Chapter 18
Micro TB_18-95 Scenario 18-3 In 1997, Albania experienced a civil war. The civil unrest sent thousands of refugees across the Adriatic Sea to Italy where they sought relief from the fighting. 96. Refer to Scenario 18-3. In what way did the Albanian civil war probably affect Italian labour markets? a. Total employment in Italy decreased. b. Wages in Italy increased. c. The marginal product of labour in Italy decreased. d. Fewer Italians were able to find work.
C PTS: 1 DIF: Average REF: 404-407 BLM: Higher Order
Micro TB_18-97 98. Refer to Scenario 18-3. When a labour market experiences a surplus of labour, which of the following experiences downward pressure? a. the marginal productivity of labour b. final product price c. wages d. the demand for labour
C PTS: 1 DIF: Average REF: 404-407 BLM: Higher Order
Micro TB_18-98 Scenario 18-4 Rocchetta Industries manufactures and supplies bottled water in Mexico. As a result of a contamination of water supplies at many of Mexico's resort communities, the demand for bottled water has increased. 99. Refer to Scenario 18-4. As a result of the contamination, what would we expect would happen to the value of the marginal product for Rocchetta Industries' workers? a. It would be offset by a decrease in wages. b. It would be unaffected by a rise in demand for bottled water. c. It would rise since the price of bottled water increases. d. It would fall since the marginal product of labour decreases.
C PTS: 1 DIF: Average REF: 404-407 BLM: Higher Order
Micro TB_18-58 59. When labour is the only input a firm uses, what can the marginal cost of a unit of output be defined as? a. marginal revenue minus wage b. marginal product of labour minus wage c. wage divided by marginal product of labour d. marginal product of labour divided by wage
C PTS: 1 DIF: Challenging REF: 401 BLM: Remember
Micro TB_18-87 88. What do we know about the slope of an individual worker's labour supply curve? a. It cannot slope downward. b. It slopes downward if that person responds to a higher wage by taking fewer hours of leisure per week. c. It slopes downward if that person responds to a higher opportunity cost of leisure by working fewer hours per week. d. It is horizontal if that person works the same number of hours per week, regardless of the opportunity cost of leisure.
C PTS: 1 DIF: Challenging REF: 402-403 BLM: Remember
Micro TB_18-3 4. A firm's demand for a factor of production is derived from its decision to supply a good in the market. What do we call this type of demand? a. differentiated demand b. secondary demand c. derived demand d. hybrid demand-supply
C PTS: 1 DIF: Easy REF: 396 BLM: Remember
Micro TB_18-4 5. In what form is most of the total income earned in the Canadian economy ultimately paid to households? a. profit b. interest c. wages d. dividends
C PTS: 1 DIF: Easy REF: 396 BLM: Remember
Micro TB_18-7 8. Why are labour markets different from most other markets? a. Labour demand is represented by a vertical line on a supply-demand diagram. b. Labour demand is represented by an upward-sloping line on a supply-demand diagram. c. Labour demand is derived. d. Labour demand is differentiated.
C PTS: 1 DIF: Easy REF: 396 BLM: Remember
Micro TB_18-32 33. If hiring more workers results in each additional worker contributing successively smaller amounts of output, then which of the following applies? a. diminishing profitability b. diminishing marginal cost c. diminishing marginal product d. diminishing average product
C PTS: 1 DIF: Easy REF: 398-399 BLM: Remember
Micro TB_18-81 82. Which of the following is most closely linked to a household member's decision on how much labour to supply? a. the supply of factors of production other than labour b. technological change c. the tradeoff between leisure and work d. immigration trends
C PTS: 1 DIF: Easy REF: 402-403 BLM: Remember
Micro TB_18-91 92. What happens to the labour supply curves in both countries when Mexican workers leave Mexico and move to Canada? a. Labour supply decreases in both Mexico and Canada. b. Labour supply increases in both Canada and Mexico. c. Labour supply increases in Canada and decreases in Mexico. d. Labour supply increases in Mexico and decreases Canada.
C PTS: 1 DIF: Easy REF: 402-403 BLM: Remember
Micro TB_18-57 58. When a firm hires labour up to the point where the wage is equal to the value of the marginal product of labour, what is it doing? a. It is minimizing labour costs. b. It is minimizing the number of workers it can hire. c. It is maximizing the number of workers it can hire. d. It is maximizing profit.
D PTS: 1 DIF: Average REF: 400 BLM: Remember
Micro TB_18-60 61. What is diminishing marginal product closely related to? a. diminishing total cost b. diminishing variable cost c. increasing average cost d. increasing marginal cost
D PTS: 1 DIF: Average REF: 401 BLM: Remember
Micro TB_18-61 62. What does a firm's labour-demand curve represent? a. the quantity of labour supplied at the market wage b. the marginal product of labour c. the quantity of labour supplied based on the product demand d. the number of workers that the firm is willing to hire at any given wage
D PTS: 1 DIF: Average REF: 401 BLM: Remember
Micro TB_18-66 67. If the price of airline tickets falls, what will happen to the demand curve for flight attendants? a. The slope of the demand curve will increase. b. The slope of the demand curve will decrease. c. It will shift to the right. d. It will shift to the left.
D PTS: 1 DIF: Average REF: 401-402 BLM: Remember
Micro TB_18-79 80. If workers respond to an increase in the opportunity cost of leisure by taking less leisure, then what is the shape of their labour supply curve? a. horizontal b. vertical c. downward sloping d. upward sloping
D PTS: 1 DIF: Average REF: 402-403 BLM: Remember
Micro TB_18-82 83. Which of the following events would NOT shift the labour supply curve? a. changes in the number of women willing to work b. immigration of workers c. changing attitudes towards work d. increases in worker productivity
D PTS: 1 DIF: Average REF: 402-403 BLM: Remember
Micro TB_18-94 95. When labour supply increases, which of the following will result? a. The marginal productivity of workers continually increases. b. Profit-maximizing firms reduce employment. c. The value of marginal productivity of workers increases as long as labour supply is upward sloping. d. Wages decrease as long as labour demand is downward sloping.
