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Exam 18: The Markets for the Factors of Production

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Question 111

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The quantity available of one factor of production can affect the marginal product of other factors.

A) True
B) False

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Question 112

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The wage is to the labor market as the

A) rental price of capital is to the capital market.
B) purchase price of capital is to the capital market.
C) supply of land is to the land market.
D) demand for land is to the land market.

E) All of the above
F) C) and D)

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Question 113

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Table 18-7 The table displays data for a small, competitive, profit-maximizing firm that produces and sells envelopes. Assume that labor is the only input that varies for the firm. ​ ​ $\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Labor } \\\text { (Number of workers) }\end{array} & \begin{array} { c } \text { Marginal Product of Labor } \\\text { (Boxes of envelopes per week) }\end{array} & \begin{array} { c } \text { Wage } \\\text { (Dollars per } \\\text { worker per week) }\end{array} \\\hline 0 & & \\\hline 1 & 133 & 393 \\\hline 2 & 111 & 393 \\\hline 3 & 93 & 393 \\\hline 4 & 83 & 393 \\\hline 5 & 75 & 393 \\\hline\end{array}$ ​ -Refer to Table 18-7. Suppose the firm sells each box of envelopes that it produces for $5. How many workers should the firm hire?

A profit-maximizing competitive firm will hire workers up to the point at which the wage equals the marginal product of labor.

What are the typical effects on the labor market of technological progress?

Figure 18-3 The figure shows a particular profit-maximizing, competitive firm's value-of-marginal-product (VMP) curve. ​ -Fiona's hourly wage increases from $8 to $10. Which of the following describes a consequence of the increase in Fiona's wage?

Figure 18-1 -Refer to Figure 18-1. The marginal product of the fifth worker is

Scenario 18-1 Harry owns a snow-removal business. He hires workers to shovel driveways for him during the winter. The first worker he hires can shovel 12 driveways in one day. When Harry hires two workers, they can shovel a total of 22 driveways in one day. When Harry hires a third worker, he shovels an additional eight driveways in one day. -Refer to Scenario 18-1. Suppose that Harry pays each worker $80 per day and that he charges each customer $20 to have his driveway shoveled. What is the value of the marginal product of labor for the second worker?

Figure 18-8 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 18-8. If the shop charges $120 per repair and pays each of its mechanics a wage of $400 per day, then what is the marginal profit of the third mechanic?

Capital income does not include income paid to households for the use of their capital.

In order to calculate the value of the marginal product of labor, a manager must know the marginal product of labor and the wage rate of the worker.

Consider the market for capital equipment. Suppose the price of firms' output decreases. Holding all else constant, the equilibrium rental price of capital equipment will

How does increased immigration affect the labor market? How would the equilibrium wage and the equilibrium quantity of labor be affected?

The marginal product of land depends on the quantity of land that is available.

Figure 18-1 -Refer to Figure 18-1. Suppose the firm hires each unit of labor for $172 per day, and each unit of output sells for $11. How many workers will the firm hire to maximize its profit?

Figure 18-7 ​ -Refer to Figure 18-7. Suppose the intersection of the supply and demand curves matches with a value of $200 on the vertical axis. Then

A monopsony firm in a labor market hires fewer workers than would a competitive firm.

Figure 18-1 -Refer to Figure 18-1. Suppose the firm hires each unit of labor for $108 per day, and each unit of output sells for $12. What is the value of the marginal product of the third worker?

Scenario 18-4 Suppose that workers from northern Minnesota, North Dakota, and Montana decide to immigrate to southern Canada. -Refer to Scenario 18-4. In the labor market in the northern United States, the equilibrium wage

Suppose that eight workers can manufacture 63 radios per day and that nine workers can manufacture 85 radios per day. If radios can be sold for $18 each, the value of marginal product of the ninth worker is