Question 1

The table shown displays the production schedule for an apple orchard in a competitive market that sells a bushel of apples for $50.

What is the value of the marginal product of labor for the third worker?

Accepted Answer

A)  $40
B)  $750
C)  $2,000
D)  $1,250E) C) and D)
F) None of the above

Question 2

The intersection of supply and demand in the capital market determines the market equilibrium price and quantity in the:

Accepted Answer

A)  rental market.
B)  purchase market.
C)  output market.
D)  Any of these could be true.E) A) and B)
F) C) and D)

Question 3

If the price effect outweighs the income effect of a wage increase, the labor supply curve will:

Accepted Answer

A)  slope downward.
B)  slope upward.
C)  be perfectly horizontal.
D)  be perfectly vertical.E) All of the above
F) A) and B)

Question 4

Graphically, we can think of the marginal product of a factor as the:

Accepted Answer

A)  slope of the total production curve, when output is plotted against the quantity of the input that is used.
B)  slope of the total cost curve, when output is plotted against the costs of the quantity of the inputs used.
C)  additional cost associated with producing one more unit of output.
D)  additional inputs associated with producing one more unit of output.E) A) and B)
F) None of the above

Question 5

The increase in output that is generated by an additional unit of input is called:

Accepted Answer

A)  the input-output relationship.
B)  the production function.
C)  resource product.
D)  marginal product.E) A) and B)
F) A) and C)

Question 6

Which of the following is not a characteristic of the market labor supply curve?

Accepted Answer

A)  It is always upward sloping.
B)  It reflects people's willingness to work more when wages are higher.
C)  It shows the relationship between the price of labor and the quantity of labor supplied.
D)  It shifts with changes in the opportunity cost for work.E) A) and B)
F) All of the above

Question 7

The labor supply income effect describes the _______ in the quantity of labor supplied due to _______.

Accepted Answer

A)  increase; a higher wage
B)  decrease; the greater demand for leisure caused by a higher income
C)  decrease; a lower wage
D)  increase; the greater demand for leisure caused by a higher incomeE) None of the above
F) A) and C)

Question 8

For a competitive firm, the price of its output _______ with each additional worker hired, and the marginal product of labor _______ with each additional worker hired.

Accepted Answer

A)  stays constant; decreases
B)  increases; decreases
C)  increases; increases
D)  decreases; stays constantE) A) and B)
F) None of the above

Question 9

The graph shown displays a competitive market that is currently offering a wage more than P*. Which of the following statements is true about this market?

Accepted Answer

A)  There will be a shortage of workers who want to work at that wage.
B)  There will be unemployment in the market.
C)  Firms will have a hard time finding employees.
D)  Other firms will increase demand and shift the equilibrium.E) A) and B)
F) All of the above

Question 10

The competitive firm's profit-maximizing quantity of labor occurs where:

Accepted Answer

A)  the quantity of the marginal product of labor is equal to the market wage.
B)  the value of the marginal product of labor is equal to the market wage.
C)  the quantity of the marginal product of labor is equal to zero.
D)  the value of the marginal product of labor is equal to the profit.E) A) and D)
F) A) and B)

Question 11

The question of how much labor a firm will hire comes down to:

Accepted Answer

A)  whether added workers are going to generate more revenue than what it costs to hire them.
B)  if the added workers are going to add revenues to the firm.
C)  whether the value of the marginal product is greater than, less than, or equal to the average total cost.
D)  the healthcare costs the firm will incur by hiring added workers.E) All of the above
F) A) and B)

Question 12

All factors of production eventually experience:

Accepted Answer

A)  decreasing average variable cost.
B)  diminishing marginal productivity.
C)  decreasing average fixed costs.
D)  diminishing total productivity.E) B) and C)
F) C) and D)

Question 13

Which of the following is not an example of human capital?

Accepted Answer

A)  The ability to write clearly
B)  Knowledge of word processing programs
C)  The ability to coordinate labor effectively
D)  A computer with top-of-the-line word processing softwareE) All of the above
F) None of the above

Question 14

If the graph shown displays a competitive labor market:

Accepted Answer

A)  D represents the workers' demand for jobs at each wage.
B)  S represents the firm's supply of jobs at each wage.
C)  P* represents the equilibrium wage.
D)  Q* represents the most employment possible for the market.E) None of the above
F) B) and D)

Question 15

A minimum wage law is a:

Accepted Answer

A)  price ceiling.
B)  price floor.
C)  customary norm without legal structure or protection.
D)  quantity restriction.E) None of the above
F) C) and D)

Question 16

A person will choose to work another hour if the benefit of doing so is:

Accepted Answer

A)  greater than the opportunity cost.
B)  exactly equal to the opportunity cost.
C)  less than the opportunity cost.
D)  greater than the benefit of the previous hour worked.E) B) and C)
F) None of the above

Question 17

The relationship between the quantity of inputs and the quantity of outputs is called the:

Accepted Answer

A)  cost function.
B)  production function.
C)  profit function.
D)  resource function.E) A) and B)
F) B) and C)

Question 18

The determinants of labor supply include:

Accepted Answer

A)  culture and other opportunities.
B)  supply of other factors and output prices.
C)  culture and technology.
D)  other opportunities and technology.E) B) and D)
F) B) and C)

Question 19

For a competitive firm, the value of the marginal product of labor:

Accepted Answer

A)  increases for each additional worker.
B)  remains constant across workers.
C)  decreases for each additional worker.
D)  is zero when profits are maximized.E) None of the above
F) A) and B)

Question 20

The factor of production called "labor" can be defined as the:

Accepted Answer

A)  time spent by employees in the production of goods, but not services.
B)  fraction of total costs spent on employees.
C)  number of worker-hours a business uses at a given time.
D)  number of people a business has access to at any given time.E) A) and B)
F) B) and C)

Exam 16: The Facts of Production

The table shown displays the production schedule for an apple orchard in a competitive market that sells a bushel of apples for $50. What is the value of the marginal product of labor for the third worker?

Correct AnswerverifiedShow Answer

For a competitive firm, the value of the marginal product of labor:

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If the graph shown displays a competitive labor market:

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The relationship between the quantity of inputs and the quantity of outputs is called the:

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All factors of production eventually experience:

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Which of the following is not a characteristic of the market labor supply curve?

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A minimum wage law is a:

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The determinants of labor supply include:

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The intersection of supply and demand in the capital market determines the market equilibrium price and quantity in the:

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The question of how much labor a firm will hire comes down to:

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The increase in output that is generated by an additional unit of input is called:

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The graph shown displays a competitive market that is currently offering a wage more than P*. Which of the following statements is true about this market?

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Which of the following is not an example of human capital?

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The factor of production called "labor" can be defined as the:

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The labor supply income effect describes the _______ in the quantity of labor supplied due to _______.

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For a competitive firm, the price of its output _______ with each additional worker hired, and the marginal product of labor _______ with each additional worker hired.

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The competitive firm's profit-maximizing quantity of labor occurs where:

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A person will choose to work another hour if the benefit of doing so is:

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If the price effect outweighs the income effect of a wage increase, the labor supply curve will:

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Graphically, we can think of the marginal product of a factor as the:

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The labor supply income effect describes the _ in the quantity of labor supplied due to _.

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For a competitive firm, the price of its output _ with each additional worker hired, and the marginal product of labor _ with each additional worker hired.

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