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Exam 18: The Markets for the Factors of Production

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Question 81

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If a particular labor market were to convert from a competitive market to a monopsony, what effect would we expect on the number of workers hired? What effect would we expect on the wage paid to workers?

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We would expect the number of ...

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Question 82

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When labor supply increases,

A) the marginal productivity of workers always increases.
B) profit-maximizing firms reduce employment.
C) wages increase as long as labor supply is upward sloping.
D) wages decrease as long as labor demand is downward sloping.

E) B) and C)
F) None of the above

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Question 83

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

According to the neoclassical theory of distribution, the wages paid to workers

Figure 18-5 The figure shows a particular profit­maximizing, competitive firm's value­of­marginal­product (VMP) curve. On the horizontal axis, L represents the number of workers. The time frame is daily. -Refer to Figure 18-5. Assume that two points on the firm's production function are (L = 2, Q = 180) and (L = 3, Q = 228) , where L = number of workers and Q = quantity of output. The firm pays its workers $120 per day. The firm's non­labor costs are fixed, and they amount to $250 per day. We can conclude that

Does an upward-sloping labor-supply curve mean that people respond to a decrease in the wage by enjoying more leisure or less leisure?

Figure 18-10 -Refer to Figure 18-10. Which of the following would shift of the labor demand curve from D1 to D2?

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

Table 18-1 -Refer to Table 18-1. Suppose that the firm pays its workers $45 per day. Each unit of output sells for $10. How many days of labor should the firm hire?

Economists refer to the inputs that firms use to produce goods and services as

Suppose an increase in the demand for labor results in an increase of $4 per hour in the equilibrium wage. How does the increase in the demand for labor affect the value of the marginal product of labor (VMPL) ?

For a snow-removal business, the capital stock would include inputs such as snow blowers and shovels.

Figure 18-3 -Refer to Figure 18-3. What is the marginal product of the fourth worker?

Diminishing marginal product occurs when

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

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 $5 in a competitive market and the firm pays each unit of labor a wage equal to $320 per day. How many units of labor should the firm hire to maximize profit?

For a competitive firm experiencing diminishing marginal productivity, the value of the marginal product

When we focus on labor as an input in the production process, we typically draw the production function by measuring the

A profit-maximizing, competitive firm for which the marginal product of labor is diminishing also experiences

Consider the labor market for computer programmers. 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?