D PTS: 1 DIF: Average REF: 402-403 BLM: Remember
Micro TB_18-1 2. Rent, interest, and profit are all forms of income paid to the owners of which of the following? a. aggregate stock b. aggregate demand c. firms and non-for-profit organizations d. land and capital
D PTS: 1 DIF: Easy REF: 395 BLM: Remember
Micro TB_18-39 40. What directly measures a worker's contribution to a firm's revenue? a. the worker's marginal product b. the worker's value of marginal product c. the worker's marginal product multiplied by his/her wage d. the worker's value of marginal product multiplied by his/her wage
B PTS: 1 DIF: Average REF: 399 BLM: Remember
Micro TB_18-53 Figure 18-1 The figure represents the value of marginal product for a firm that sells its product in a competitive market. 54. Refer to Figure 18-1. The value of the marginal-product curve shown in this figure is the same as which of the following? a. the labour-supply curve b. the labour-demand curve c. the marginal-revenue curve d. the total-revenue curve
B PTS: 1 DIF: Average REF: 400 BLM: Higher Order
Micro TB_18-42 43. To maximize profit, a competitive firm hires workers up to the point of what intersection? a. the total-revenue curve and the marginal-cost curve b. the value-of-marginal-product curve and the wage line c. the value-of-marginal-product curve and the marginal-revenue curve d. the total-revenue curve and the wage line
B PTS: 1 DIF: Average REF: 400 BLM: Remember
Micro TB_18-45 46. For a competitive, profit-maximizing firm, what is the same as the labour demand curve? a. the marginal cost curve b. the value of marginal product curve c. the production function d. the profit function
B PTS: 1 DIF: Average REF: 400 BLM: Remember
Micro TB_18-47 48. A profit-maximizing firm starts with 50 employees and then increases employment. Which of the following occurs when 50 more employees are hired? a. The wage exceeds the value of the marginal product of labour. b. The value of the marginal product of labour exceeds the wage. c. The marginal product of labour is increasing. d. The marginal product of labour is decreasing .
B PTS: 1 DIF: Average REF: 400 BLM: Remember
Micro TB_18-49 50. A profit-maximizing, competitive firm will hire an additional worker when the additional worker makes a positive contribution to which of the following? a. total revenue b. total profit c. the value of the marginal product of labour d. marginal revenue
B PTS: 1 DIF: Average REF: 400 BLM: Remember
Micro TB_18-63 64. Charles owns one of many bakeries in New York City. Which of the following events will lead to a decrease in Charles's demand for the services of bakers? a. The supply of wheat increases. b. The price of baked goods falls. c. The local bakers form a union. d. Bakers become more productive.
B PTS: 1 DIF: Average REF: 401 BLM: Higher Order
Micro TB_18-84 85. Which of the following people has the highest opportunity cost of leisure? a. an attorney who earns $200 per hour and who plays golf during her leisure time b. a medical doctor who earns $210 per hour and who sleeps during his leisure time c. a retail clerk who earns $15 per hour and who watches TV during her leisure time d. a waiter who earns $12 per hour and who reads poetry during his leisure time
B PTS: 1 DIF: Average REF: 402-403 BLM: Higher Order
Micro TB_18-77 78. The labour supply curve is fundamentally a representation of the tradeoff people face. What is this tradeoff between? a. work and the wage rate b. work and leisure c. the wage rate and productivity d. technology and the wage rate
B PTS: 1 DIF: Average REF: 402-403 BLM: Remember
Micro TB_18-80 81. If workers respond to an increase in the opportunity cost of leisure by taking more leisure, then what is the shape of their labour supply curve? a. upward sloping b. downward sloping c. horizontal d. vertical
B PTS: 1 DIF: Average REF: 402-403 BLM: Remember
Micro TB_18-90 91. What happens to the labour supply in the pear-picking market when the wage paid to apple pickers increases? a. The labour supply will increase. b. The labour supply will decrease. c. The slope of labour supply will increase. d. The slope of labour supply will decrease.
B PTS: 1 DIF: Average REF: 402-403 BLM: Remember
Micro TB_18-93 94. Which of the following events would tend to lead to an increase in the supply of labour? a. The price of a firm's product increases. b. A country experiences an increase in immigrant labour. c. The wage rate increases. d. Technology makes workers more productive.
B PTS: 1 DIF: Average REF: 402-403 BLM: Remember
Micro TB_18-78 79. What does an upward-sloping supply curve mean? a. It means that workers prefer to buy more leisure time when their incomes increase. b. It means that workers prefer to supply less labour when wages are high. c. It means that an increase in the opportunity cost of leisure leads workers to increase the quantity of labour they supply. d. It means that workers will be more productive at higher wages.
C PTS: 1 DIF: Average REF: 402-403 BLM: Remember
Micro TB_18-88 89. When does the labour supply curve shift? a. when employers need to hire more people b. when employers develop new technology c. when workers change the amount they want to work at any given wage d. when workers become more productive
C PTS: 1 DIF: Average REF: 402-403 BLM: Remember
Micro TB_18-89 90. When does the labour supply curve shift? a. when employers need to hire more people b. when employers develop new technology c. when new workers enter the labour market d. when workers become more productive
C PTS: 1 DIF: Average REF: 402-403 BLM: Remember
Micro TB_18-92 93. Which of the following effects is often a result, in significant part, of immigration of workers into Canada? a. an increase in the demand for labour in Canada b. a decrease in the demand for labour in Canada c. an increase in the supply of labour in Canada d. a decrease in the supply of labour in Canada
C PTS: 1 DIF: Average REF: 402-403 BLM: Remember
Micro TB_18-102 103. Refer to Figure 18-2. If the price of apples increases, what will happen to the wage and the hiring of apple pickers? a. The wage will increase, and more apple pickers will be hired. b. The wage will decrease, and more apple pickers will be hired. c. The wage will increase, and fewer apple pickers will be hired. d. The wage will decrease, and fewer apple pickers will be hired.
