Econ chpt 11

Assume that both the goods and the labor market are perfectly competitive. If at equilibrium, the wage rate is $20 per hour and the marginal product of labor is 4 units, the firm's marginal cost must be equal to: A) $5. B) $24. C) $40. D) $80.

A) $5.

If the value of marginal product of physical capital is $30 and the price at which the good the capital is used to produce is sold at $15, the marginal product of the physical capital used is: A) 2 units. B) 5 units. C) 15 units. D) 30 units.

A) 2 units.

If the value of marginal product of a worker is $20 and the market price of the good he produces is $5, his marginal product is: A) 4 units. B) 10 units. C) 25 units. D) 100 units.

A) 4 units.

Which of the following statements correctly identifies a difference between labor and capital? A) Capital can be rented or owned by a firm, but labor cannot be owned. B) Labor can be rented or owned by a firm, but capital cannot be owned. C) Labor is hired until a point where the marginal product of labor equals the price of labor, whereas capital is hired until a point where the average product of capital equals the price of capital. D) Labor is hired until a point where the average product of labor equals the price of labor, whereas capital is hired until a point where the marginal product of capital equals the price of capital.

A) Capital can be rented or owned by a firm, but labor cannot be owned.

Which of the following is an example of a factor of production? A) Land B) Cell phones C) Canned soup D) Television sets

A) Land

Which of the following statements is true? A) Lower wages are normally offered for jobs with better amenities. B) Jobs that are relatively risky pay a lower wage than other safer jobs. C) Educational qualifications and wage rates are negatively correlated. D) Incentives are normally higher for desirable occupations in comparison to undesirable occupations.

A) Lower wages are normally offered for jobs with better amenities.

Everything else remaining unchanged, which of the following is likely to happen if there is a decrease in the price of flour products? A) There will be a decrease in both the wage rate and the employment levels in the flour industry. B) There will be an increase in both the wage rate and the employment levels in the flour industry. C) There will be an increase in the wage rate and a decrease in the employment levels in the flour industry. D) There will be a decrease in the wage rate and an increase in the employment levels in the flour industry.

A) There will be a decrease in both the wage rate and the employment levels in the flour industry.

If there is a decrease in the price of the final good that an industry produces, the labor demand curve in the industry is likely to: A) shift inward. B) shift outward. C) become vertical. D) become horizontal.

A) shift inward.

Technological changes that increase the productivity of skilled workers relative to that of unskilled workers are referred to as: A) skill-biased technological changes. B) labor-saving technological changes. C) unskilled-biased technological changes. D) labor-complementary technological changes.

A) skill-biased technological changes.

The decision rule for a profit-maximizing firm, operating in a competitive market, to hire an additional worker is that: A) the value of marginal product of the worker should be equal to or greater than the wage rate. B) the value of marginal product of the worker should be equal to or lower than the wage rate. C) the value of average product of the worker being hired should be equal to the wage rate. D) the value of average product of the worker being hired should be lower than the wage rate.

A) the value of marginal product of the worker should be equal to or greater than the wage rate.

A firm will continue to purchase and use land until the: A) value of marginal product of land equals the price of land. B) value of average product of land equals the marginal product of land. C) value of marginal product of land equals the marginal product of labor. D) value of marginal product of land equals the marginal product of capital

A) value of marginal product of land equals the price of land.

In case of leisure, the substitution effect implies that: A) when the price of leisure increases, people will work more. B) when the price of leisure increases, people will work less and relax more. C) if people tend to work more and relax less, the price of leisure increases. D) if people tend to work more and relax less, the price of leisure decreases.

A) when the price of leisure increases, people will work more.

Employers engaging in ________ try to enhance their profits. A) preferential bias B) implicit discrimination C) statistical discrimination D) taste-based discrimination

C) statistical discrimination

If the value of marginal product of physical capital is $10 and the marginal product of physical capital is 5 units, the price of the finished good that the capital is used to produce is: A) $1. B) $2. C) $5. D) $10.

B) $2.

