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Exam 18: The Markets for the Factors of Production

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Question 61

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The production function is the

A) increase in the amount of output from an additional unit of labor.
B) marginal product of an input times the price of output.
C) relationship between the quantity of inputs and output.
D) shift in labor demand caused by a change in the price of output.

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

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Question 62

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The equilibrium purchase price of an acre of land depends upon the current value of the marginal product of land and upon the __________.

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value of the margina...

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Question 63

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An event that changes the supply of any factor of production can alter the earnings of all the factors.

Figure 18-1. The figure shows the relationship between the number of mechanics hired and the number of car repairs performed per day at a car-repair shop. -Refer to Figure 18-1. If the shop charges $120 per repair, then what is the value of the marginal product of the third mechanic?

Rent, interest, and profit are all forms of income paid to the owners of

Scenario 18-3 Sam has two jobs, one for the winter and one for the summer. In the winter, he works as a lift attendant at a ski resort where he earns $13 per hour. During the summer, he drives a tour bus around the ski resort, earning $11 per hour. -Refer to Scenario 18-3. Assume that Sam has an upward-sloping labor supply curve. If the opportunity cost of Sam's leisure time increases, he will respond by working

Which of the following is an example of a firm's derived demand?

Daryn is raking leaves to earn money for his university's economics club. In the first hour, he rakes 8 bags of leaves. In the second hour, he rakes 6 bags of leaves. If he earns $8 per hour, the value of the marginal product of the second hour of labor is $48.

Bill is a laborer. What is the relationship between Bill's wage and his opportunity cost of an hour of leisure?

Table 18-9 The following table shows the production function for a particular business. The numbers represent the various labor and output combinations the firm may choose for its output on a daily basis. -Refer to Table 18-9. Suppose this firm charges a price of $5 per unit of output and pays workers a wage equal to $160 per day. What is the value of the marginal product of labor for the second worker?

As a result of a labeling mistake at the chemical factory, a farmer accidentally sprays weedkiller rather than fertilizer on half her land. As a result, she loses half of her productive farmland. If the property of diminishing returns applies to all factors of production, she should expect to see the marginal productivity of her remaining land

If the marginal productivity of the sixth worker hired is less than the marginal productivity of the fifth worker hired, then the addition of the sixth worker causes total output to decline.

The value of the marginal product of capital can be calculated as the marginal product of capital multiplied by the cost of the capital input.

The rental price of capital is the price a person pays to own the capital indefinitely.

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

Scenario 18-4 In 1997, Albania experienced a civil war. The civil unrest sent thousands of refugees across the Adriatic Sea to Italy where they sought relief from the fighting. -Refer to Scenario 18-4. The Italian government started to patrol the Adriatic Sea and had a policy of returning all refugees to Albania. This policy would contribute to

Which of the following events could increase the demand for labor?

When a competitive firm hires labor up to the point at which the value of the marginal product of labor equals the wage, it also produces up to the point at which the price of output equals average variable cost.

Profit maximization by firms ensures that the equilibrium wage always equals the value of the marginal product of capital.

Suppose that the labor market for life guards is initially in equilibrium. Then the marginal productivity of life guards increases. What happens to the equilibrium wage and quantity of life guards?