Unit 5: Factor Markets Exam

Marci is a monopsony employer of bakers. The table shows how many hours of labor will be supplied at a variety of wages. The total factor cost of employing six hours of labor is equal to:

$36

Suppose Billy Bud's Bucking Broncos employs 20 workers at a daily wage rate of $60 each. The average product of labor is 30 bucking broncos per day; the marginal product of the last worker is 12 bucking broncos per day; and total fixed cost is $3,600 for equipment. What is the marginal cost of the last bucking bronco produced?

$5

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

the wage is equal to the marginal revenue product of the last worker employed

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 value of the marginal product for the fourth worker?

$50

Max employs both labor and capital to produce his trinkets. Currently the last unit of labor employed has a marginal product of 100 units. The last unit of capital employed has a marginal product of 40 units. The price of labor is $25 per unit and the price of capital is $10 per unit. Max should:

Do nothing; he is hiring the optimal quantity of labor and capital

The wage rate is $20 per hour and the last worker hired by the firm increased output by 100 units. Computers rent for $50 per hour and the last computer rented by the firm increased output by 200 units. If the firm is producing the desired level of output, what should the firm do to minimize costs?

Hire more workers and reduce the number of computers rented because the marginal product per dollar spent is higher for workers

Assume a firm employs two inputs, A and B. The optimal hiring of inputs occurs when which of the following is true?

MP/P=MP/P

Debbie owns a bakery and can hire workers to produce cakes selling in a competitive output market at $10 each. Debbie must pay each worker a competitive market wage of $30 per day. Now suppose that the government imposes a minimum wage law that states that all bakeries must pay no less than $50 per day. How will this affect her profit-maximimizing hiring decision?

She reduces employment from six workers to four workers

Which of the following would cause the supply of teachers to decrease?

The government required another year of of college before a teacher could begin teaching

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

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%

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

demand and supply in the market for bricklayers

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

Laura is a price-taking farmer who produces corn. Assume the wage rate for the workers is $125 and the price per unit of corn is $10. The table shows Laura's production function. To maximize profits Laura should employ _____________ workers.

four

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

hires fewer workers and pays a lower wage

Human capital:

is the improvement in labor created by education and knowledge that is embodied in the workforce

The individual producer's labor demand curve is the:

marginal revenue product of the labor curve

A single buyer in a factor market is called a:

monopsony

Eric is a college professor who uses a laptop computer to write exam questions on the side. For Eric, he and his laptop computer are:

more productive when used together, rather than when they are used separately

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 by the marginal product of labor

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

substitutes

Which of the following would cause the supply of nurses to increase?

the government offered to pay for student loans if students enrolled in nursing schools

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

the marginal revenue product is equal to the wage rate