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Exam 18: The Markets for the Factors of Production

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Question 251

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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. If Harold and Maude offer a special sale for one day where dance lessons are $5 each, and if they pay their workers $200 per day for that day, what is the maximum number of workers that they will hire for that day?

A) 1
B) 2
C) 3
D) 4

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

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Question 252

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When the wages paid to government economists increase, the labor supply curve for academic economists

A) shifts to the left.
B) shifts to the right.
C) will become backward-sloping.
D) will not change.

E) All of the above
F) A) and B)

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Question 253

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The rental price of land is

The demand for computer programmers is inseparably tied to the supply of computer software.

Suppose that the wage paid to workers who detassel corn rises. What happens in the market for workers who weed soybean fields, given that workers who detassel corn can easily work weeding soybean fields?

Let L represent the quantity of labor, and let Q represent the quantity of output. Suppose a certain production function includes the points (L = 7, Q = 27), (L = 8, Q = 35), and (L = 9, Q = 45). Based on these three points, this production function exhibits diminishing marginal product.

Christine works for a firm that makes tires for cars. How is Christine's wage affected if the price of tires decreases?

Sunshine's Organic Market sells organic produce. Assume that labor is the only input that varies for the firm. The store manager has determined that if she hires 12 workers, the store can sell 300 pounds of produce per day. If she hires 13 workers, the store can sell 370 pounds of produce per day. The store earns $4 for each pound of produce that it sells, and the manager pays each worker $80 per day. Assuming no changes in either the daily wages paid to store workers or the price at which the store sells its produce, what is the minimum number of sales that would allow the firm to increase its profits by hiring a 14th worker?

In general, less productive workers are paid less than more productive workers.

Willie's wage increased, and he responded by enjoying more hours of leisure per day. Is Willie's behavior consistent with an upward-sloping labor-supply curve?

The distinction between purchase price and rental price applies to which factor(s) of production?

Suppose that the market for labor is initially in equilibrium. A decrease in the price of output will cause the equilibrium wage

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 increase significantly, it is most likely that Gertrude would

What are the three most important factors of production?

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?

Which of the following is not correct?

Over time, there have been technological advances in the production of radios. At the same time, it has become less popular to listen to radio. Taking these two events into account, what would be the likely effect on the wages of workers who manufacture radios?

Table 18-A -Refer to Table 18-4. The price of output is

For a competitive, profit-maximizing firm, the demand curve for labor will shift in response to a change in the

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. What is the marginal product of the third unit of labor?