) If the value of marginal product of a worker is $40 and the marginal product of the worker is 8 units, the market price of the good he produces is: A) $2. B) $5. C) $8. D) $10.

B) $5

Assume that both the goods and the labor market are perfectly competitive. If at equilibrium, the marginal cost faced by a firm is $3 and the market wage rate is $6, the marginal product of the last unit of labor hired by the firm must be: A) 0.5 units. B) 2 units. C) 9 units. D) 18 units.

B) 2 units.

Which of the following is an example of capital? A) A cell phone bought by an individual for her younger brother B) A tractor used by a farmer for plowing his field C) A used television set purchased by a family D) Alcoholic beverages served at a corporate event

B) A tractor used by a farmer for plowing his field

Sarah is a high school graduate and James is a college graduate. Which of the following statements is true? A) Sara is likely to have more human capital than James. B) James is likely to have more human capital than Sara. C) Both Sara and James are likely to earn the same wage in the labor market. D) Both Sara and James are likely to have the same amount of human capital.

B) James is likely to have more human capital than Sara.

Which of the following is true of the market for labor? A) Workers are the suppliers of labor. B) Workers are the demanders of labor. C) The labor supply curve is perfectly elastic. D) The labor demand curve is perfectly elastic.

B) Workers are the demanders of labor.

Land is: A) any artificially created input whose supply is fixed. B) any naturally occurring input whose supply is fixed. C) any artificially created input whose supply is variable. D) any naturally occurring input whose supply is variable.

B) any naturally occurring input whose supply is fixed.

The value of marginal product of labor is the: A) value of the output produced by all the workers in a firm. B) contribution of an additional unit of labor to a firm's revenue. C) extra output that is produced by hiring an additional unit of labor. D) amount of output produced by the first unit of labor hired by a firm.

B) contribution of an additional unit of labor to a firm's revenue.

The price of non-work activities is: A) zero. B) equal to the opportunity cost of those activities. C) less than the opportunity cost of those activities. D) greater than the opportunity cost of those activities.

B) equal to the opportunity cost of those activities.

A person's stock of skills to produce economic value is referred to as: A) fixed capital. B) human capital. C) personal wealth. D) personal capital.

B) human capital.

Non-paying activities in economics are referred to as: A) relief. B) leisure. C) free-time. D) unemployment.

B) leisure.

If both the goods and the labor market are perfectly competitive, a firm that hires labor up to a point where the value of marginal product of labor equals the wage rate also produces at a point where: A) price is equal to average cost. B) price is equal to marginal cost. C) price is less than marginal cost. D) price is higher than marginal cost.

B) price is equal to marginal cost.

The cost of using a good for some specific period of time is called the ________ of the good. A) issue price B) rental price C) auction price D) market price

B) rental price

If there is an increase in the price of the final good that an industry produces, the labor demand curve in the industry is likely to: A) shift inward. B) shift outward. C) become vertical. D) become horizontal.

B) shift outward.

If the market for labor is perfectly competitive, the wage rate for labor equals: A) the average cost of hiring labor. B) the value of marginal product of labor. C) the marginal product of the last unit of labor employed. D) the price of the product that the firm produces using the labor services.

B) the value of marginal product of labor.

Given that the market wage rate is $50 and both the labor and the goods market are perfectly competitive, a profit-maximizing firm should hire an additional worker if: A) the marginal product of the worker is 50 units. B) the value of marginal product of the worker is at least $50. C) the marginal product of the worker is less than 50 units. D) the value of marginal product of the worker is less than $50.

B) the value of marginal product of the worker is at least $50.

The market price of capital is $10 and the market wage rate is $5. If a firm is optimally hiring physical capital, the value of marginal product of physical capital is: A) $1. B) $2. C) $10. D) $50.

C) $10.

If the value of marginal product of physical capital is $20 and the value of marginal product of labor is $5, the highest price that a firm should pay for an additional unit of physical capital is: A) $4. B) $5. C) $20. D) $100.

C) $20.

