Microeconomics Chapter 18

increase.

Refer to Scenario 18-6. We would expect that, as a result of the contamination, the value of the marginal product for Rocchetta Industries' workers would

It is not possible to determine what will happen to the equilibrium wages

Refer to Scenario 18-7. As a result of these two events, holding all else constant, the equilibrium wages of university economics professors will

It is not possible to determine what will happen to the equilibrium quantity.

Refer to Scenario 18-8. As a result of these two events, holding all else constant, the equilibrium quantity of university economics professors will

$25

Refer to Table 18-10. What is the marginal profit of the fourth worker?

100 cookies

Refer to Table 18-10. What is the sixth worker's marginal product of labor?

160 cookies

Refer to Table 18-10. What is the third worker's marginal product of labor?

$300

Refer to Table 18-10. What is the value of the marginal product of the fifth worker?

$500.

Refer to Table 18-6. To maximize its profit, the firm will hire workers as long as the value of the marginal product of labor equals or exceeds

40

Refer to Table 18-6. What is the value for the cell labeled FF?

$200

Refer to Table 18-6. What is the value of the cell labeled II?

3

Refer to Table 18-7. If Harold pays his workers $250 per day and sells his cranberries for $5 per bushel, what is the maximum number of workers that he will hire?

50 units

Refer to Table 18-8. What is the marginal product of the third unit of labor?

decrease because the marginal productivities of workers will decrease.

Suppose that a college physics experiment goes horribly wrong and releases an electronic pulse that renders all electronic equipment in the city of San Francisco, California permanently useless. No people are hurt, and no buildings are damaged. After the accident, the wages earned by California workers will

labor-saving technology.

Suppose that a new invention decreases the marginal productivity of labor, shifting labor demand to the left. Such an invention would be an example of

As the supply of vacation land decreases, the marginal productivity of the remaining land will increase; thus, rents will increase.

Suppose that a violent earthquake causes the uninhabited Hawaiian island of Mokuauia (also called Goat Island) to fall into the Pacific Ocean. No people are killed or injured, and since the island is undeveloped, no buildings are destroyed. The island was a source of tourist income for Hawaiian landowners. Which of the following statements correctly describes the rents earned by the people who own land on the surrounding islands?

work and leisure

The labor supply curve is fundamentally a representation of the trade-off people face between which of the following?

workers' decisions about the labor-leisure tradeoff respond to a change in the wage.

The labor supply curve reflects how

All of the above are correct.

Who receives income from capital in the United States?

an increase in the wage paid to workers in a competing market

Which of the following would shift a market labor supply curve to the left?

better employment opportunities in a closely-related job

Which of the following would shift a market labor supply curve to the left?

upward sloping.

Refer to Scenario 18-3. If Sam takes fewer hours of leisure in the summer than in the winter, we can assume that his labor supply curve is

an increase in immigration

Which of the following would shift a market labor supply curve to the right?

the marginal product of labor in Italy to decrease.

Refer to Scenario 18-4. The Albanian civil war probably affected Italian labor markets by causing

value of the marginal product equals the wage.

A competitive, profit-maximizing firm hires workers up to the point where the

total profit.

A profit-maximizing, competitive firm will always hire an additional worker when the additional worker makes a positive contribution to

A country experiences an increase in immigrant labor.

All of the above are correct.

an increase in the marginal productivity of his remaining land and a decrease in the marginal productivity of his labor

As a result of severe flooding, a farmer loses half of his productive farmland. If the property of diminishing returns applies to all factors of production, he should expect to see

high marginal product and a high rental price.

Because of diminishing returns, a factor in relatively low supply has a

It is not possible to determine what happens to the equilibrium quantity of labor

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 quantity in the labor market for computer programmers?

The equilibrium wage decreased.

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?

increased.

Consider the labor market for computer programmers. During the late 1990s, the value of the marginal product of all computer programmers increased dramatically. Holding all else equal, the equilibrium quantity in the labor market for computer programmers

increased.

Consider the labor market for computer programmers. During the late 1990s, the value of the marginal product of all computer programmers increased dramatically. Holding all else equal, the equilibrium wage in the labor market for computer programmers

both equilibrium wages and equilibrium employment to decrease.

Consider the labor market for short-order cooks. A shortage in the availability of frying pans will cause

equilibrium wages to decrease and equilibrium employment to increase.

Consider the labor market for short-order cooks. An increase in immigration will cause

the marginal product of an input decreases as the quantity of the input increases.

Diminishing marginal product occurs when

(i) and (iv) only

Harold owns a cranberry bog in which he grows cranberries. Harold's farm is a competitive, profit-maximizing firm. As such, Harold much decide (i)how many cranberries to sell.(ii)what price to charge for his cranberries.(iii)what wages to pay his workers.(iv)how many workers to hire.

wage by working more hours per week

If Ernie's individual labor supply curve is upward sloping, then Ernie responds to an increase in the

wage by working more hours per week.