A PTS: 1 DIF: Average REF: 404-407 BLM: Higher Order
Micro TB_18-104 105. Refer to Figure 18-2. What happens to the profit earned by apple producers and the wage earned by apple pickers when the price of apples falls? a. Both profit and the wage will fall. b. Both profit and the wage will rise. c. Profit will rise, and the wage will fall. d. Profit will fall, and the wage will rise.
A PTS: 1 DIF: Average REF: 404-407 BLM: Higher Order
Micro TB_18-107 108. Refer to Figure 18-3. If the relevant labour supply curve is S2 and the current wage is W1, what do we know about the condition of this labour market? a. There is a surplus of labour. b. The quantity of labour demanded exceeds the quantity of labour supplied. c. An increase in the minimum wage could be employed to restore equilibrium in the market. d. The demand has to shift downward to restore the equilibrium.
A PTS: 1 DIF: Average REF: 404-407 BLM: Higher Order
Micro TB_18-122 123. Which of the following determines the rental price of capital? a. the amount that is determined by the supply and demand in capital markets b. the amount of equity that is generated in equity markets c. the amount of bond financing used by profit-maximizing firms d. the amount of dividends paid out to shareholders by profit-maximizing firms
A PTS: 1 DIF: Average REF: 410 BLM: Remember
Micro TB_18-126 127. What does the marginal product of any factor of production depend on? a. the quantity of the factor used b. the price of the final good c. the demand for the final good d. the price of the factor used
A PTS: 1 DIF: Average REF: 410 BLM: Remember
Micro TB_18-137 138. The Black Death was one of the most devastating pandemics in human history, killing an estimated 75 to 200 million people and peaking in Europe in the years 1348-50. What resulted from the Black Death in fourteenth century Europe? a. a lower marginal product of land b. a lower marginal product of labour of surviving workers c. economic hardship for surviving peasants d. economic prosperity for surviving landowners
A PTS: 1 DIF: Average REF: 411-413 BLM: Remember
Micro TB_18-113 114. What is a market in which there is only one buyer called? a. a monopsony b. a monopoly c. a unipoly d. an oligopsony
A PTS: 1 DIF: Easy REF: 409 BLM: Remember
Micro TB_18-10 11. Given that wheat is an important ingredient in bread, what can we say about the demand of wheat? a. The demand of wheat is derived from consumers' choices, which determine the demand for bread. b. The demand for wheat is derived from firms' choices, which determine the supply of bread. c. The demand for wheat and the demand for bread are both derived demands. d. Neither the demand for wheat nor the demand for bread is a derived demand.
B PTS: 1 DIF: Average REF: 396 BLM: Remember
Micro TB_18-9 10. Which of the following is a characteristic of the demand for a factor of production? a. It is based on the supply curve of the product market. b. It is a derived demand. c. It is a differentiated demand. d. It is likely to be upward sloping, in violation of the law of demand.
B PTS: 1 DIF: Average REF: 396 BLM: Remember
Micro TB_18-101 102. Refer to Figure 18-2. If the price of apples increases, which of the following will result? a. Demand for apple pickers will shift to the left. b. Demand for apple pickers will shift to the right. c. Supply of apple pickers will shift to the left. d. Supply of apple pickers will shift to the right.
B PTS: 1 DIF: Average REF: 404-407 BLM: Higher Order
Micro TB_18-106 107. Refer to Figure 18-3. Assume that W1 = $20 and W2 = $18 and that the market stays in equilibrium. What would happen to the marginal product of labour if the labour supply curve shifts from S1 to S2? a. The shift decreases the value of the marginal product of labour by more than $2. b. The shift decreases the value of the marginal product of labour by $2. c. The shift increases the value of marginal product of labour by more than $2. d. The shift increases the value of the marginal product of labour by $2.
B PTS: 1 DIF: Average REF: 404-407 BLM: Higher Order
Micro TB_18-111 112. Refer to Figure 18-4. If the relevant labour demand curve is D2 and the current wage is W1, which of the following explains the condition of the labour market? a. There is a surplus of labour. b. There is a shortage of labour. c. The quantity of labour supplied exceeds the quantity of labour demanded. d. Workers are failing to take into account the work-leisure tradeoff in deciding what quantity of labour to supply at alternative wages.
B PTS: 1 DIF: Average REF: 404-407 BLM: Higher Order
Micro TB_18-115 116. When a labour market is a monopsony, what can we say about the monopsony firm? a. It hires more workers than would a competitive firm. b. It hires fewer workers than is socially optimal. c. It pays a higher wage than would a competitive firm. d. It is nevertheless regarded as a competitive firm in both the input and output markets.
B PTS: 1 DIF: Average REF: 409 BLM: Remember
Micro TB_18-120 121. Which of the following best describes the rental price of capital? a. the value of the capital to the firm b. the price paid to use capital for a limited time period c. the price paid for ownership of the capital d. the interest rate of the capital paid by the firm
B PTS: 1 DIF: Average REF: 409-410 BLM: Remember
Micro TB_18-121 122. Which of the following best describes the rental price of land? a. the price paid for ownership of the land b. the price paid for the flow of services from land over a specified time period c. the opportunity cost of the land for alternative uses d. the market price of the land for the rental period
B PTS: 1 DIF: Average REF: 410 BLM: Remember
Micro TB_18-125 126. With regard to capital, which of the following is it important to distinguish between? a. the supply price of capital and the demand price of capital b. the rental price of capital and the purchase price of capital c. firms and the demanders of capital d. the suppliers of capital and the owners of capital
B PTS: 1 DIF: Average REF: 410 BLM: Remember
Micro TB_18-129 130. The determination of the demand for land is essentially the same as the determination of which of the following? a. demands for goods and services b. demands for labour and capital c. supplies of labour and capital d. supplies of goods and services
B PTS: 1 DIF: Average REF: 410 BLM: Remember
Micro TB_18-134 135. What is the equilibrium rental income paid to landowners at any point in time? a. the purchase price of land b. the value of the marginal product of land c. the marginal product of land d. the wage paid to labourers of land
B PTS: 1 DIF: Average REF: 411-413 BLM: Remember
Micro TB_18-135 136. What is the equilibrium rental income paid to the owners of capital at any point in time? a. the marginal product of capital b. the value of the marginal product of capital c. the profits paid out to shareholders in the form of dividends d. the equilibrium purchase price of capital
B PTS: 1 DIF: Average REF: 411-413 BLM: Remember
Micro TB_18-112 113. Suppose medical research provides evidence that eating bananas provides far greater health benefits than was previously thought. Which of the following results would the increase in the demand for bananas have? a. It increases the marginal product of banana pickers for any given number of banana pickers. b. It increases the value of the marginal product of banana pickers for any given number of banana pickers. c. It increases the supply of banana pickers. d. It increases the minimum wage for workers in general.
