econ exam two
a reduction in the workers marginal productivity would result in
a reduction in the equilibrium wage rate
human capital theory proposes that
a workers wage is directly related to his stock of human capital
to produce 150 units of output, the firm must use 3 employee-hours. to produce 300 units of output the firm must use 8 employee hours. apparently, the firm is
expierencing diminishing marginal returns
marginal utility is defined as
extra utility gained by consuming an extra unit of a good
a fixed factor of production is
fixed only in the short run
if not for the existence of unique or essential factors of production, supply curves would be
highly elastic
the shutdown condition for a firm is where
total revenues are less than the cost of variable factors of production
the price elasticity of demand is the
% change in quantity demand divided by the percent change in price
a vertical supply cure has a price elasticity of supply equal to
0
Labor input cups of espresso 0 0 1 25 2 45 3 60 4 70 5 75 how to calculate the marginal product of labor
0 0 = 0 1 25= 25 2 45= (45-25) 20 3 60= (60-45) 15
a price elasticity of demand of -0.3 means
10 % increase in the price results in a 3% increase in demand
The relationship between labor usage and output at the local Starbucks is summarized in the table below. the price of a cup if espresso is $1.25 and no other inputs are required Labor input cups of espresso 0 0 1 25 2 45 3 60 4 70 5 75 the most Starbucks would pay the 3rd worker is?
18.75
Output per day Employee hourly wage rate hours 0 0 5 33 1 5 66 2 5 99 4 5 132 7 5 165 11 5 the total labor cost of 99 units of output is?
20
Short run
a period in which at least one factor of production is fixed
Output per day Employee hourly wage rate hours 0 0 5 33 1 5 66 2 5 99 4 5 132 7 5 165 11 5 The law of diminishing marginal returns becomes evident at ______ units of output
4
The relationship between labor usage and output at the local Starbucks is summarized in the table below. the price of a cup if espresso is $1.25 and no other inputs are required Labor input cups of espresso 0 0 1 25 2 45 3 60 4 70 5 75 how to calculate the most Starbucks would pay the 3rd worker is?
45 x $1.25 = 56.25 45 is the number the third person can make because you include zero then you divided 56.25/3 to get 18.75
Output per day Employee hourly wage rate hours 0 0 5 33 1 5 66 2 5 99 4 5 132 7 5 165 11 5 To produce 132 units of output, the firm must use ______ employee hours
7
The relationship between labor usage and output at the local Starbucks is summarized in the table below. the price of a cup if espresso is $1.25 and no other inputs are required Labor input cups of espresso 0 0 1 25 2 45 3 60 4 70 5 75 The marginal product of the third worker is _______ the marginal product of the second worker which means__________
Less then; diminishing returns are present
long run
a period in which all factors of production are variable
Output per day Employee hourly wage rate hours 0 0 5 33 1 5 66 2 5 99 4 5 132 7 5 165 11 5 why does The law of diminishing marginal returns becomes evident at 7 units of output
because at 1 hour an employee is able to make 33 at two hours you have to multiple 2x33 and you get 66 but at 4 hours you multiple 4x33 and you get 132 not 99 so that is why it is evident
the price equals marginal cost rule for profit maximization is a specific example of which of the following core principals?
cost benefit
the Responsiveness of quantity demanded for good M when the price of goods N changes is measured by
cross price elasticity of demand
a firm wishes to increase its total revenues by changing the price it charges. to be successful, the firm must _______ price if demand for their product is______
decrease, elastic
profit
difference between total revenue and total explicit and implicit cost
if, as price falls from $10 to $9, quantity demanded rises from 7 to 12 units, demand is
elastic
total expenditures are
equal to to total revenues
the value of marginal product
equals marginal product times price
a price taker confronts a demand curve that is
horizontal at the market price
the growth of the internet sites devoted to employment search should
increase the degree of competition in labor markets
if the absolute value of the % change in quantity demanded is smaller than the absolute value of the % change in price, demand is classified as
inelastic
a horizontal supply curve has a price elasticity of supply equal to
infinity
the law of diminishing marginal returns
is a short run concept
kyle works for a perfectly competitive firm and he receives a wage rate of $15. one can infer that
kyles value of marginal product is at least 15
when some factors of production are fixed, equal sized increases in production will eventually require
larger increases in the variable factor
if the firm experiences an increase in the cost of a fixed factor of production it will
leave its output decision unchanged
wide spread availability of connections to the internet should serve to
make factors of production more mobile
the extra utility gained from consuming an extra unit of a good measures the
marginal utility
the easier it is for the firm to acquire additional amounts of the factors of production they use, the
more elastic supply will be
assume the price of gasoline doubles tonight and remains there for the next two years. the price elasticity of demand for gasoline measured tomorrow when compared with the price elasticity demand for gasoline measured two years from now will be
more inelastic
employee output hourly wage rate rent hours 0 0 7 75 1 45 7 75 3 90 7 75 6 135 7 75 10 180 7 75 15 225 7 75 if the output price for this good is 50 cents, the firm should produce
more than 135 units but less then 180
assume that marginal utility of the 3rd candy bar is 15, the marginal utility of the first tube of toothpaste is 12 the price of a candy bar is $1.50/bar and the price of toothpaste is $2.00/tube. if one buys three candy bars and a tube of toothpaste, is one applying the rational spending rule correctly?
no, spend more on candy and less on toothpaste
if the slope of the demand curve is infinity, the price of demand will be
perfectly inelastic
if billys value of marginal product is $6 one can infer that
price times billys marginal product is $6
the reasons a brand item (Budweiser) has a larger price elasticity than the item class(beer) is because ,
there are fewer substitutes for beer
assume consumers all allocating their fixed incomes between two goods A and B. if consumers experience a decrease in their incomes then, as they apply the rational spending rule, the most likely outcome is they will
purchase less of both goods if both goods are normal
employee output hourly wage rate rent hours 0 0 7 75 1 45 7 75 3 90 7 75 6 135 7 75 10 180 7 75 15 225 7 75 as the law of diminishing marginal returns becomes more evident, marginal cost...
rise
assume that the production technology required to produce goods X and Y are vary similar. if a firm that is producing good C notices that the market price of good Y is rising, it will...
shift into producing good Y
price elasticity of supply
the % change in quantity divided by a one % change in the price of a good
marginal cost is calculated by
the change in total cost divided by the change in output
in a competitive labor market, it is observed that the equilibrum wage rate and employment level have both risen. one can infer that
the demand for labor has increased
a university observes that when it rasises the price of football tickets, total revenu from football games increase. and when they lower ticket prices, total rev falls. this suggest
the demand for tickers to football games must be inelastic
marginal product
the extra output associated with hiring an extra worker
the tendency for consumers to purchase more of a good or service as its price falls is called
the law of demand
which of the following factors of production is likely to be fixed in the short run
the location of the firm
in general the law of demand asserts that a negative relationship exists between
the only monetary and non monentary price and quantity demanded
in a particular labor market, the equilibrium wage rate is $15. from this information, one can infer that
the value of the marginal product is greater than or equal to 15
the optimal # of workers for a perfectly competitive firm to hire occurs when
the wage rate equals the value of marginal product of the last worker
ben and Ashley are identical in every way except one. ashley has an IQ score 10 points higher than ben. all else equal, human capital theory would predict ashley
will earn more then ben
