microeconomics chapter 18

Rosie's Flower Shop sells bouquets of roses for $15 each. If Rosie hires 10 workers, she can sell 500 bouquets per week. If she hires 11 workers, she can sell 560 bouquets per week. Rosie pays each of her workers $400 per week. Which of the following is correct?

For the 11th worker, the marginal profit is $500.

Diminishing marginal product occurs when

the marginal product of an input decreases as the quantity of the input increases.

A Luddite would be expected to oppose

technological advance.

Which of the following is an example of a firm's derived demand?

A tractor manufacturer's demand for assembly-line workers is inseparably linked to the supply of tractors.

When a production function exhibits a diminishing, but positive, marginal product of labor,

output increases, but at a decreasing rate, as more workers are employed.

Which of the following is an example of a firm's derived demand?

A firm's demand for college textbook study guide authors is inseparably linked to the supply of college textbooks

The marginal product of labor is

the increase in the amount of output from an additional unit of labor.

Diminishing marginal product is closely related to

increasing marginal cost.

Competitive firms decide how much output to sell by producing output until the price of the good equals

marginal cost.

Which of the following is not an example of a factor of production?

interest

Value of marginal product is defined as the additional

revenue earned from hiring one more factor of production.

Capital, labor, and land

have derived demands.
are factors of production.
are inputs used in the production of goods and services.

Which of the following could increase the supply of labor in the market for cranberry pickers?
(i) a change in the preferences of women toward full-time work
(ii) an increase in the output price
(iii) an increase in the wages paid to apple pickers
(iv) a decrease in the wages paid to apple pickers

(i) and (iv) only

Which of the following would shift a market labor supply curve to the right?

an increase in immigration

Which of the following would shift a market labor supply curve to the left?

an increase in the wage paid to workers in a competing market

When the wages paid to government economists increase, the labor supply curve for academic economists

shifts to the left

Which of the following events would shift the labor supply curve?

changes in the number of women willing to work
immigration of workers
changing attitudes towards work

Fiona's hourly wage increases from $8 to $10. Which of the following describes a consequence of the increase in Fiona's wage?

Fiona may choose to work fewer hours due to the increase in her wage.

The labor supply curve is fundamentally a representation of the trade-off people face between which of the following?

work and leisure

Which of the following events would lead to an increase in the supply of labor?

A country experiences an increase in immigrant labor.

Scenario 18-3
Sam 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 $11 per hour. During the summer, he drives a tour bus around the ski resort, earning $13 per hour.

Refer to Scenario 18-3. During the winter months, what is Sam's opportunity cost of taking an hour off work to go skiing?

$11

Immigration is an important

source of shifts in labor supply.

Consider the labor market for computer programmers. During the late 1990s, the value of the marginal product of all computer programmers increased dramatically. Holding all else equal, the equilibrium wage in the labor market for computer programmers

increased.

Consider the labor market for short-order cooks. An increase in the wages paid to fast-food workers will cause

equilibrium wages to increase and equilibrium employment to decrease in the market for short-order cooks.

Suppose that the market for labor is initially in equilibrium. A decrease in the price of output will cause the equilibrium wage

and the equilibrium quantity of labor to fall.

Consider the labor market for short-order cooks. A shortage in the availability of frying pans will cause

both equilibrium wages and equilibrium employment to decrease

Consider the labor market for short-order cooks. A labor-augmenting technological change such as a faster food processor will cause

both equilibrium wages and equilibrium employment to increase.

Scenario 18-4
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.

Refer to Scenario 18-4. The Italian government started to patrol the Adriatic Sea and had a policy of returning all refugees to Albania. This policy would contribute to

preventing an increase in the supply of labor in Italy.

Scenario 18-5
Suppose that workers from northern Minnesota, North Dakota, and Montana decide to emigrate to southern Canada.

Refer to Scenario 18-5. In the labor market in southern Canada, the equilibrium wage

will fall, and the equilibrium quantity of labor will rise.

Consider the labor market for computer programmers. During the late 1990s, the value of the marginal product of all computer programmers increased dramatically. Holding all else equal, the equilibrium quantity in the labor market for computer programmers

increased.

Scenario 18-4
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.

Refer to Scenario 18-4. The Albanian civil war probably affected Italian labor markets by causing

the marginal product of labor in Italy to decrease.

The equilibrium rental income paid to the owners of capital at any point in time equals the

value of the marginal product of capital.

Which of the following would be an example of capital for a retail gasoline station?
(i) the gas tanks and pumps
(ii) the service attendants' time
(iii) the plot of land on which the station sits

(i) only

Who receives income from capital in the United States?

bank depositors
bondholders
stockholders

The effect of the Black Death in 14th-century Europe was to

reduce income inequality between peasants and the landed classes.

Suppose that a college physics experiment goes horribly wrong and releases an electronic pulse that renders all electronic equipment in the city of San Francisco, California permanently useless. No people are hurt, and no buildings are damaged. After the accident, the wages earned by California workers will

decrease because the marginal productivities of workers will decrease.

Suppose the government designates certain areas within a community to be "wetlands," making it illegal to build on the land. What happens to land not classified as "wetlands" within the community?
(i) The price of non-wetland land will rise.
(ii) The marginal product of non-wetland land will fall.
(iii) The marginal product of non-wetland land will rise.

(i) and (iii) only

The demand curve for capital

reflects the marginal productivity of capital.

Which of the following is not correct?

Firms earn the highest profits when the owners of capital receive a value above the marginal product.

Which of the following best describes the economy's stock of equipment and structures?

capital

An increase in population can be expected to

increase the marginal product of land.