Econ 13

(See image 1): Debbie owns a bakery and can hire workers to produce cakes selling in a competitive output market at $10 each. The table shows the relationship between the number of workers and the number of cakes produced. What is the value of the marginal product for the fourth worker?

$50

(See image 2): Marci is a monopsony employer of bakers. The table shows how many hours of labor will be supplied at a variety of wages. When the wage is increased from $4 to $5, the marginal factor cost of labor is equal to

$9

The market for land is competitive and in equilibrium at the rental rate of $500 per acre. If the supply of land is perfectly inelastic at 1000 acres, the total economic rent on this land is equal to:

500,000

Which of the following instances of wage disparity is an example of the existence of compensating differentials?

A window washer working in a suburban residential subdivision gets paid less than one who is washing windows on the outside of a skyscraper

A nurse willing to work the midnight to 8 AM shift may earn more than she would if she worked 8 AM to 4 PM because of

Compensating differentials

For a perfectly competitive employer, the marginal revenue product curve is the firm's labor ___________ curve. This means the marginal product curve has a _________ slope.

Demand ; horizontal

The demand for factors of production is called a derived demand because it is

Derived from the demand for the outputs that are produced by the factors of production

A new teacher often earns less than a teacher with 20 years experience because of:

Differences in human capital

The marginal productivity theory of income distribution is that:

Each factor is paid the value of the output generated by the last unit employed in the factor market as a whole

Stan has an employee, Barbara, who is critical to Stan's company. He knows that replacing her will be more costly and difficult so he pays her a salary that is 10% higher than the market salary for qualified employees like Barbara. This wage differential is likely an example of:

Efficiency wages

According to the ___________, workers may earn a wage rate higher than the marginal revenue product to provide an incentive to perform efficiently

Efficiency-wage model

In the factor market for land, one will find equilibrium rental prices will be ___________ the marginal revenue product of land

Equal to

The market for land is competitive and in equilibrium at the rental rate of $500 per acre and the supply of land is perfectly inelastic at 1000 acres. If the demand for land falls and the rental rate falls to $400 per acre, the total economic rent on this land __________ by __________

Falls ; $100,000

Davey works _________ hours when the wage rises only if the

Fewer; income effect outweighs the substitution effect

See image 1): Debbie owns a bakery and can hire workers to produce cakes selling in a competitive output market at $10 each. The table shows the relationship between the number of workers and the number of cakes produced. If Debbie must pay each worker a competitive market wage of $40 per day, how many workers will she hire to maximize profit?

Five

See image 1): Debbie owns a bakery and can hire workers to produce cakes selling in a competitive output market at $10 each. The table shows the relationship between the number of workers and the number of cakes produced. Debbie must pay each worker a competitive market wage of $45 per day. How many workers will she hire to maximize profit?

Four

Suppose a firm is producing the profit-maximizing level of output and the MP of capital and labor are 10 and 20, respectively. If the wage is $10 and the rental rate for capital is $25, which of the following is true. To minimize costs the firm should

Hire more labor and use less capital

When compared to a perfectly competitive labor market, a monopsony labor market

Hires fewer workers and pays the same wage

Max employs both labor and capital to produce his trinkets. Currently the last unit of labor employed has a marginal product of 15 units. The last unit of capital employed has a marginal product of 40 units. The price of labor is $3 per unit and the price of capital is $10 per unit. If max is going to find the least-cost combination of labor and capital, he needs to _________ his employment of labor and __________ his employment of capital.

Increase ; decrease

Melanie works 50 hours each week and earns an hourly wage $w. She can work another hour or she can enjoy an hour of leisure with her children. The opportunity cost of an hour of leisure is equal to

The hourly wage $w

Human capital is the improvement in _________ created by _________

Labor ; education and knowledge

In the model of labor supply, workers must decide how to allocate scarce hours between:

Labor and leisure

The marginal revenue product is equal to:

Marginal product times the wage rate

According to the _________, in a perfectly competitive economy each factor of production is paid its equilibrium marginal revenue product

Marginal productivity theory of income distribution

A single buyer in a factor market is called a:

Monopsony

When labor is hired in a competitive market, the value of the marginal product of labor is computed by:

Multiplying the price of the output by the marginal product of labor

In terms of contribution to total income, the single most important factor of production is:

Physical capital

Manufactured resources such as equipment, buildings, and tools are also known as:

Physical capital

Melanie owns a cafe and employs two servers Eric and Theo. Eric and Theo are each paid the same low hourly wage but can earn much more with tips from satisfied customers. In a typical day, Theo will serve more customers and, when the tips are included, earn ahigher average wage than Eric. This wage differential is likely an example of:

Productivity differences

If a union is able to bargain for a wage that is higher than the equilibrium, this means that:

Some excess supply of labor or unemployment will result at this wage rate

A factory produces gadgets that have two key parts. The factory can employ workers to attach those parts, or it can employ robotic machines to attach them. In this case, the labor and capital are considered:

Substitutes

According to the cost-minimization rule, the firm must hire labor and capital to the point where:

The marginal product per dollar is equal for both inputs

To maximize profits a firm will employ workers up to the point at which for the last worker employed:

The marginal revenue product is equal to the wage rate

In the competitive market for capital, firms employ units of capital to the point where

The marginal revenue product of capital is equal to the rental rate per until

A firm is hiring labor and capital in the cost minimizing combination. Which of the following would cause the firm to increase hiring capital and decrease hiring of labor?

The price of labor increases 5%

When the competitive labor market is in equilibrium, we know that:

The quantity of labor demanded is equal to the quantity of labor supplied

Davey works _______ hours when the wage falls only if the

The same amount of ; substitution effect equals the income effect

An increase in the market demand for electricians might occur if:

The wage for electricians falls

If the competitive price (wage) of bricklayers is $100 per day, that price was determined by:

Where MRPL of bricklayers = MP bricklayers x price of output

An efficiency wage describes a wage rate that is

above the equilibrium wage and is paid in order to provide workers with an incentive to perform efficiently