land. Suppose the value of the marginal product of land decreases. Holding all else constant, the equilibrium rental price for land 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 $2.50 in a competitive market. What is the marginal revenue product of the fourth worker?

In the 1980s, the dangerous Ebola virus entered the United States through contaminated monkeys that were imported for use in medical experiments. Suppose this virus had not been contained but had spread to the general population. Assume that the virus is lethal in half of the people who are exposed to it. Describe the resulting effect on labor productivity.

A competitive, profit-maximizing firm hires labor up to the point at which the wage is equal to the .

When a firm experiences diminishing marginal product, what is the shape of the curve that represents the value of the marginal product of labor?

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

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 total revenue per day that the firm will earn if it employs five workers?

A pretzel-stand owner in Chicago hires workers to make hot pretzels and sell them to customers. If the firm is competitive in both the market for pretzels and in the market for pretzel-makers, then it has

The demand curve for capital