Micro Econ Chapter 18 HW

Figure: Market for Plumbers If the market in this figure is in equilibrium, the hourly wage paid to plumbers is ______ and the marginal product of a plumber is ______. a. $30; $50 b. $40; $40 c. $20; $30 d. $40; $20

$40; $40

Table: Sunshine Flower Vase Co. Number of Workers Daily Total Revenue ($) Reference: Ref 18-2 (Table: Sunshine Flower Vase Co.) Refer to the table. What is the marginal product of labor for the fifth worker? a. $1,760 b. $1,580 c. $135 d. $180

180

Figure: Cleaners' Wages Refer to the figure. How many workers will this firm hire at a wage of $29? a. 0 b. 3 c. 1 d. 2

2

Table: All-Stars Number of All-Star Marginal Product of Labor Quality Pitchers (MPL per season, millions) Reference: Ref 18-1 (Table: All-Stars) Refer to the table. A Major League Baseball team is considering increasing the quality of its pitching staff by hiring all-star quality pitchers. If the going salary for an all-star pitcher is $12 million per season, this team will hire ________ pitchers. a. 3 b. 4 c. 5 d. 2

2

Table: Stone Masons A construction company builds stone fireplaces. The market wage for a stonemason is $350 per day. The table depicts the marginal product of labor (MPL) per day for a given number of stonemasons. To maximize profits, this company should hire ______ stonemasons. a. 4 b. 2 c. 5 d. 3

2

Which of the following statements is(are) TRUE? I. The demand for labor is downward sloping. II. The marginal product of labor declines as a firm hires more labor. III. The marginal product of labor is the demand curve for labor. a. III only b. I, II, and III c. I and II only d. I only

I and II only

Which of the following best explains why assembly-line workers in the United States earn significantly more than assembly-line workers in Mexico? I. The supply of low-skilled laborers, such as those that work on assembly lines, is higher in Mexico. II. The demand for assembly-line workers is higher in the United States. III. Assembly-line workers are more productive in the United States. a. I and III only b. I and II only c. II and III only d. I, II, and III

I, II, and III

Suppose that a public accounting firm plans to hire some accountants for tax season. What will happen to the marginal product of labor as the firm hires more and more accountants? a. The marginal product of labor will increase because completing and filing tax returns requires team production techniques. b. The marginal product of labor will not change because the practice of accounting is quite standardized, forcing all accountants to follow the uniform procedures set forth in federal tax law. c. The marginal product of labor will increase because preparing tax returns requires high levels of education and experience. d. The marginal product of labor will decline because each subsequent accountant that is hired will be assigned to work on less important (i.e., less lucrative) tax returns.

The marginal product of labor will decline because each subsequent accountant that is hired will be assigned to work on less important (i.e., less lucrative) tax returns.

When wages decrease, firms will hire more workers who will be: a. assigned to the most important tasks. b. assigned to the least important tasks. c. paid wages that are higher than market wages. d. least likely to be laid off.

assigned to the least important tasks.

If the market wage for electrical engineers in the United States is $50 per hour, then we know that the marginal product of electrical engineers is: a. at least $50 an hour. b. exactly $50 an hour. c. approximately $50 an hour. d. less than $50 an hour.

at least $50 an hour.

In general, wages are determined: a. by the skills of the worker, regardless of the country he or she works in. b. based on the average wage for all individuals in a particular country. c. based on the average marginal product of labor of workers in similar countries. d. by the skills of the worker and the productivity of the entire economy

by the skills of the worker and the productivity of the entire economy

When labor demand decreases, the wage is expected to: a. decrease. b. change in an indeterminate direction. c. remain the same. d. increase.

decrease

As more workers are hired, the marginal product of labor typically: a. remains the same. b. decreases. c. increases. d. oscillates more rapidly.

decreases.

The ______ is derived from a marginal product of labor function. a. supply of labor b. demand for labor c. minimum wage d. salary cap

demand for labor

If the marginal product of labor is constant in labor, then a market labor demand curve is: a. negatively sloped. b. flat. c. varied. d. positively sloped

flat

A firm is willing to hire a worker when the marginal product of labor is: a. efficient. b. greater than the wage. c. less than the wage. d. equal to or less than the wage.

greater than the wage.

A college education in the United States: a. is not counted as human capital market issues. b. does not command the same high wages as it did in the past. c. has been shown to earn a wage premium. d. does not lead to any difference in wages as compared with a high school education.

has been shown to earn a wage premium.

Human capital labor market issues: a. include the skills, knowledge, and experience that people obtain. b. refers to workers who do highly repetitive work, which requires little thought and creativity. c. refers to a worker in a capital intensive industry. d. include the equipment, tools, and computers that make workers more productive.

include the skills, knowledge, and experience that people obtain.

. To maximize profit, a firm will hire workers when the ________ in revenue from hiring an additional worker ________ the worker's wage. a. increase; is greater than b. increase; is less than or equal to c. decrease; is less than or equal to d. decrease; is greater than

increase; is greater than

We often think of technology and labor as substitutes for each other, but technology can lead to the hiring of more labor if it: a. decreases the average total cost of production. b. increases the marginal product of labor. c. increases the opportunity cost of labor. d. decreases the compensating differential.

increases the marginal product of labor.

The increase in a firm's revenues created by hiring an additional worker is called: a. marginal revenue of labor. b. marginal product. c. marginal revenue. d. marginal product of labor.

marginal product of labor.

An individual's labor supply curve: a. may be backward bending if the wage is high enough. b. is identical to the market labor supply curve. c. is typically vertical. d. is always upward sloping.

may be backward bending if the wage is high enough.

As the wage for janitors falls, firms will demand: a. fewer janitors. b. no janitors. c. a constant number of janitors. d. more janitors.

more janitors.

If the marginal product of labor is decreasing in labor, then a firm-level labor demand curve is: a. varied. b. negatively sloped. c. positively sloped. d. flat.

negatively sloped.

If the marginal product of labor is decreasing in labor, then a market labor demand curve is: a. varied. b. negatively sloped. c. flat. d. positively sloped.

negatively sloped.

The individual supply curve for labor: a. starts sloping up and then bends back as wages rise. b. slopes down. c. slopes up. d. is flat.

starts sloping up and then bends back as wages rise.

The market supply curve for labor: a. slopes up. b. starts sloping up but may then bend back as wages rise. c. slopes down. d. is flat.

starts sloping up but may then bend back as wages rise.

Marián Hossa was paid $7.4 million by the Detroit Red Wings for the 2008-2009 season. We can conclude that: a. Marián Hossa was overpaid. b. the marginal product of labor of Marián Hossa is 0.90 times the marginal cost. c. the marginal product of labor of Marián Hossa must be less than $7.4 million. d. the Red Wings expected Marián Hossa to increase the team's revenue by at least $7.4 million.

the Red Wings expected Marián Hossa to increase the team's revenue by at least $7.4 million.

If higher wages give the incentive for some workers to work fewer hours: a. the quantity of labor supplied in the market will still rise as new workers enter the market. b. the MPL will fall. c. the demand for workers will rise. d. the quantity of labor supplied in the market will fall.

the quantity of labor supplied in the market will fall.