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Exam 18: The Market For the Factors of Production.

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Question 81

Multiple Choice

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The purchase price of capital is

A) the value of the capital to the firm.
B) always less than the rental price.
C) the price received from the flow of some capital services.
D) the price a person pays to own that factor of production indefinitely.

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

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Question 82

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Suppose a labor-augmenting technology were developed for a product that increased the marginal product of labor for all workers.Which of the following would happen in the labor market for this product?

A) Demand would decrease.
B) Demand would increase.
C) Supply would decrease.
D) Supply would increase.

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

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Question 83

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Which of the following would shift a market labor supply curve to the left?

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

"The firm hires the factor up to the point where the value of the factor's marginal product is equal to the factor's price." This statement applies to which factor of production?

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.

José receives a pay raise at his part-time job from $9 to $11 per hour.He used to work 12 hours per week,but now he decides to work 15 hours per week.For this price range,his labor supply curve is

A firm's demand for labor is derived from its decision to supply a good in another market.

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.Suppose the marginal product of the fifth unit of labor is 30 units of output per day.The figure implies that the

Figure 18-9 -Refer to Figure 18-9.If the price of apples decreases,the equilibrium wage will

Suppose that an industrial accident at a factory destroys a significant number of high-speed blenders that bartenders use to mix frozen drinks.What will happen in the labor market for bartenders?

Figure 18-4 -Refer to Figure 18-4.The graph above illustrates the market for bakers who make homemade breads and breakfast pastries.If bakeries adopt new labor-augmenting technologies,what happens in the market for bakers?

Sarah owns and manages a small coffee shop.We assume that Sarah (i) does not directly care about the quantity of coffee that she sells. (ii) does not directly care about the number of workers that she hires. (iii) wants to maximize the quantity of coffee that she sells. (iv) wants to minimize the number of workers that she hires. (v) wants to maximize profits.

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?

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

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 decrease significantly,it is most likely that Gertrude would

If a worker respond to an increase in the opportunity cost of leisure by taking more leisure,then her labor supply curve is

A change in the supply of one factor of production

Factor markets for baked goods are influenced by the

When a firm decides to retain its earnings instead of paying dividends,the stockholders necessarily suffer.