chap 11
Use the data in Table: Katia's Car Wash to answer the question. When four workers are employed, the total revenue equals _____, and total cost equals _____.
$1,880, $1,600
Use the data in Table: Carmin's Cones to answer the question. Using the Rational Rule for Employers, the maximum profit Carmin could earn is _____. She would employ _____ workers to earn this profit.
$352; three (tot sales minus wage)
Use the data in Table: Wendy's Windows to answer the question. What is the marginal revenue product of the fourth worker?
$400
Use the data in Table: Larry's Lawn Mowing to answer the question. If three workers are employed, total revenue will equal _____, and total costs will be _____.
$1,680; $1,620
Salaries for physical therapists rise more than salaries for athletic trainers. What will happen in the labor market for athletic trainers?
Labor supply will decrease, resulting in higher wages and fewer hours of employment for the trainers.
When labor is hired in a competitive market, the value of the marginal revenue product is computed by:
P x MPL
Jordan's Photography Studio pays its workers $60 per day and sells poster-size prints for $10 each. Suppose that, during the holiday season, the price of poster-size prints increases to $12 due to a shift in the demand for the product. What happens?
The demand for labor increases.
The government of Florida is considering raising the state sales tax from the current 6% to 10% starting in January of next year. If the sales tax is applied to all goods, and the state government does not change the tax on labor income, what will likely happen?
The demand for labor will decrease.
Which statement is TRUE?
The marginal revenue product is the marginal product of labor times the price.
Alena manages a small theme park. She hires one more custodian at $450 per week, and her park is cleaner and more attractive. As a result of this improvement, ticket sales rise by 40 tickets per week. Tickets sell for $12. Use the Rational Rule for Employers to determine if hiring the extra custodian was a good move.
Yes, it was a good move because it added more to revenue than to cost.
If a firm hires labor such that W < MRPL, then profit:
can be increased by hiring more labor.
(Table: The Market for Power Tools, Marginal Revenue Product of Labor and Demand) Use Table: The Market for Power Tools, Marginal Revenue Product of Labor and Demand. In the table, the total product of labor is shown for the hourly production of power tools. Assume that the market for power tools is perfectly competitive. If the price of a power tool is $2 and the market wage rate is $60 per hour, the profit-maximizing quantity of labor is _____ workers.
four
(Table: Production of Bagels at The Bagel Factory) Use Table: Production of Bagels at The Bagel Factory. Diminishing marginal returns begin with the addition of the _____ worker.
fourth
The substitution effect of a higher wage measures
how people respond to a change in relative prices.
Louise works 46 hours a week at $12 an hour. If her wage increases to $18.50:
if leisure is a normal good, the income effect implies that she will work less.
Suppose there are diminishing returns to labor. If the quantity of labor hired by a firm increases, holding everything else constant, the _____ labor will _____.
marginal product of; fall
Carlo implemented some management changes that increased worker productivity in his company. This increased the _____ and led him to _____ workers.
marginal revenue product of labor; hire more
Gabriel's wage is $30 per hour, and he works 50 hours a week, which is his optimal labor supply at that wage. His marginal utility of one hour of leisure is equal to the:
marginal utility he gets from $30 worth of goods.
Your landscaping company uses labor and shovels. The price of shovels falls, and this _____ your demand for labor because labor and shovels are _____.
raises; complements
When an increase in demand for stand-up paddleboards rises, then the demand for skilled paddleboard shapers _____, and their marginal revenue product _____.
rises; rises
When the substitution effect dominates, a person's labor supply curve
slopes upward.
(Table: The Market for Power Tools, Marginal Revenue Product of Labor and Demand) Use Table: The Market for Power Tools, Marginal Revenue Product of Labor and Demand. In the table, the total product of labor is shown for the hourly production of power tools. Assume that the market for power tools is perfectly competitive. If the price of a power tool is $2, the marginal revenue product of labor for the third worker is:
$80.
Use the data in Table: Wendy's Windows to answer the question. What is the marginal revenue product of the second worker?
$800 (marg product x price)
As the price of scanners with high-resolution cameras dropped, Ford began using them instead of human inspectors to check the quality of the painted surfaces of its cars. What is the relationship between capital and labor in this example?
Labor and capital are substitutes in production.
(Figure: Competitive Equilibrium in the Labor Market) Use Figure: Competitive Equilibrium in the Labor Market. In the figure, a decrease in the productivity of labor will, all else equal, lead to a(n) _____ in the equilibrium quantity of labor and a(n) _____ in the equilibrium price of labor.
decrease; decrease
When wages _____, if the substitution effect dominates, the quantity of labor supplied will _____.
increase; increase
A wage _____ increases the quantity of labor supplied through the _____ effect.
increase; substitution
When making labor supply decisions, your options are
working or leisure.
The costs of working do NOT include what
could have been bought with the income earned.