If Ernie's individual labor supply curve is upward sloping, then Ernie responds to an increase in the

decreases as total product increases.

If a firm experiences diminishing marginal productivity of labor, the marginal product

increase profit by hiring additional labor.

If the value of the marginal product of labor exceeds the wage, then the firm could

All of the above are correct.

If the wages of a dentist increase,

increases in the supply of labor in the United States.

Immigration of workers into the United States is often an important source of

Both a and b are correct.

In a representative labor market,

equipment and structures used in production.

In economics, the term capital refers to

(i) and (iii) only

Labor-augmenting technology causes which of the following? (i)The marginal productivity of labor increases.(ii)The marginal productivity of labor decreases.(iii)Labor demand shifts to the right.(iv)Labor demand shifts to the left.

value of the marginal product of land.

Owners of land are compensated according to the

$5

Paul is the owner of Paul's Popcorn Palace. Paul is a profit-maximizing owner whose firm operates in a competitive market. An additional worker costs Paul $200 and has a marginal productivity of 40 canisters of popcorn. Assuming no other variable costs, what is the marginal cost of a popcorn?

(i) and (iv) only

Refer to Figure 18-1. Based on the shape of the curve, the (i) total product is increasing.(ii)total product is decreasing.(iii)marginal product is increasing.(iv)marginal product is decreasing.

$675

Refer to Figure 18-1. Suppose the firm hires each unit of labor for $600 per week, and each unit of output sells for $9. What is the value of the marginal product of the third worker?

90 units of output.

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

the wage is W1.

Refer to Figure 18-10. When the relevant labor demand curve is D1 and the labor market is in equilibrium,

an increase in the price of firms' output

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

labor demand curve.

Refer to Figure 18-5. The value-of-marginal-product curve that is drawn could be relabeled as the firm's

Supply decreases from S2 to S1.

Refer to Figure 18-6. The graph above illustrates the market for bakers who make homemade breads and breakfast pastries. If the bakery profession becomes less attractive to young women and men because of news reports documenting health risks, what happens in the market for bakers?

Supply increases from S1 to S2.

Refer to Figure 18-6. The graph above illustrates the market for bakers who make homemade breads and breakfast pastries. If the wages paid to wedding cake bakers decrease, what happens in the market for bread bakers?

All of the above are correct.

Refer to Figure 18-7. When the relevant labor supply curve is S1, and the labor market is in equilibrium, the

the wage paid to automobile workers

Refer to Figure 18-8. What is measured along the vertical axis on the graph?

The price of automobiles decreased.

Refer to Figure 18-8. Which of the following events would most likely explain a shift of the labor-demand curve from D2 back to D1?

A technological advance increased the marginal product of automobile workers.

Refer to Figure 18-8. Which of the following events would most likely explain the shift of the labor-demand curve from D1 to D2?

$160

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 third worker?

wage exceeds the value of the marginal product of labor.

Suppose that in January a profit-maximizing firm has 25 employees. By February, the firm has decreased employment. One can infer that, when 25 employees are hired, the

The equilibrium wage decreases, and the equilibrium quantity increases.

Suppose that the labor market for life guards is initially in equilibrium. Then a new television series debuts which glamorizes the social opportunities for life guards. What happens to the equilibrium wage and quantity of life guards?

decreases because the marginal productivity of life guards decreases.

Suppose that the labor market for life guards is initially in equilibrium. Whistles are an important safety tool that life guards use as a part of their jobs. A fire destroys the largest factory that produces whistles. In the market for life guards the equilibrium wage

Both the equilibrium wage and quantity decrease.

Suppose that the labor market for life guards is initially in equilibrium. Whistles are an important safety tool that life guards use as a part of their jobs. A fire destroys the largest factory that produces whistles. What happens to the equilibrium wage and quantity of life guards?

and the equilibrium quantity of labor will rise.

Suppose that the market for labor is initially in equilibrium. If the firm employs labor-augmenting technology, the equilibrium wage

land and capital only

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

reduce income inequality between peasants and the landed classes.

The effect of the Black Death in 14th-century Europe was to

inputs used to produce goods and services.

The factors of production are best defined as the

decreases, and the value of the marginal product of labor decreases.

Typically, as a firm hires additional workers, the marginal product of labor

All of the above are correct.

Wendy's hourly wage decreases from $15 to $12. Which of the following describes a consequence of the decrease in Wendy's wage?

Labor supply increases in the United States and decreases in Mexico.

What happens to the labor supply curves in both countries when Mexican workers leave Mexico and move to the United States?

profit.

When deciding whether to hire an additional worker, firms need only consider how the additional worker would affect

value of the marginal product of labor will increase.

When firms are able to increase the amount of physical capital available to workers, the