B PTS: 1 DIF: Challenging REF: 404-407 BLM: Higher Order
Micro TB_18-133 134. As a result of severe flooding, a farmer loses one-half of his productive farmland. If the property of diminishing returns applies to all factors of production, which of the following should he expect? a. an increase in the marginal productivity of his remaining land, and an increase in the marginal productivity of his labour b. an increase in the marginal productivity of his remaining land, and a decrease in the marginal productivity of his labour c. a decrease in the marginal productivity of his remaining land, and an increase in the marginal productivity of his labour d. a decrease in the marginal productivity of his remaining land, and a decrease in the marginal productivity of his labour
B PTS: 1 DIF: Challenging REF: 411-413 BLM: Higher Order
Micro TB_18-116 117. When economists refer to a firm's capital, what are they likely describing? a. markets for final goods and services b. the stock of equipment and buildings used in production c. the amount of bank financing used by the firm d. the amount of financing provided by the equity markets
B PTS: 1 DIF: Easy REF: 409-410 BLM: Remember
Micro TB_18-103 104. Refer to Figure 18-2. What happens to the profit earned by apple producers and to the wage earned by apple pickers when the price of apples rises? a. Profit will rise. and the wage will fall. b. Profit will fall, and the wage will rise. c. Both profit and the wage will rise. d. Both profit and the wage will fall.
C PTS: 1 DIF: Average REF: 404-407 BLM: Higher Order
Micro TB_18-105 Figure 18-3 106. Refer to Figure 18-3. What could possibly explain the shift of the labour supply curve from S1 to S2? a. an increase in technology b. a change in the price of firms' output c. a change in workers' attitudes toward the work-leisure tradeoff d. an increase in workers' productivity
C PTS: 1 DIF: Average REF: 404-407 BLM: Higher Order
Micro TB_18-108 Figure 18-4 109. Refer to Figure 18-4. When the relevant labour demand curve is D1 and the labour market is in equilibrium, how can we interpret W1? a. The value of the marginal product of labour to firms is less than W1. b. The opportunity cost of leisure to workers is greater than W1. c. The wage is W1. d. The price of output is higher at W1 than at W2.
C PTS: 1 DIF: Average REF: 404-407 BLM: Higher Order
Micro TB_18-109 110. Refer to Figure 18-4. Which of the following factors could possibly explain the shift of the labour demand curve from D1 to D2? a. a change in workers' attitudes toward the work-leisure tradeoff b. decreases in wages in other labour markets c. an increase in the price of firms' output d. new technology that replaces workers
C PTS: 1 DIF: Average REF: 404-407 BLM: Higher Order
Micro TB_18-118 119. If one were to consider a university as a business, how would the economists regard the computers in the computer labs? a. as technology flows b. as mechanization flows c. as part of the university's stock of capital d. as a flow of services from the university's stock of capital
C PTS: 1 DIF: Average REF: 409-410 BLM: Remember
Micro TB_18-124 125. How are owners of capital resources compensated? a. according to the purchase price of the capital stock b. according to the marginal product of capital c. according to the value of the marginal product of capital d. according to the absolute level of production of final goods and services
C PTS: 1 DIF: Average REF: 410 BLM: Remember
Micro TB_18-127 128. What factors of productions does the distinction between purchase price and rental price apply to? a. land and labour b. capital and labour c. land and capital d. land, capital, and labour
C PTS: 1 DIF: Average REF: 410 BLM: Remember
Micro TB_18-114 115. What is the difference between monopoly and monopsony? a. The term "monopoly" refers to either a market with one buyer or to a market with one seller, while the term "monopsony" refers to a market with more than one buyer and seller. b. The term "monopoly" refers to a market with one buyer, while the term "monopsony" refers to a market with one seller. c. The term "monopsony" refers to a market with one buyer, while the term "monopoly" refers to a market with one seller. d. The term "monopsony" refers to either a market with one buyer or to a market with one seller, while the term "monopoly" refers to a market with more than one buyer and seller.
C PTS: 1 DIF: Easy REF: 409 BLM: Remember
Micro TB_18-117 118. What is the accumulation of machinery and buildings used in the production of new goods and services called? a. production factors b. output factors c. capital d. equity
C PTS: 1 DIF: Easy REF: 409-410 BLM: Remember
Micro TB_18-100 Figure 18-2 101. Refer to Figure 18-2. If the apple pickers start working fewer hours (by taking more vacation time), what will happen to the equilibrium wage? a. It will fall below W1 due to a shift in demand. b. It will fall below W1 due to a shift in supply. c. It will rise above W1 due to a shift in demand. d. It will rise above W1 due to a shift in supply.
D PTS: 1 DIF: Average REF: 404-407 BLM: Higher Order
Micro TB_18-110 111. Refer to Figure 18-4. Assume that W1 = $20 and W2 = $22 and that the market stays in equilibrium. What would happen to the marginal product of labour if the labour demand curve shifts from D1 to D2? a. The shift decreases the value of the marginal product of labour by more than $2. b. The shift decreases the value of the marginal product of labour by $2. c. The shift increases the value of the marginal product of labour by less than $2. d. The shift increases the value of the marginal product of labour by $2.