Which of the following is likely to lead to an inward shift in the demand curve for labor in the petroleum extraction industry? A) An increase in the wage rate B) A decrease in the wage rate C) An increase in the price of cars D) An increase in the price of petroleum

C) An increase in the price of cars

Which of the following is NOT an example of a factor of production? A) Coal B) Tractors C) Cigarettes D) College graduates

C) Cigarettes

Which of the following correctly identifies a difference between taste-based discrimination and statistical discrimination? A) Taste-based discrimination is observed in the service sector, whereas statistical discrimination is observed in the manufacturing sector. B) Taste-based discrimination is observed in the manufacturing sector, whereas statistical discrimination is observed in the service sector. C) Employers engaging in taste-based discrimination are willing to forego profit, whereas employers engaging in statistical discrimination are trying to enhance profits. D) Employers engaging in statistical discrimination are willing to forego profit, whereas employers engaging in taste-based discrimination are trying to enhance profits.

C) Employers engaging in taste-based discrimination are willing to forego profit, whereas employers engaging in statistical discrimination are trying to enhance profits.

Which of the following statements is true? A) The slope of the labor supply curve depends only on the income effect of a wage rate change. B) The income effect and the substitution effect of a wage rate change work in the same direction. C) The income effect and the substitution effect of a wage rate change work in opposite directions. D) The slope of the labor supply curve depends only on the substitution effect of a wage rate change.

C) The income effect and the substitution effect of a wage rate change work in opposite directions.

Goods that are used for the production of other goods are referred to as: A) consumer durable goods. B) consumer capital. C) physical capital. D) public goods.

C) physical capital.

Based on research conducted on the productivity of Hispanic and non-Hispanic workers, an employer decides to hire non-Hispanic workers. This is an example of: A) explicit discrimination. B) implicit discrimination. C) statistical discrimination. D) taste-based discrimination.

C) statistical discrimination.

When expectations cause people to discriminate against a certain group, it is referred to as: A) preferential bias. B) implicit discrimination. C) statistical discrimination. D) taste-based discrimination.

C) statistical discrimination.

A firm should consume physical capital until: A) the value of total product of physical capital equals the price of capital. B) the value of average product of physical capital equals the price of capital. C) the value of marginal product of physical capital equals the price of capital. D) the value of marginal product of physical capital equals the value of marginal product of labor.

C) the value of marginal product of physical capital equals the price of capital.

A factor of production refers to any good or service which is: A) produced by the government. B) produced in a competitive market. C) used to produce other goods and services. D) produced using scarce economic resources.

C) used to produce other goods and services.

If the marginal product of a unit of physical capital is 10 units of output, and the product it is used to produce is sold for $5, the value of marginal product of physical capital equals: A) $2. B) $10. C) $20. D) $50.

D) $50

When a firm hires 10 units of labor, 20 pens are produced. When it hires another unit of labor, the total output increases to 23 pens. If the price of one pen is $2, the value of marginal product of the 11th unit of labor is: A) $1.50. B) $2. C) $4. D) $6.

D) $6

Which of the following is likely to lead to an outward shift in the demand curve for labor in the coffee producing industry? A) A decrease in the price of tea B) An increase in the demand for tea C) A decrease in the demand for coffee D) An increase in the demand for coffee

D) An increase in the demand for coffee

Which of the following statements is true of the market for labor? A) In the market for labor, the supply curve is always more inelastic than the demand curve. B) In the market for labor, there is a shortage of labor at the point of intersection of the labor demand and labor supply curves. C) In the market for labor, there is a surplus of labor at the point of intersection of the labor demand and labor supply curves. D) In the market for labor, both the equilibrium wage rate and quantity of labor are determined at the point of intersection of the labor demand and labor supply curves.

D) In the market for labor, both the equilibrium wage rate and quantity of labor are determined at the point of intersection of the labor demand and labor supply curves.