(Table: The Market for Power Tools, Marginal Revenue Product of Labor and Demand) Use Table: The Market for Power Tools, Marginal Revenue Product of Labor and Demand. In the table, the total product of labor is shown for the hourly production of power tools. Assume that the market for power tools is perfectly competitive. The price of a power tool is $2, the market wage rate is $40 per hour, and eight workers are hired. Profit can be maximized by hiring _____ worker(s).
three fewer
Use the data in Table: Larry's Lawn Mowing to answer the question. If Larry uses the Rational Rule for Employers, how many workers will he hire?
two (b/c marg rev prod = wage)
(Table: The Market for Power Tools, Marginal Revenue Product of Labor and Demand) Use Table: The Market for Power Tools, Marginal Revenue Product of Labor and Demand. In the table, the total product of labor is shown for the hourly production of power tools. Assume that the market for power tools is perfectly competitive. If the price of a power tool is $2, and the wage rate is $90 per hour, the profit-maximizing quantity is labor is __________ workers.
zero
(Table: Production of Bagels at The Bagel Factory) Use Table: Production of Bagels at The Bagel Factory. The marginal product of labor for the fourth worker is _____ bagels.
12 dozen
(Table: Employment and Output in the Buckwheat Market) Use Table: Employment and Output in the Buckwheat Market. In the table, if the price of a bushel of buckwheat is $10, and the price of labor (the wage) is $120, then the profit-maximizing quantity of labor is:
4
Which of the following is NOT one of the three steps for forecasting changes in wages and employment opportunities in labor markets? (Note: Steps are not necessarily listed in order.)
NOT "How will wages and the number of jobs change in the new equilibrium?"
The _________________ measures how people respond to a change in relative prices when the wage rises.
NOT income effect
Who gains the most when robots replace workers?
Owners of robots
Victoria's Vineyard is considering hiring more sommeliers. The market wage for a sommelier is $120 per day. The average sommelier approves 40 bottles of wine per day, but Victoria expects the next sommelier to produce only 20 bottles per day. Assuming the market for wine is perfectly competitive, Victoria's Vineyard will hire another sommelier if:
a bottle of wine sells for $6 or more.
If wages rise for accountants but not for financial analysts, there will be _____ in the market for accountants and _____ in the market for financial analysts.
an increase in quantity supplied; a leftward shift of labor supply
Since the advent of the digital age, the demand for in-person telephone operators has fallen dramatically. Which factor would account for this development?
an increase in the number of automated answering services.
When robots replace workers in performing a particular task, productivity
and total output can rise because displaced workers are now free to produce other things.
Alex and Marilyn started Ono Yo, an organic and fresh fruit frozen yogurt truck. As the demand for organic and healthier desserts rose, demand for Ono Yo's products grew. Because of the growth in demand for Ono Yo's product, Alex's and Marilyn's
demand for workers increased.
You are likely to succeed in a career for which you
have a comparative advantage.
Nora, the manager of three hospital rehabilitation clinics, has the clinics adopt software that allows better tracking of supplies. This software adoption also allows therapists to spend less time gathering supplies for therapy sessions. On average, each therapist can meet with one more patient per day. The marginal revenue product of the therapists will _____, and the demand for therapists at the clinics will _____.
increase; increase
The marginal revenue product is equal to:
marginal product of labor time the price per unit of output.
When wages increase, the substitution effect makes work
more attractive.
The labor supply curve for social workers will shift to the right when:
nonage benefits increase for social workers.
An employer should hire one more worker if
the marginal benefit exceeds the marginal cost.
(Table: Labor and Output for Cappuccinos) Use Table: Labor and Output for Cappuccinos. The marginal product of labor for the fourth worker is:
6
(Table: Total Product of Labor at Suzi's Sandwich Shop) Use Table: Total Product of Labor at Suzi's Sandwich Shop. Suzi can sell sandwiches for $10 each. If Suzi must pay each worker $40 per day, how many workers will she hire to maximize profit?
5
After Giselle increased worker training at her company, the output per worker rose by 5%. What impact would this have on labor's marginal revenue product and her demand for labor?
Both marginal revenue product and demand for labor would increase.
What will happen in the market for nurses in the United States if capital equipment replaces nurse labor to monitor vital statistics on patients in hospitals?
Labor demand will decrease, resulting in lower wages and fewer hours of employment for nurses.
Better management increases worker productivity in the labor market for factory production line workers. What will happen in the labor market for production line workers?
Labor demand will increase, resulting in higher wages and more hours of employment for the workers.
What will happen in the labor market if income tax rates rise?
There will be a leftward shift of the labor supply curve.
(Table: Employees and Artisanal Carpets) Use Table: Employees and Artisanal Carpets. Suppose that you achieve your dream of opening an artisanal studio specializing in the production of hand-woven carpets. You pay $10 in fixed costs for equipment and $9 per day to each of your artists (employees) who make the carpets. If the industry is perfectly competitive, and the current market price is $1, how many artists should you employ?
3
(Table: Employees and Artisanal Carpets) Use Table: Employees and Artisanal Carpets. Suppose that you achieve your dream of opening an artisanal studio specializing in the production of hand-woven carpets. You pay $10 in fixed costs for equipment and $9 per day to each of your artists (employees) who make the carpets. If the industry is perfectly competitive, and the current market price is $1, how many carpets should you produce?
35
If wages fall for surgeons but not for family practice doctors, there will be _____ in the market for surgeons and _____ in the market for family practice doctors.
a decrease in quantity supplied; a rightward shift of labor supply
(Table: The Market for Power Tools, Marginal Revenue Product of Labor and Demand) Use Table: The Market for Power Tools, Marginal Revenue Product of Labor and Demand. In the table, the total product of labor is shown for the hourly production of power tools. Assume that the market for power tools is perfectly competitive. If the price of a power tool is $2, and the wage rate is $90 per hour, the profit-maximizing quantity of labor is _____ workers.
zero
