Ch 19 Microecon

As a general rule, a profit-maximizing restaurant owner employs each factor of production up to the point at which the value of the marginal product of the ________ unit of the factor employed is ________ that factor's price. a) last; equal to b) first; equal to c) first; greater than d) last; less than

a

Manufactured resources such as equipment, buildings, and tools are also known as: a) physical capital. b) labor. c) natural resources. d) human capital.

a

The key distinction between a factor of production and an input is that: a) a factor of production earns income from the selling of its services over and over again but an input cannot. b) a factor of production has limited earning potential. c) an input earns income from the selling of its services over and over again but a factor of production cannot. d) an input represents an enduring source of income, but a factor of production is used up in the production process.

a

To maximize profits a firm will employ workers up to the point at which for the last worker employed: a) the value of the marginal product is equal to the wage rate. b) the value of the marginal product is equal to the price per unit of output. c) the value of the marginal product is as high as possible. d) marginal product is equal to the nominal wage rate.

a

Which of the following is a factor of production at a college? a) the faculty and the classroom buildings b) electricity c) the faculty d) the classroom buildings

a

(Table: Total Product of Labor at Debbie's Bakery) 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? a) six b) five c) three d) four

b

A new teacher often makes less than a teacher with 20 years experience because of: a) differences in physical capital. b) differences in human capital. c) efficiency wages. d) discrimination.

b

The value of the marginal product is equal to: a) marginal product times the wage rate. b) marginal product times the price per unit of output. c) average product times the price per unit of output. d) average product times the wage rate.

b

G. Reecy's Hamburger Joint is a fast-food restaurant that specializes in hamburgers. It uses inputs and factors of production in the production process. Which of the following is a factor of production? a) the hamburger buns b) the cook c) the raw meat used for the hamburgers d) the concentrate that is diluted to make the soft drinks

b

Human capital: a) is the improvement in labor created by education, which has become less important due to the progress in technology. b) is the improvement in labor created by education and knowledge that is embodied in the workforce. c) consists of man-made resources such as buildings and machines. d) has become less important due to the progress in technology.

b

(Table: Employment and Output) In the table, if the price of a bushel of wheat is $10, then the value of the marginal product of the third worker is: a) $510. b) $170. c) $150. d) $15.

c

A firm is in equilibrium when the wage is: a) equal to the average product. b) greater than the average product. c) equal to the VMPL. d) less than the price of the product.

c

A profit-maximizing firm will hire workers up to the quantity of labor where ________. a) VMPL > W b) MP × MR = VMPL c) VMPL = W d) VMPL < W

c

An efficiency wage describes a wage rate that is: a) efficient because it is exactly equal to the wage rate implied by the marginal productivity theory. b) determined by collective bargaining between unions and management. c) above the equilibrium wage and is paid in order to provide workers with an incentive to perform efficiently. d) equal to the VMPL adjusted so as to make the structure of compensation more equitable.

c

If a firm is hiring labor such that W < VMPL, then profit: a) can be increased by increasing the wage. b) can be increased by hiring less labor. c) can be increased by hiring more labor. d) is maximized.

c

If marginal product is ________, value of marginal product must be ________. a) falling; rising b) rising; falling c) falling; falling d) rising; zero

c

Which of the following is not a factor of production at a college? a) the computer labs b) the faculty c) electricity d) classroom buildings

c

Alex's boss notices that with each course Alex takes, he becomes a more knowledgeable and efficient worker. This is an example of: a) value of marginal product. b) income effects. c) derived demand. d) human capital development.

d

Human capital is the improvement in ________ created by ________. a) labor; physical capital b) labor; management c) physical capital; technology d) labor; education and knowledge

d

Value of the marginal product is calculated as: a) MR ÷ MP. b) MP ÷ P. c) MP ÷ MR. d) MP × P.

d