Which of the following correctly identifies the difference between the demand for factors of production and the demand for final goods? A) The demand for factors of productions is fixed over time, whereas the demand for final goods changes according to changes in tastes and preferences. B) The demand for final goods is fixed over time, whereas the demand for factors of production changes according to the changes in tastes and preferences. C) The demand for final goods is derived from the demand for factors of production, whereas the demand for factors of production is independent of the demand for final goods. D) The demand for factors of production is derived from the demand for final goods, whereas the demand for final goods is independent of the demand for factors of production.

D) The demand for factors of production is derived from the demand for final goods, whereas the demand for final goods is independent of the demand for factors of production.

Suppose a firm sells its product in a competitive market. If the ongoing wage rate in a competitive labor market is $30 and the market price of a firm's product is $2, then which of the following statements is true? A) The firm should continue to hire workers until the marginal product of the last worker hired is 2 units. B) The firm should continue to hire workers until the marginal product of the last worker hired is 5 units. C) The firm should continue to hire workers until the marginal product of the last worker hired is 10 units. D) The firm should continue to hire workers until the marginal product of the last worker hired is 15 units.

D) The firm should continue to hire workers until the marginal product of the last worker hired is 15 units.

Which of the following is NOT a factor that can cause wage inequality across workers producing the same good? A) Differences in compensating wages B) Differences in productivity and human capital C) The nature and extent of discrimination in the job market D) The market price of the final good being produced by the workers

D) The market price of the final good being produced by the workers

Which of the following is a likely reason for wage inequality between men and women? A) Men generally tend to have higher education qualifications than women. B) Women generally tend to have higher educational qualifications than men. C) Men tend to spend more time out of the labor force as compared to women. D) Women tend to spend more time out of the labor force as compared to men

D) Women tend to spend more time out of the labor force as compared to men

A compensating wage differential is a wage premium paid in order to: A) recognize a more efficient employee. B) attract workers who have a family to support. C) improve the goodwill of a firm hiring workers. D) attract workers to otherwise undesirable occupations.

D) attract workers to otherwise undesirable occupations.

The market supply curve of labor in a perfectly competitive labor market: A) is horizontal or perfectly elastic. B) is vertical or perfectly inelastic. C) can be derived by vertically adding the individual supply curves of labor. D) can be derived by horizontally adding the individual supply curves of labor.

D) can be derived by horizontally adding the individual supply curves of labor.

Discrimination that occurs when people's preferences cause them to discriminate against a certain group is referred to as: A) group discrimination. B) implicit discrimination. C) explicit discrimination. D) taste-based discrimination

D) taste-based discrimination

An employer discriminating against Asian workers is an example of: A) implicit discrimination. B) explicit discrimination. C) statistical discrimination. D) taste-based discrimination.

D) taste-based discrimination.

The negative slope of the labor demand curve can be attributed to: A) Moore's law. B) the law of accelerating returns. C) the law of diminishing marginal utility. D) the law of diminishing marginal returns.

D) the law of diminishing marginal returns

The condition to decide on the optimal amount of leisure is that: A) the average benefit of leisure should be equal to zero. B) the total benefit of leisure should be equal to the wage rate. C) the average benefit of leisure should be equal to the wage rate. D) the marginal benefit of leisure should be equal to the wage rate.

D) the marginal benefit of leisure should be equal to the wage rate.

The value of marginal product of labor is given by: A) the ratio of the marginal product of labor to the wage rate. B) the product of the marginal product of labor and the wage rate. C) the ratio of the marginal product of labor to the price of the final good produced. D) the product of the marginal product of labor and the price of the final good produced.

D) the product of the marginal product of labor and the price of the final good produced.

If the marginal product of a worker is 10 units and each unit of the good is sold for $5, the value of marginal product of the worker is: A) $2. B) $5. C) $10. D) $50.

D)$50

1) Which of the following statements is true? A) Firms are the demanders in the market for labor as well as the market for consumer goods. B) Firms are the suppliers in the market for labor as well as the market for consumer goods. C) Firms are the demanders in the market for labor, whereas they are the suppliers in the market for consumer goods. D) Firms are the suppliers in the market for labor, whereas they are the demanders in the market for consumer goods.

Firms are the demanders in the market for labor, whereas they are the suppliers in the market for consumer goods.