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Exam 18: The Markets for the Factors of Production

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Question 41

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Figure 18-4 The graph below illustrates the market for nurses who work in doctors' offices. -Refer to Figure 18-4. If doctors' offices adopt new labor­saving technologies, what happens in the market for nurses?

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) None of the above
F) A) and C)

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Question 42

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Table 18-11 Consider the following daily production data for MadeFromScratch, Inc. MadeFromScratch sells cupcakes for $2 each and pays the workers a wage of $325 per day. -Refer to Table 18-11. What is the fifth worker's marginal product of labor?

A) 120 cupcakes
B) 140 cupcakes
C) 160 cupcakes
D) 180 cupcakes

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

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Question 43

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A profit-maximizing, competitive firm will always hire an additional worker when the additional worker makes a positive contribution to

Table 18-8 Harold and Maude own a dance studio where they and their employees teach ballroom dancing. Their company is a competitive, profit-maximizing firm. Harold and Maude's production function is detailed in the table below. -Refer to Table 18-8. What is the marginal product of the third worker?

Why do we say that the demand for labor is a derived demand?

If the demand curve for wedding cakes shifts to the right, then the value of the marginal product of labor for bakers will

Figure 18-6 -Refer to Figure 18-6. The graph above illustrates the market for bakers who make homemade breads and breakfast pastries. If the bakery profession becomes more attractive to young women and men because of a new reality television show, what happens in the market for bakers?

Table 18-3 -Refer to Table 18-3. For Firm B, the marginal product of labor is

Suppose that a violent earthquake causes the uninhabited Hawaiian island of Mokuauia (also called Goat Island) to fall into the Pacific Ocean. No people are killed or injured, and since the island is undeveloped, no buildings are destroyed. The island was a source of tourist income for Hawaiian landowners. Which of the following statements correctly describes the rents earned by the people who own land on the surrounding islands?

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 events would most likely explain a shift of the labor-demand curve from D2 back to D1?

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 and the firm pays each unit of labor a wage equal to $225 per day. How many units of labor should the firm hire to maximize profit?

Suppose that the market for labor is initially in equilibrium. Suppose that workers' tastes change so that they choose to retire at age 55 rather than age 67. Then the equilibrium wage

An upward-sloping labor-supply curve implies that an increase in the wage induces

Describe the process by which the market for capital and the market for land reach equilibrium. As part of your description, elaborate on the role of the stock of the resource versus the flow of services from the resource.

Economic theory predicts a close relationship between productivity and real wages. Does history confirm this relationship?

Capital, labor, and land

Harold owns a cranberry bog in which he grows cranberries. Harold's farm is a competitive, profit­maximizing firm. As such, Harold much decide

Table 18-4 -Refer to Table 18-4. How many workers should the firm hire?

For maximum profit, a firm hires labor up to the point at which the wage equals

Labor-augmenting technological advances decrease the marginal productivity of labor.