D PTS: 1 DIF: Average REF: 404-407 BLM: Higher Order
Micro TB_18-119 120. Which of the following best describes the purchase price of capital? a. the value of the capital to the firm b. the interest rate of the capital paid by the firm c. the price received from the flow of some capital services d. the price a person pays to own that factor of production indefinitely
D PTS: 1 DIF: Average REF: 409-410 BLM: Remember
Micro TB_18-123 124. How are owners of land compensated? a. according to the absolute level of production from the land b. according to the number of labourers the land can support c. according to the purchase price of the land stock d. according to the value of the marginal product of land
D PTS: 1 DIF: Average REF: 410 BLM: Remember
Micro TB_18-132 133. As a result of severe flooding, a farmer loses one-half of his productive farmland. What should he expect will happen to the marginal productivity of his remaining land? a. It will decrease since the land quality falls. b. It will decrease since the demand for his remaining land decreases. c. It will increase since there will be more workers to work on the remaining land. d. It will increase since the demand for his remaining land increases.
D PTS: 1 DIF: Average REF: 411-413 BLM: Higher Order
Micro TB_18-130 131. Because of diminishing returns, which of the following does a factor in abundant supply have? a. a high marginal product, and a high rental price b. a high marginal product, and a low rental price c. a low marginal product, and a high rental price d. a low marginal product, and a low rental price
D PTS: 1 DIF: Average REF: 411-413 BLM: Remember
Micro TB_18-131 132. Because of diminishing returns, which of the following does a factor in scarce supply have? a. a low marginal product, and a low rental price b. a low marginal product, and a high rental price c. a high marginal product, and a low rental price d. a high marginal product, and a high rental price
D PTS: 1 DIF: Average REF: 411-413 BLM: Remember
Micro TB_18-136 137. What will a change in supply of one factor of production do to the marginal productivities and the prices of other factors? a. It will not change either the marginal productivities or the prices of other factors. b. It will not change the prices of other factors, but it may change their marginal productivities. c. It will not change the marginal productivities of other factors, but it may change their prices. d. It changes the marginal productivities and the prices of other factors.
D PTS: 1 DIF: Average REF: 411-413 BLM: Remember
Micro TB_18-128 129. What term refers to the accumulation of goods produced in the past that are being used in the present to produce new goods and services? a. inventories b. products c. factors of production d. capital
D PTS: 1 DIF: Easy REF: 410 BLM: Remember
Micro TB_18-6 7. Which markets do the basic tools of supply and demand apply to? a. markets for goods and services and markets for labour services b. markets for goods and services but not markets for labour services c. markets for labour services but not markets for factors of production d. markets for factors of production but not markets for goods and services
A PTS: 1 DIF: Average REF: 396 BLM: Remember
Micro TB_18-13 14. Refer to Scenario 18-1. If the price of fresh Pacific salmon were to decrease significantly, what would Gertrude most likely do? a. She would reduce her demand for crewmembers. b. She would try to increase her catch to make up for lost revenue. c. She would become a seller in at least one factor market. d. She would shut down her fishing business.
A PTS: 1 DIF: Average REF: 397 BLM: Higher Order
Micro TB_18-33 34. What effect on the shape of the production function does diminishing marginal product serve to have? a. The slope of the production function decreases as the quantity of input increases. b. The production function becomes steeper as the quantity of input increases. c. The production function slopes downward. d. The production function is horizontal beyond a certain quantity of input.
A PTS: 1 DIF: Average REF: 398-399 BLM: Remember
Micro TB_18-40 41. Typically, as a firm hires additional workers, what happens to the marginal product of labour and the value of the marginal product of labour? a. The marginal product of labour and the value of the marginal product of labour both decrease. b. The marginal product of labour stays constant, and the value of the marginal product of labour decreases. c. The marginal product of labour decreases, and the value of the marginal product of labour stays constant. d. The marginal product of labour decreases, and the value of the marginal product of labour increases.
A PTS: 1 DIF: Average REF: 399 BLM: Remember
Micro TB_18-48 49. Letting Δ denote "change," when will a competitive firm hire an additional worker? a. only if Δ in the firm's revenue > Δ in the firm's cost b. only if Δ in the firm's marginal product > Δ in the firm's profit c. only if Δ in the firm's profit > Δ in the firm's cost d. only if Δ in the marginal product > Δ in the firm's cost
A PTS: 1 DIF: Average REF: 400 BLM: Remember
Micro TB_18-67 68. If consumers demand more genetically engineered foods, what will happen to the value of genetic engineers' marginal product of labour? a. Price of the genetically engineered foods increases, therefore the value of marginal product of labour will rise. b. Price of the genetically engineered foods decreases, therefore the value of marginal product of labour will fall. c. Price of the genetically engineered foods increases, therefore the value of marginal product of labour will fall. d. Price of the genetically engineered foods decreases, therefore the value of marginal product of labour will rise.
A PTS: 1 DIF: Average REF: 401-402 BLM: Remember
Micro TB_18-69 70. Which of the following events would NOT bring about a change in the value of the marginal product of labour? a. technological stability b. a change in the marginal product of labour c. a change in the price of the product that the firm sells d. an increase in product demand
A PTS: 1 DIF: Average REF: 401-402 BLM: Remember
Micro TB_18-75 76. Refer to Scenario 18-2. Assume that Jerry has an upward-sloping labour supply curve. If the opportunity cost of Jerry's leisure time increases, how will he respond? a. by working more hours b. by working fewer hours c. by working an equal number of hours d. by dividing his time equally between work and leisure
A PTS: 1 DIF: Average REF: 402-403 BLM: Higher Order
Micro TB_18-85 86. Which of the following does the labour supply curve reflect? a. how workers' decisions about the labour-leisure tradeoff respond to a change in the wage b. how workers' decisions about the opportunity cost of labour respond to a change in the quantity of labour supplied c. how firms' decisions about the labour-leisure tradeoff respond to the quantity of labour demanded d. how firms' decisions about how the quantity of labour they hire responds to changes in their opportunities to earn profits
A PTS: 1 DIF: Average REF: 402-403 BLM: Remember
Micro TB_18-86 87. If Emma's individual labour supply curve is upward sloping, which of the following increases would Emma respond to, and how? a. the wage, by working more hours per week b. the opportunity cost of leisure, by working fewer hours per week c. the opportunity cost of leisure, by taking fewer hours of leisure per week d. the wage, by enjoying more leisure
A PTS: 1 DIF: Average REF: 402-403 BLM: Remember
Micro TB_18-64 65. A competitive firm sells its output for $45 per unit. It employs 30 workers, and the marginal product of the 30th worker is four units of output per day. It pays its workers a wage of $150 per day. Which of the following statements will help the firm make the right decision regarding hiring a 31st worker? a. The firm's profit would increase if it hired a 31st worker. b. For the 30th worker, the value of the marginal product of labour is $600. c. For the 30th worker, the marginal revenue product is $600. d. Workers are consistently becoming more productive.
