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