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Exam 18: The Markets for the Factors of Production

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Question 131

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When a firm is a profit maximizer

A) it is driven to produce as much of its product as possible.
B) it will measure its success by the number of employees it has.
C) its revenue will always be maximized as well.
D) it does not care directly about the number of workers it hires.

E) None of the above
F) A) and D)

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Question 132

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A sandwich shop hires workers to make sandwiches and sell them to customers.If the firm is competitive in both the market for sandwiches and in the market for sandwich-makers,then it has

A) some control over both the price of sandwiches and the wage it pays to its workers.
B) no control over the price of sandwiches but some control over the wage it pays to its workers.
C) some control over the price of sandwiches but no control over the wage it pays to its workers.
D) no control over either the price of sandwiches or the wage it pays to its workers.

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

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Question 133

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Describe the difference between a diminishing marginal product of labor and a negative marginal product of labor.Why would a profit-maximizing firm always choose to operate where the marginal product of labor is decreasing (but not negative)?

Average productivity can be measured as total output divided by total units of labor.

Diminishing marginal product affects the shape of the production function in what way?

Diminishing marginal product occurs when

Diane's Auto World installs tires on automobiles,light trucks,and sport utility vehicles.She is a profit-maximizing business owner whose firm operates in a competitive market.The marginal cost of installing a tire is $10.The marginal productivity of the last worker that Diane hired was 2 tires per hour.What is the maximum hourly wage that Diane was willing to pay the last worker hired?

Scenario 18-4 Rocchetta Industries manufactures and supplies bottled water in Mexico. As a result of a contamination of water supplies at many of Mexico's resort communities, the demand for bottled water has increased. -Refer to Scenario 18-4.When the labor market adjusts to its new equilibrium,we would expect the

Labor-augmenting technological advances increase the marginal productivity of labor.

Consider the labor market for computer programmers,which is in equilibrium.Because of the dot.com boom in the late 1990s,a lot of workers went to school to learn how to write computer code for one of thousands of new dot.com companies.However,when these computer programming students graduated,the dot.com bust took place.The dot.com bust decreased the value of the marginal product of computer programmers.Holding all else equal,what effect did these two circumstances have on the equilibrium wage in the labor market for computer programmers?

Technological advances can cause the labor demand curve to shift.

Which of the following correctly describes a representative labor market?

The negative slope of the value of marginal product curve is most easily explained by

Scenario 18-3 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 18-3.The Italian government started to patrol the Adriatic Sea and had a policy of returning all refugees to Albania.This policy would contribute to

If you purchase a share in the ownership of a firm you are said to be a

The factors of production are best defined as the

Movements of workers from country to country can cause shifts in the labor supply curves for both countries.

Table 18-2 Consider the following daily production data for Davis Golf Balls, Inc. Davis Golf Balls, Inc. sells golf balls for 50 cents each and pays the workers a wage of $30 a day. -Refer to Table 18-2.What is the sixth worker's marginal product of labor?

The figure represents the value of marginal product for a firm that sells its product in a competitive market. Figure 18-1 -Refer to Figure 18-1.To maximize profit,a firm will hire a quantity of labor

When workers are in an industry that is experiencing rapid improvements in technology,they can expect