A PTS: 1 DIF: Challenging REF: 401 BLM: Higher Order
1. What terms best describes the economy's stock of equipment and structures? a. capital b. aggregate demand c. long-term inventory d. aggregate stock
A PTS: 1 DIF: Easy REF: 395 BLM: Remember
Micro TB_18-12 13. Refer to Scenario 18-1. When Gertrude participates in the labour market to hire crewmembers for her boats, what is she most likely considered to be? a. a demander of labour services b. a supplier of labour services c. a buyer of capital d. a demander of capital
A PTS: 1 DIF: Easy REF: 397 BLM: Higher Order
Micro TB_18-27 28. Refer to Table 18-1. What is the name of the property exemplified by the fact that the marginal product changes as the number of workers increases? a. diminishing marginal product b. utility maximization c. supply and demand d. profit maximization
A PTS: 1 DIF: Easy REF: 398 BLM: Higher Order
Micro TB_18-28 29. Refer to Table 18-1. What is the marginal profit of the fourth worker? a. -$100 b. $0 c. $200 d. $400
A PTS: 1 DIF: Easy REF: 398 BLM: Higher Order
Micro TB_18-30 31. Refer to Table 18-1. To maximize its profit, how many workers will the firm hire? a. 2 b. 3 c. 4 d. 5
B PTS: 1 DIF: Average REF: 398 BLM: Higher Order
Micro TB_18-8 9. Which of the following examples best illustrates the concept of "derived demand"? a. An increase in the wages of autoworkers will lead to an increase in the demand for robots in automobile factories. b. An automobile producer's decision to supply more cars will lead to an increase in the demand for automobile production workers. c. An automobile producer's decision to supply more minivans results from a decrease in the demand for station wagons. d. A decrease in the wages of autoworkers will lead to an increase in the demand for robots in automobile factories.
B PTS: 1 DIF: Average REF: 396 BLM: Remember
Micro TB_18-26 27. Refer to Table 18-1. What is the marginal product of the fourth worker? a. 30 b. 40 c. 60 d. 100
B PTS: 1 DIF: Average REF: 398 BLM: Higher Order
Micro TB_18-99 100. Refer to Scenario 18-4. When the labour market adjusts to its new equilibrium, which of the following would we expect to result? a. the marginal product of labour to be higher than it was before the increase in demand for bottled water b. the value of the marginal product of labour to be higher than it was before the increase in demand for bottled water c. the price of bottled water to be lower than it was before the increase in demand for bottled water d. the wages of Rocchetta's workers to be lower than they were before the increase in demand for bottled water
B PTS: 1 DIF: Average REF: 404-407 BLM: Higher Order
Micro TB_18-65 66. Aurora Custom Cabinets produces and sells custom kitchen cabinets. The firm has determined that if it hires 10 workers, it can produce 4 sets of cabinets per day. Alternatively, if it hires 11 workers, it can produce 4.2 sets of cabinets per day. It sells each set of cabinets for $2000, and it pays each of its workers $200 per day. Which of the following will help the firm to make the right decision regarding hiring the 11th worker? a. For the 11th worker, the value of the marginal product of labour is $500. b. For the 11th worker, the marginal revenue product is $400. c. If the firm hires 11 workers, the firm is maximizing its profit. d. If the firm hires 11 workers, then its profit would increase if it cut back to 10 workers.
B PTS: 1 DIF: Challenging REF: 401 BLM: Higher Order
Micro TB_18-2 3. What are the factors of production best defined as? a. the output produced from raw materials b. the inputs used to produce goods and services c. the wages paid to the workforce d. the goods and services sold in the market
B PTS: 1 DIF: Easy REF: 396 BLM: Remember
Micro TB_18-5 6. In the Canadian economy, what factor of production is considered to be the most important in terms of the magnitude of income earned by that factor of production? a. land b. labour c. profit d. capital
B PTS: 1 DIF: Easy REF: 396 BLM: Remember
Micro TB_18-15 16. Refer to Scenario 18-1. In the fresh Pacific salmon product market, what does Gertrude control? a. the price she charges for her fresh salmon b. the quantity of fresh salmon that she catches and supplies to the market c. the competitive environment of the market d. the wage she pays her workers
B PTS: 1 DIF: Easy REF: 397 BLM: Higher Order
Micro TB_18-16 17. Refer to Scenario 18-1. According to the labour market theory, which one of Gertrude's incentives does her demand for crewmembers and her supply of fresh Pacific salmon result from? a. intrinsic desire to hire crewmembers b. primary goal of maximizing profit c. altruistic motives to provide fresh salmon to consumers d. desire to supply fresh salmon to the customer
B PTS: 1 DIF: Easy REF: 397 BLM: Higher Order
Micro TB_18-20 21. How is the value of the marginal product of labour calculated? a. by multiplying the price of output by the quantity of labour b. by multiplying the price of output by the marginal product of labour c. by multiplying the wage by the quantity of labour d. by multiplying the wage by the marginal product of labour
B PTS: 1 DIF: Easy REF: 398 BLM: Remember
Micro TB_18-22 23. How is the marginal product of labour defined? a. the change in output per additional unit of revenue b. the change in output per additional unit of labour c. the change in revenue per additional unit of labour d. the change in revenue per additional unit of output
B PTS: 1 DIF: Easy REF: 398 BLM: Remember
Micro TB_18-55 56. Refer to Figure 18-1. To maximize profit, what quantity of labour will a firm hire? a. 0 b. equal to Q* c. along the value of marginal product d. equal to market wage rate
B PTS: 1 DIF: Easy REF: 400 BLM: Higher Order
Micro TB_18-73 Scenario 18-2 Jerry has two jobs, one for the winter and one for the summer. In the winter, he works as a lift attendant at a ski resort where he earns $10 per hour. During the summer, Jerry drives a tour bus around the ski resort, earning $12 per hour. 74. Refer to Scenario 18-2. During the winter months, what is Jerry's opportunity cost of taking an hour off work to go skiing? a. less than $10 b. $10 c. between $10 and $12 d. $12
B PTS: 1 DIF: Easy REF: 402-403 BLM: Higher Order
Micro TB_18-14 15. Refer to Scenario 18-1. If Gertrude is a competitor in both the fresh Pacific salmon market and in the market for crewmembers, what is she called in the salmon market and the crew market? a. a price taker in the salmon market, and a wage setter in the crew market b. a price taker in the crew market, and a price setter in the salmon market c. a price taker in both markets d. a price setter in both markets
C PTS: 1 DIF: Average REF: 397 BLM: Higher Order
Micro TB_18-25 26. Refer to Table 18-1. If the firm hires two workers, what do the two workers together produce? a. 80 units b. 100 units c. 180 units d. 200 units
C PTS: 1 DIF: Average REF: 398 BLM: Higher Order
Micro TB_18-29 30. Refer to Table 18-1. What is the fourth worker's contribution to total revenue? a. -$100 b. $200 c. $400 d. $500
C PTS: 1 DIF: Average REF: 398 BLM: Higher Order
Micro TB_18-35 36. The profit from an additional worker is the worker's contribution to which of the following values? a. profit minus the worker's wage b. cost plus the worker's wage c. revenue minus the worker's wage d. output minus the worker's wage
C PTS: 1 DIF: Average REF: 399 BLM: Remember
Micro TB_18-37 38. What is the value of the marginal product of labour equal to? a. the change in marginal cost caused by the addition of the last worker b. the change in total cost caused by the addition of the last worker c. the change in total revenue caused by the addition of the last worker d. the change in total profit caused by the addition of the last worker
C PTS: 1 DIF: Average REF: 399 BLM: Remember
Micro TB_18-56 57. Refer to Figure 18-1. If a firm were employing fewer than Q* workers, what would hiring more workers do? a. It would increase marginal product. b. It would decrease the price of the final good. c. It would increase profit. d. It would decrease marginal revenue.
C PTS: 1 DIF: Average REF: 400 BLM: Higher Order
Micro TB_18-41 42. What is the shape of the curve that represents the value of the marginal product of labour? a. U-shaped b. flat c. downward sloping d. upward sloping
C PTS: 1 DIF: Average REF: 400 BLM: Remember
Micro TB_18-43 44. What most easily explains the shape of the value-of-marginal-product curve? a. tight labour markets b. a surplus of workers c. diminishing marginal product d. downward-sloping labour demand
C PTS: 1 DIF: Average REF: 400 BLM: Remember
Micro TB_18-46 47. Which of the following does a profit-maximizing competitive firm for which the marginal product of labour is diminishing also experience? a. a perfectly inelastic supply of labour b. a perfectly elastic supply of labour c. a downward-sloping demand for labour d. an upward-sloping demand for labour
C PTS: 1 DIF: Average REF: 400 BLM: Remember
Micro TB_18-50 51. Which of the following is most likely if a profit-maximizing firm starts with 25 employees and then decreases employment? a. The firm is losing market share. b. The firm is not likely to be minimizing losses. c. The wage exceeds the value of the marginal product of labour. d. The value of the marginal product of labour exceeds the wage.
C PTS: 1 DIF: Average REF: 400 BLM: Remember
Micro TB_18-51 52. A competitive firm will hire workers up to the point at which the value of the marginal product of labour equals which of the following? a. average total cost b. average variable cost c. wage d. price per unit of output
C PTS: 1 DIF: Average REF: 400 BLM: Remember
Micro TB_18-59 60. What is diminishing marginal product closely related to? a. diminishing average cost b. diminishing variable cost c. increasing marginal cost d. increasing total cost
C PTS: 1 DIF: Average REF: 401 BLM: Remember
Micro TB_18-62 63. Competitive firms decide how much output to sell by producing output until the price of the good equals which of the following? a. marginal product b. the value of marginal product c. marginal cost d. marginal profit
C PTS: 1 DIF: Average REF: 401 BLM: Remember
Micro TB_18-68 69. For a competitive, profit-maximizing firm, which of the following will cause the demand curve for labour to shift in response? a. a change in wage rate b. a change in quantity of labour demanded c. a change in price of the product that the firm sells d. a change in the size of the labour force
C PTS: 1 DIF: Average REF: 401-402 BLM: Remember
Micro TB_18-70 71. Which of the following events could increase the demand for labour? a. a decrease in output price b. a decrease in the amount of capital available for workers to use c. an increase in the marginal productivity of workers d. an increase in the size of the labour force
C PTS: 1 DIF: Average REF: 401-402 BLM: Remember
Micro TB_18-71 72. Which of the following events could decrease the demand for labour? a. an increase in migrant workers b. an increase in the marginal productivity of workers c. a decrease in demand for the final product produced by labour d. a decrease in the labour supply
C PTS: 1 DIF: Average REF: 401-402 BLM: Remember
Micro TB_18-72 73. When firms are able to increase the amount of physical capital available to workers, which of the following will occur? a. The marginal product of labour will decrease. b. The profits of the firm will increase. c. The value of the marginal product of labour will increase. d. The final product price will increase.
C PTS: 1 DIF: Average REF: 401-402 BLM: Remember
Micro TB_18-76 77. Refer to Scenario 18-2. If Jerry takes fewer hours of leisure in the summer than in the winter, we can assume that his labour supply curve is what shape? a. horizontal b. vertical c. upward sloping d. downward sloping
C PTS: 1 DIF: Average REF: 402-403 BLM: Higher Order
Micro TB_18-11 Scenario 18-1 Gertrude Kelp owns three boats, which participate in commercial fishing for fresh Pacific salmon off the coast of British Columbia. As part of her business, she hires a captain and several crewmembers for each boat. In the market for fresh Pacific salmon, there are thousands of firms like Gertrude's. While Gertrude usually catches a significant number of fish each year, her contribution to the entire harvest of salmon is negligible relative to the size of the market. 12. Refer to Scenario 18-1. Based on the given information, what is likely the role that Gertrude's firm plays over wages to crewmembers on the labour market and the price of salmon on the salmon market? a. Gertrude's firm is a price taker on the salmon market but a wager setter on the labour market. b. Gertrude's firm is a price setter on the salmon market but a wager taker on the labour market. c. Gertrude's firm is a price setter on the salmon market and a wager setter on the labour market. d. Gertrude's firm is a price taker on the salmon market and a wager taker on the labour market.
D PTS: 1 DIF: Average REF: 397 BLM: Higher Order
Micro TB_18-17 18. When a firm is a profit maximizer, what will be the effect on the labour market? a. It is driven to have the workers to produce as much product as possible. b. It will measure its success by the number of employees it has. c. Its labour cost will be minimized. d. It does not care directly about the number of workers it hires.
D PTS: 1 DIF: Average REF: 397 BLM: Remember
Micro TB_18-23 Table 18-1 Number of Workers Output Marginal Product of Labour Value of Marginal Product of Labour Wage Marginal Profit 0 0 1 100 $1000 $500 $500 2 80 $800 $500 3 60 $500 $100 4 280 $400 $500 5 20 $500 24. Refer to Table 18-1. What is the market price of the final good? a. $5 b. $6 c. $8 d. $10
D PTS: 1 DIF: Average REF: 398 BLM: Higher Order
Micro TB_18-24 25. Refer to Table 18-1. When does increasing marginal product occur? a. It occurs when the first worker is hired. b. It occurs after the first worker is hired. c. It occurswhen the fifth worker is hired. d. It does not occur.
D PTS: 1 DIF: Average REF: 398 BLM: Higher Order
Micro TB_18-31 32. Refer to Table 18-1. To maximize its profit, the firm will hire workers as long as the value of the marginal product of labour equals or exceeds what amount? a. $200 b. $300 c. $400 d. $500
D PTS: 1 DIF: Average REF: 398 BLM: Higher Order
Micro TB_18-34 35. When deciding whether to hire an additional worker, firms look at how the additional worker would affect which of the following? a. costs only b. revenue only c. output only d. profit only
D PTS: 1 DIF: Average REF: 399 BLM: Remember
Micro TB_18-36 37. The value of the marginal product of any input is equal to the marginal product of that input multiplied by which of the following? a. additional revenue b. marginal cost of the output c. change in total profit d. market price of the output
D PTS: 1 DIF: Average REF: 399 BLM: Remember
Micro TB_18-38 39. When a production function exhibits a diminishing, but positive, marginal product of labour, which of the following scenarios results? a. Profit generally increases as output increases. b. Profit generally decreases as output increases. c. Output declines as more workers are employed. d. Output increases, but at a decreasing rate, as more workers are employed.
D PTS: 1 DIF: Average REF: 399 BLM: Remember
Micro TB_18-54 55. Refer to Figure 18-1. The shape of the curve suggests the presence of which of the following? a. increased productivity with increased labour b. diminishing returns to scale c. increasing returns to scale d. diminishing marginal product
D PTS: 1 DIF: Average REF: 400 BLM: Higher Order
Micro TB_18-44 45. Up to what point does a competitive, profit-maximizing firm hire workers? a. where the marginal product equals zero b. where the marginal revenue product equals zero c. where the marginal product equals the wage d. where the value of the marginal product equals the wage
D PTS: 1 DIF: Average REF: 400 BLM: Remember
Micro TB_18-52 53. For the profit-maximizing, competitive firm, what do we know about the value-of-marginal-product curve? a. It is continually rising. b. It is falling only when marginal product is rising. c. It is the same as the labour supply curve. d. It is the same as the labour demand curve.
D PTS: 1 DIF: Average REF: 400 BLM: Remember
Micro TB_18-18 19. A sandwich shop hires workers to make sandwiches and sell them to customers. If the firm is competitive in both the market for sandwiches and in the market for sandwich makers, what control does it have over the price of sandwiches and the wage it pays to its workers? a. some control over both the price of sandwiches and the wage it pays to its workers b. no control over the price of sandwiches but some control over the wage it pays to its workers c. some control over the price of sandwiches but no control over the wage it pays to its workers d. no control over either the price of sandwiches or the wage it pays to its workers
D PTS: 1 DIF: Easy REF: 397 BLM: Remember
Micro TB_18-19 20. When we focus on the firm as a supplier of a good or a service, we assume that the firm is a profit maximizer. When we focus on the firm as a demander of labour, what do we assume the firm's objective to be? a. minimize wages b. minimize variable costs c. maximize the number of workers hired d. maximize profit
D PTS: 1 DIF: Easy REF: 397 BLM: Remember
Micro TB_18-21 22. Along the horizontal axis of the production function, what do we typically measure? a. the total revenue of the output b. the marginal product of the input c. the total product of the output d. the quantity of input
D PTS: 1 DIF: Easy REF: 398 BLM: Remember
Micro TB_18-74 75. Refer to Scenario 18-2. During the summer months, what is Jerry's opportunity cost of taking an hour off work to go hiking? a. less than $10 b. $10 c. between $10 and $12 d. $12
D PTS: 1 DIF: Easy REF: 402-403 BLM: Higher Order
Micro TB_18-83 84. What is the opportunity cost of an hour of leisure? a. 60 minutes b. an hour of sleep c. an hour's TV watching d. your hourly wage
D PTS: 1 DIF: Easy REF: 402-403 BLM: Higher Order
Micro TB_18-96 97. Refer to Scenario 18-3. The Italian government started to patrol the Adriatic Sea and had a policy of returning all refugees to Albania. What would this policy contribute to? a. an increase in the supply of labour in Italy b. an increase in the demand for labour in Italy c. a decrease in the demand for labour in Italy d. prevention of an increase in the supply of labour in Italy
D PTS: 1 DIF: Easy REF: 404-407 BLM: Higher Order